„I believe that the real price of a land is the one that deserves to pay a developer in order to be able to construct a building with tenants or apartments which he could sell sustainably, at fair prices. That means being determined by the purchasing or renting power. We have a psychologically tendency to look at the land prices with growth expectations, but I believe it is more cautiously to be first interested in what building we put there and what is the tenant or final buyer. You have posses the certitude that the building will generate revenues and make the transaction only after the price is the one asked by the buyer or tenant“, mentioned Liviu Tudor, the biggest Romanian office spaces owner.
In the latest crises years, the owner of Genesis Development has consolidated its 150,000 sq. m portfolio owned within West Gate and Novo Park. Apart the two parks, the company also owns the student campus West Gate Studios, with 925 units, and the revenues generated by all these properties reach nearly EUR 34-35 million per year.
The office sector is already facing an oversupply, considering that the vacancy rate of the existing buildings is kept at the same level for a longer period of time. For this reason, Liviu Tudor is not willing to start a new construction.
„If we hurry to overdevelop a field which looks attractive, we might not have the expected success. The oversupply creates pressure on prices and the pressure on prices creates phenomena similar to the oil price“, the businessman sustains.
Corporations offer stability
In his opinion, Romania is a safe market for investments and he expects an ascending trend towards the country’s attractiveness growth. The investors are being motivated by the multinationals’ wish to expand in Romania, in Tudor’s opinion being the pillars of strength during the crises.
„Fortunately, Romania is a land of development for these large worldwide players, as they find here qualified workforce and optimal salary requests. Why is good to have multinationals? Because they can give stability during complicated times. All real estate sector suffered during the crises, less the offices with multinational companies as tenants“, he stresses.
Regarding Genesis Development’s expansion plans outside Bucharest, Liviu Tudor announced he didn’t intend such a move, nor now and most probably neither in the future, but he admitted that it was a good tactics to develop nowadays office buildings in large cities.
„Any large office development should satisfy the condition of the employees’ critical mass a potential tenant could find in that city. Unfortunately, large cities in the country are the size of half a sector in Bucharest and I am very much afraid that the big tenants will go to these cities and then they will start having problems in finding employees. But this is a medium term possibility. Currently, all the cities with more than 200,000-300,000 inhabitants are very good for placing offices with tenants, but in the long term it will be as complicated as in Bucharest “, explains the businessman.
Aged buildings
He also says that, although the modern real estate market in Romania is only 15 years old, the aged real estate stock, which is currently approx. 30 pct. of the market, will be bigger and bigger.
„There are large players which moved from very old buildings, industrial buildings converted to office spaces in the beginning of the ‘00s. It was a necessity for those tenants to relocate to A class buildings. Probably 70 pct. of the market are real inquiries for offices from expanding players or newcomers and 30 pct. are the necessity of relocating the office from spaces that is no longer meeting the requests“, concluded Liviu Tudor.
Liviu Tudor has invested by now nearly EUR 300 million in the three assets in Genesis’s portfolio, and its debts have gradually decreased from more than EUR 200 million to less than EUR 100 million. He has approx. 8-10 years until fully repayment of the loans received for the development of Novo Park in Pipera and West Gate in Militari. Last year, Genesis Development invested nearly EUR 3.5 million in improving its two office parks.
The businessman have an estimated wealth of EUR 250-260 million, in the last edition of Top 300 Capital. (source: capital.ro)
