#Colectiv changes part of the Real Estate market
– “The politicians are thieves! The Parliament… the parties… Iohannis… I want them all replaced!”
– “What happened? You usually don’t care about politics. Is it the “Colectiv” case that made you upset?”
– “I will probably have to shut down my restaurant! It is not in the announced list of the restaurants that function in a property with red bullet, but the authorities are controlling everything from scratch… and now the new law shuts down activities in non-consolidated buildings…”
– “But this is not something new for you. I have explained to you this problem since 2010, when I was your consultant during the acquisition. I insisted that you would have to consider the consolidation of the property so as to avoid surprises. You promised to me that you would… ”
– “You don’t become rich if you do all that authorities say”
– “You don’t remain rich if you don’t respect the law and risk people’s lives”
– “And now… what am I going to do? Why should I pay this money? This is the State’s obligation to do so…”
– “I suggest you to take this opportunity, close your restaurant temporarily, consolidate the building, solve also all the problems you had, invest in your infrastructure and reopen, telling to your clients that you got sensitive from “Colectiv” and you decided to protect them”
– “But why should I invest all this money?”
– “For your business, my friend. Actually you will pay what you did not pay back in 2010, you will avoid closing and you will show to everyone that you care”
– “Bloody politicians! They should be executed!”
– “By the way, why don’t you also insure the place? I am almost begging you to do so, I don’t want you to bankrupt…”
– “Consolidation… insurance… what kind of business is this?”
– “A legal one…”
– “This is not the Romania we used to know…”
– “And this is good. But let me ask you a question: In a market where many restaurants will have to leave from dangerous buildings, the value of the remaining ones gets higher. Correct?”
– “… yes, I did not see it this way…”
– “So by investing in your property, you will not only solve your problems, become legal and respect your clients, but also its value will increase”.
Commercial activities in dangerous buildings will be punished
After the tragedy of Colectiv club, many serious people have started talking about the possibility of an earthquake in Bucharest. If it happens, the results will be devastating, as I have explained to you few weeks ago. I am really expecting from the new Government to take serious actions towards this direction, but at least a first, important, step was made: Dangerous buildings, ready to fall in case of an earthquake, cannot host commercial activities and risk the lives of thousands of people. What does this mean, from the Real Estate point of view?
- Many commercial spaces in Bucharest will have to be evacuated, especially the ones whose owners will refuse to pay the consolidation costs
- In several retail areas, the value of some properties will increase, as the supply will decrease and the demand is the same.
- Many owners of properties in the Old Center (but also Magheru, Calea Victoriei etc.) will have to reconsider their approach and (together with their tenants?) search for solutions. Otherwise soon we will see this district with many abandoned properties, while the prices of the consolidated ones will rise.
In case nothing happens, as many predict? Some High Street areas will lose value, while the Malls and the modern retail spaces will further gain ground.
Residential properties / offices
Taking into consideration that end customers are much more careful than in the past, we expect to see similar situations also in the residential sector, where many apartments in dangerous buildings will lose their value. Even if the law will not force someone to evacuate his property, it is clear that the vast majority of investors will avoid properties with seismic risk. Add as well the new norms of property taxes for apartments used for business purposes and you will see many properties remaining empty in the center of the city. But for this part of the market we will analyze more…
What is your opinion?
Source of the image: Wikimedia