Bucharest real estate
Bucharest property: City Lights
+ 75% LTV mortgage available
+ Expected capital gain growth: 20% pa for the next 3 years
+ 9% rental yield anticipated
+ Completion between December 2008 and December 2009
Source: "The Diplomat" Report by Michael Bird, Corina Mica, Ana-Maria Smadeanu and Mihai Alexandrescu Bucharest - the city where anything goes
Will it be possible to manage the chaos of development in the capital? ‘The Diplomat – Bucharest’ asks experts for solutions Bucharest is a city developing almost exclusively through private initiative, where the local authorities lack the resources and legal muscle to impose strict regulations on new buildings. On the positive side, some large projects can find it easy to win the green light for development. However, this also means citizens and authorities may lose their grip on the urban profile of their city. “For the moment, the market dictates what new developments will happen and where,” says Radu-Petre Nastase, associate professor at Ion Mincu University of Architecture and currently running his own practice. The lack of a strong regulatory framework could impact on the quality of life of the city inhabitants and, consequently, on the value of property. “All the developers are trying to earn more from constructions, but they are not thinking about people’s comfort after they move in,” says president of real estate firm Regatta, Eduard Uzunov. “In the short term they will make money, but over a longer period, they will have a lot to lose.”
Land is not cheap
One reason for this state of affairs is that land is very expensive and developers are racing after the best plots. This leads to a competitive market where developers need to be economical in their construction costs and work to short deadlines. “When you do not have enough money to design great architecture and the schedules are tight, the final quality is not so good,” says Nastase. “When you do things quickly you cannot have quality. Quality is the product of competition and time to think and develop.” Thus, Bucharest is developing spontaneously, rather than through a master plan.
Communism’s inheritance can also take some of the blame. Following World War II, the city underwent huge development in industry and housing, where cheap to construct and quick to build tower blocks destroyed many residential neighbourhoods. Now added to this mix, especially in the centre and the north, are new developments – mostly made of glass and steel. By contrast, about 30 per cent of the city also remains rural in appearance. Therefore, the city’s aesthetics are now best described as ‘eclectic’ and at worst ‘chaotic’. There are few areas with a consistent style, argues Edmond Desliu, an architect and project development group director for Immoconsult. “There are none in the centre of the town,” he says, “where each era has left its mark.” To bring more coherence into development, Bucharest’s Prefect Mioara Mantale argues for stronger involvement from Bucharest’s six sector administrations and owners’ associations and programmes to diminish discrepancies. “We also need to revive that ‘community soul’ we all used to be so proud of,” she says. Another major problem is that the percentage of public property in the hands of the Bucharest municipality is low. The city has under 15 per cent of the total land, compared to Helsinki, which has over 80 per cent. This means the City Hall can influence only a limited amount of space for development. “Huge differences thus appear between the speed at which public projects can be finalised,” Mantale says.
Regulations are also slack. The current law does not mention any aesthetic criteria for buildings in any city, but only about its general appearance, says Adrian Bold, chief architect for urban development and public works in the Bucharest City Hall. This law is also written in a “very evasive way” argues the chief architect. It can be bent by the most persuasive argument. “Everything that is being built right now is more related to a social structure, that between a client and an architect,” says Bold. “There is no consultation with the local authorities.” Another problem is the lack of experts and the dissemination of the decision-making process for new developments. The law divides the responsibility for assessing whether building projects should take place between the six sector administrations and the City Hall. “There’s no other city in the world that has such a system in place,” says Bold. “New York, for example, has one single City Hall, and a special department of urban development that employs 10,000 specialists.” Bucharest as a city lacks a special study, research and design department that can offer input on how the city’s architecture should develop. “In Paris, every four years such an institution undertakes a study to research the status of street junctions in the city,” says Bold. “In Romania and in Bucharest especially, the regulation process is viewed as a bad thing, from common citizens to members of local councils.” Bold says there need to be restrictions on the rights of citizens to build whatever they like on their property in Romania. But there is an issue here regarding the mentality of the public which, due to a violent history against private property, are suspicious of meddling from authorities. “The right of ownership is guaranteed by the Constitution, but there is a huge difference between one’s right to own a property and the right to build on it whatever and whenever,” says Bold. Home-owners and some institutions, he argues, cannot differentiate between these two rights.
Common (not collective) ownership
Bold cites a French law which states that the French territory is the common patrimony of the entire nation. The state has the duty to restrict the ownership right when its use does not meet the common goal. “The urban development law in Romania does not have any element which can clarify ways local authorities can restrict the right to build,” he says. There is no master plan for the city, but at the same time the city is witnessing its largest development since the Communist era. “Many of the proposed developments are not included in a strategic master plan of the city,” says Nastase. “There is an urgent need of a bigger strategic plan for Bucharest and surroundings.” Critics argue the existing General Urban Plan (PUG) is not a strategic plan – it is a zoning plan only. “My understanding is that the local community is pushing to solve this issue very shortly,” says Nastase. A master plan needs a team of experts – including investment companies, lawyers, architects, urban planners, City Hall leaders and managers, social workers, engineers, infrastructure workers, community representatives, project managers and financial institutions to propose the strategic project for this city and in which direction to navigate its funds. “This could be infrastructure projects in the cultural field, educational and sanitary systems, public transport, utilities roads, and public urban places,” says Nastase. “We have to decide if Bucharest should be a financial city, a cultural city, and/or a regional capital of Europe.” To make the city more attractive for its inhabitants, Mantale argues there are two choices. Either to harmonise the old style with the new – which some buildings have tried to develop. The other is to pioneer a modern architectural style. “Where this type of architecture does not impede the cultural value that gives a distinct identity to the capital city,” she says. But from the architectural point of view, Eurisko general manager Andrei Panculescu thinks that Bucharest will not receive a major face-lift. “Developers are usually looking for cheaper options, so I don’t think things will change soon,” he says.
Restoring classic buildings may be key to Bucharest’s need to recover its identity. Desliu says the capital’s inhabitants should realise the more attractive its old centre becomes, the more appealing the city will be. He gives Poland as an example – where, following World War II, Warsaw managed to rebuild its bombed-out centre in an exact replica of its former self. “Keeping the patrimony alive will also allow for the healing of the wounds inflicted by Communist architectural mistakes,” he says. President of Raiffeisen Banca pentru Locuinte and board member of Equest Balkan Properties, Ionut Costea, also argues for a makeover. “I would prefer that we see a complete renovation of building facades, be that blocks or old buildings, because these make today’s Bucharest an untidy city,” he says. “Once this is done, and with the long-awaited renovation of the Historic Centre, we can hope for an appearance that is similar to other European capitals.” But there are again problems with regulations. The City Hall can only regulate, not make the owner of a building clean up the outside. “We can propose they renovate their facades and point out to the regulations in place, but we cannot compel an owner to do something,” says Bold. In Paris, by contrast, the local administration laws oblige all building owners to renovate their facades every ten years.
Making a landmark
Cities such as Paris have prided themselves on constructing prestige projects. Costly, controversial, but aiming for harmony with their surroundings, these are buildings that have an indirect effect on the financial health and quality of life of the city – such as the Eiffel Tower or La Defense. This is not happening in Bucharest. “The city lacks modern architecture and has to take into account the evolution of other European cities and follow the same direction,” argues Mayor Videanu. “There is a lack of prestige projects in Bucharest,” adds Nastase. “There are no major projects in which the local community is interested to participate in and co-finance. There are no important competitions for architects to develop new projects. If there was a piece of landmark architecture this could bring a good image to Bucharest and could also make the local competition step up.” But this may take a long time because the world’s most prestigious architects may not work on Romanian fees. One idea, put forward by the developers of Blvd Unirii’s Esplanada project, is to attract a Guggenheim Museum to Bucharest. The name has become a by-word for introducing an innovative architectural element into neutral surroundings. This happened in the Basque seaport of Bilbao, whose name is now inseparable from Frank Gehry’s deconstructionist art museum for the Guggenheim art collection. The building acts as a tourist attraction and symbol for the city. The city then benefits from increased investment from tourists and becomes synonymous with an innovative and exciting brand. But critics say importing an idea that has worked in one city may not work in another, especially as Bucharest already has two world class museum spaces for contemporary and classic art.
Now, developers and tycoons as diverse as TriGranit, Dumitru Dragomir and George Copos, have rushed into print with the desire to be the first to build a skyscraper – but nothing has yet happened. High buildings are now popping up. Charles De Gaulle Plaza and the Millenium Business Center on Blvd Carol are the result of a 1990s study by the Faculty of Architecture and Urban Development calling for tall buildings at different locations in the city to give Bucharest an urban profile. “Such ‘high points’ have been built in the meantime,” says Bold. “But I believe the initial theory has lost its spirit as now everybody seems to focus on tall buildings alone.”
Report by Michael Bird, Corina Mica, Ana-Maria Smadeanu and Mihai Alexandrescu
Bucharest holds over a tenth of the total population of Romania Its area is 226 square kilometres Its population is between 2.2 and 2.5 million Ninth largest city in Europe Fourth largest city in eastern Europe after Moscow, St Petersburg and Kiev Roughly the same size as Paris, Havana and Brasilia
Bucharest could double its population in the next ten to 15 years to over four million, according to a World Bank study. The main reason for this is that 55 per cent of foreign investments in Romania come to Bucharest, therefore attracting large numbers of labour. This is a situation not dissimilar to the largest city in Europe – Moscow. City Hall says the population will grow to three million by 2011.