Red tape in Bucharest ends €100m office project

British buying property in North Bulgaria

€300m EIB loan for Slovenian motorway extensions

Second tier cities in India offer immense retail potential

South Africa: gradually slowing down

Rentals capped in Dubai

Red tape in Bucharest ends €100m office project

German real estate company Tri Genius has dropped the Bucharest Business Tower office building project, worth €100m, after failing to conclude a public-private partnership with the local authorities in Bucharest. The building was supposed to have a 90,000sqm surface area, with 5 underground levels and 28 above-the-ground levels, and was to be located in the Alba Iulia square area. The project was to comprise Class A office space, as well as a mall and a five-star hotel.

"The building was to be erected in the Alba Iulia square area, and the land belongs to the city. We offered a fair agreement and a public-private partnership model", stated the owner of Tri Genius, Maximilian Brueckner.

TriGenius is believed to have given up the project after not receiving any answer from the local authorities.

"Although we tried and offered to build Bucharest Business Tower somewhere else, we haven't received any answer. We had numerous meetings at the city hall, but it seems that no one is or was responsible in the end. It is very difficult to keep an investor waiting for a long time at this stage, because this is a €100m project and nobody keeps a sum like that blocked until they are able to invest it", added Brueckner.

British buying property in North Bulgaria

The number of British buying property in Veliko Turnovo and the regions located nearby in the North of Bulgaria is constantly increasing, according to Bulgarian newspaper ‘Capital’.

The number of Brits buying property in the area has increased and several have indicated that they were interested in re-locating permanently to Bulgaria, the report said. Foreigners are reported to be showing more interest in less popular Bulgarian areas, especially untouched smaller villages near the mountains.

Despite the surge in interest, winter resorts remain most popular with foreign buyers, Capital said. Village houses can now be found at lower prices in the regions of Vidin, Lom and Rousse.

However, some real estate agents in Bulgaria are predicting that property prices in the country as a whole will remain stagnant for the at least the first half of 2007. A recent poll on a Bulgarian property investment website (investor.bg) found that 35% of locals thought prices had peaked, with another 26% believing a peak will come in the next two to three years.

According to a poll of investor.bg property prices in Bulgaria already reached their peak. Nearly 35 per cent of the people polled said so. Another 26 per cent said that such peak could be expected in the coming two to three years.

€300m EIB loan for Slovenian motorway extensions

The European Investment Bank (EIB) is lending €300m to help complete the remaining 59km of motorway that will link the country’s motorway network improving the transit of both passengers and goods.

The loan will co-finance the construction of the following five new motorway sections: Sentvid-Koseze (5.5km), Vrba-Peracica (9.8km), Ponikve-Hrastje (7.2km), Pluska-Ponikve (7.6km) and Slivnica-Drazenci (20km). The first four sections are located in the Trans-European Transport Network’s Corridors V and X (which are crucial routes connecting Slovenia with its neighbouring countries), while the last section provides access to this network.

The extended motorway network will provide important transport links with Croatia, an EU accession state. It will improve road safety and increase capacity, thus helping to cope with the increase in the flow of traffic that has been seen in recent years.

The EIB has already provided nine loans amounting to €943m for the construction of Slovenia’s motorways, and total EIB lending in Slovenia, including the current loan, now totals €2.2bn since the country became independent in 1991, over 60% of which have been for transport infrastructure.

Second tier cities in India offer immense retail potential

Having gained significant market share in first tier cities in India, prominent retailers are expanding into unexplored second tier cities at a fraction of the cost, according to a study by Cushman & Wakefield.

In the southern Indian markets, mall culture in first tier cities such as Bangalore, Chennai, and Hyderabad has just begun to gain momentum.

The second tier cities are also expected to see a remarkable growth in the development of malls in the near future, with over 1m sq ft of space being added in cities like Mysore and Cochin. By 2009, Coimbatore is expected to have five malls with a built-up area of 2.4m sq ft and Cochin six malls with a built-up area of 1.6m sq ft. At present, there are no malls operating in these two cities.

By the end of 2006, India is expected to have about 120 malls and Indian firm Reliance has announced an investment of $3.4bn to become the country's largest modern retailer by establishing a chain of 1,575 stores by March 2009. Hypercity Retail also plans to open 55 hypermarkets by 2015.

The opening up of foreign direct investment, the report says, will provide access to the science of retailing. International players are expected to bring in design, visual merchandise and operational expertise. They will also bring experience from developed markets.

New retail shopping centres will enhance the infrastructure of Indian cities, create jobs and increased wealth. Residential property developers are not usually too far behind.

South Africa: gradually slowing down

South Africa’s ABSA House Price Index shows that annual growth in the republic for the 12-month period to December 2006 was 13.5%, down from the 14% figure recorded in November.

ABSA is projecting growth to continue on a downward trend and is forecasting a nominal growth rate of 9% (y/y) for 2007.

House prices in South Africa increased by 15,2% in 2006 in nominal terms, compared with the 22,5% recorded in 2005 and 32.2% in the boom year of 2004.

Jacques du Toit, senior economist at ABSA says that: “House prices are expected to rise by around 3% in real terms (inflation adjusted) in 2007.

“With interest rates currently being forecast to move down to lower levels in 2008, house price growth in South Africa is expected to increase above 10% during 2008 and into 2009,” says du Toit.

ABSA is also forecasting that interest rates will rise by a total of 100 basis points, bringing the bank’s variable mortgage interest rates to 13,5% by the middle of 2007.

Rentals capped in Dubai

Sheikh Mohammad bin Rashed Al Maktoum of Dubai, has recently issued a governemnt decree imposing a 7% ceiling on annual rent increases in 2007. This is yet another attempt to put a lid on the ever soaring cost of rents, which are increasingly seen as posing a threat to Dubai’s competitiveness in attracting foreign business and investment.

No increases can be applied to rentals raised in 2006, or on any contracts signed with new tenants last year.

Sheikh Mohammad, who is also vice president of the United Arab Emirates, the seven-strong UAE federation, had previously capped rent rises in the city-state of Dubai at 15% in November 2005.

Ever-spiralling rents are seen by many economists as fuelling ongoing inflation and deterring foreign businesses and professionals from Dubai. The city-state of 1.3 million has a majority of expatriates in its burgeoning population.

The soaring cost of residential property since 2002 has prompted many people who work in Dubai to rent property in some of other emirates in the UAE. This has led to longer commuting times with increasing volumes of traffic in an already congested city-state with its relatively poor public transport facilities.