Luxury homes are no longer in demand, some say, while other realty agencies swear that such residences are still popular. The departure of foreign managers, who have been replaced by local executives, has emptied some of the villas located in northern Bucharest. However, this does not concern real estate operators, who say that a drop in rents, sometimes even to half, is the only effect.
"Until 1998, the offer was very small, while the rent amounted to 25-30 $/sq. m, so that people paid even 6,000 dollars/month for a 200 square-metre apartment. Rents have now gone down to half in some cases," says Mihnea Serbanescu, general manager of realty agency DTZ Echinox. According to Serbanescu, the departure of expats is one of the causes having led to the drop in rents.
"In the case of 'old' investments, it is only natural to replace the expatriates with Romanian managers who have gained enough experience and have adjusted superbly to the respective organisational culture, so they can be at least just as productive," said Radu Manolescu, senior consultant Target Romania - International Executive Search.
This change is not the only cause behind the rent drop. "The luxury residential offer went up, while costs went down, due to easier access to financing and the use of cheaper materials," the Echinox official says.
The real estate market has been facing this rent decrease for the past three years, especially in the Baneasa-Otopeni area.
Irina Albu, a residential broker with Colliers International, says that rents for luxury homes will keep sliding this year, "but will not lose more than 10% as compared to the current level, since there will not be many new apartments in 2003."
The rents for luxury houses currently range between 2,000 and 5,000 dollars/month, depending on the area and the amenities. The house prices for the northern area vary between 800 and 1,500 dollars/square metre and between 500 and 1,000 dollars/sq. metre in Baneasa (an area that has greatly developed in the last years).
The most popular areas are: Primaverii, Aviatorilor, Kiseleff, Dorobanti, Herastrau Park near the French Village or Baneasa - Pipera (with the last area preferred by a certain category of clients - those whose children attend the International American School).
On the other hand, Edit Vesser with CB Richard Ellis says that "demand for residential spaces has not dropped, on the contrary. There are still many expatriates who need luxury residences, especially since, according to the policy of international companies, they are replaced every three or four years."
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