US-owned Bucharest Properties REIT has appointed real estate consultancy Colliers to provide full corporate leasing services for Vitan Estates, Bucharest’s first residential development exclusively for rental, based on an American concept.
Located in the immediate proximity of the Mihai Bravu subway station, the Vitan Estates residential complex includes three buildings, with a height regime of GF+5-GF+11 floors and a total built area of over 20,000 square meters, with a total investment in this project exceeding 20 million euros. The complex has 375 apartments available – lofts, studios, one and two bedrooms, all with furniture and fittings (unfurnished on request).
Following the American model, the complex also offers laundry and dry cleaning, a fitness room, a bistro, a convenience store, concierge service and parking spaces. Leases are signed for a period of at least one year, with the possibility of extension, the area offering quick access to shops, shopping centres, supermarkets, parks, restaurants and other places of interest in Bucharest.
The two completed buildings in the Vitan Estates residential complex are almost fully leased, reaching an occupancy rate of 98.7%, and the third building, which is in the construction phase, is 100% pre-leased. Maintenance costs are directly proportional to the consumption of each property, with all apartments having individual water, gas and electricity meters, their own or a state-of-the-art, efficient central heating system and air conditioning. The apartments are bright thanks to wide windows, have a balcony and, moreover, have a modern design, suitable for young people and couples, students or young professionals, and can be easily adapted for working at home.
“The demand for leasing is growing and the expertise and professionalism of Colliers’ team is contributing to the development of the residential rental segment in Romania”, says Kim Vranceanu, co-founder of Bucharest Properties REIT. “Moreover, Colliers has proven to be the ideal partner in achieving our most important goal, which is to provide high quality services and experiences to everyone who chooses to live with us, because at Vitan Estates, our tenants are our top priority”, adds Violeta Niculae, Director of Operations at Vitan Estates.
As the gap between mortgage and rent is narrowing amid rising market prices and tighter lending conditions, Colliers consultants are seeing increasing demand for rentals. This demand has so far been met by small investors buying up packages of apartments and putting them on the rental market, but is now starting to attract the attention of the big players.
“We are no longer talking about the development of the residential rental segment as a future trend. We are extremely pleased that Bucharest Properties REIT has chosen Colliers for full leasing services for phase 3 of the Vitan Estates residential project, strengthening the long-term partnership for the development of this segment of the residential market as well. Colliers strengthens its position in the residential market through its advisory, transaction, leasing, project management and administration services for investors, developers and market operators”, points out Gabriel Blăniță, Associate Director Valuation & Advisory Services at Colliers Romania.
In this regard, Colliers consultants are currently in discussions with several developers and investors about the construction of rental-only complexes in several areas of Bucharest and have recently brokered a land transaction for such a project. Another business reality is that, for the first time since 2015, salary levels in Romania increased at a rate both below inflation and below residential price growth. Developments up to 2020 made Bucharest one of the most affordable housing capitals in the EU, next to Sofia, in relation to the average salary level. Higher house prices are now causing potential buyers to either postpone the decision to buy a home or not to afford it.
If at the beginning of 2021 it took about 7.5 years of average salary to buy the typical apartment, now we are talking about a period of at least 8 years. Therefore, Colliers consultants expect that over the next two years, a period characterized by high inflation and rising interest rates from historic lows in 2020, this trend will continue and we will have less affordable housing. The increase in interest rates from the lows of recent years has caused the ratio between mortgage and rent to reverse. Thus, in most central areas of Romania’s major cities, the rent for an apartment has now become lower than the monthly mortgage rate for the same apartment, which will lead to increased demand for rental homes in the coming period.
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