2. •The challenges of today’s market are a
compounding effect of the last 4-5 years of rapid
land, building cost and wage inflation that had no
direct coloration with local demand and productivity
markers.
• Banks were lending at high valuations to individuals
and investors alike that caused a great amount of
paper wealth to be created in a short period of time.
Challenges of today’s market
3. Challenges of today’s market
• The result of all this is that we now have vast
amounts of expensive leveraged land that has no
potential of being exploited because the market
simply cannot afford the prices that need to be
obtained to breakeven on the land cost.
• Theoretically we have a 1million home shortfall.
• Banks do not want to touch residential
development because they have too much legacy
stock.
4. Challenges of today’s market
• Investment funds and individuals are looking for
high IRR’s that can rarely be achieved.
• The banks are taking on a wait and see
approach.
• End buyers are still waiting for the market to fall
further before they make a decision on buying a
new home.
• Consumer confidence is at a 20 year low.
5. Romania on the investment map again
• At the end of this market correction/crisis
developers will need to compete with the stock that
is partially built or to be liquidated by current
developers and banks.
• We will have a 2-5 year period before we get
traction in the market again without some form of
government stimulation and positive consumer
confidence that can only be achieved through a
recovering economy.
6. • The Prima casa and 5% VAT threshold are only
relevant to old buildings and stock that is going to
be liquidated, but the reality is that there are very
few newly constructed homes that fit into the
criteria
• As soon as you start to apply the 24% VAT to
homes outside the threshold, they become cost
prohibitive.
Romania on the investment map again
7. Future projects and
management strategy
• We have adopted a new strategy focused on low
cost housing for mass market, “the Dacia
approach”.
• To build affordable housing to people who are
employed with a family income of 600-1000 Euro
per month.
• To produce the first mass market green housing,
lowering the end users utility costs in excess of
50%.
8. Future projects and
management strategy
• Facilitate banking facilities for the end client to
borrow up to 100%.
• Provide the clients a 10 Euro per day repayment
via a 30 year mortgage.
• Be prepared for the implementation of the EU laws
regarding energy efficiency.
• All new developments will have amenities
including: kitchen, parking, gardens, pools and
playgrounds.
