Jeff Kirby, CEO of real estate developer European Future Group (EFG), involved in the development of 14 projects in Romania, believes the firms that will overcome the current crisis will go on to "call the shots" on a market that will become less crowded and where there will be a resetting of property values.
"The times we live in are extremely interesting and full of challenges, so that survivors will become much stronger," Kirby states, maintaining a foreign investor has recently operated a 100m-euro cash injection in the firm he runs and EFG will benefit from further sums in the future and will seal acquisitions in the first half of 2009.
Most real estate firms are facing serious challenges brought on by the financial crisis and could sell some of their properties at prices way below the market level in the following period. Cash rich investors eagerly wait for this moment and view it as a huge opportunity to operate medium-term investments, until the market rebounds.
2009 is due to be extremely difficult for the real estate market and the overall economy, with many projects to be delayed, so that some companies have also embarked on a consolidation process by slashing wage costs.
EFG, a firm with regional activity, has reduced its number of employees from 81 to around 55-60 including 38 in Bucharest and closed its offices in Turkey and Moldova.
Due to the low level of house sales in Romania and the cash shortage at market level, EFG will put its biggest project domestically (in Buftea) on hold for 18 months. Ultimately on the 156-hectare plot of land, EFG plans to build around 6,000 homes in several stages, with investments in the project being put at 1.9bn euros. EFG will develop this project together with Black Sea Enhanced Returns fund.
Another project of EFG is located in Brasov, where EFG and Immoeast will develop a shopping centre with a 55,000-sqm area, an office building and a hotel, as well as a housing area of around 170 apartments. Immoeast is one of EFG's most important partners domestically, with the two companies developing five projects in total worth above 700m euros. EFG has also started developing Meteo Business City business park in northern Bucharest and construction works for two housing complexes in eastern Bucharest.
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