{"id":6088,"date":"2011-02-15T08:50:05","date_gmt":"2011-02-15T06:50:05","guid":{"rendered":"http:\/\/http:\/\/www.iliaspapageorgiadis.ro\/en\/?p=6088"},"modified":"2015-01-26T20:16:44","modified_gmt":"2015-01-26T18:16:44","slug":"why-the-prices-of-lands-without-approved-puz-will-fall-during-2011and-why-they-will-rise-afterwards","status":"publish","type":"post","link":"http:\/\/www.iliaspapageorgiadis.ro\/english\/2011\/02\/15\/why-the-prices-of-lands-without-approved-puz-will-fall-during-2011and-why-they-will-rise-afterwards\/","title":{"rendered":"Why the prices of lands without approved PUZ will fall during 2011 (and why they will rise afterwards)"},"content":{"rendered":"<p style=\"text-align: center\">\n\t<strong>Part 1<\/strong>\n<\/p>\n<p style=\"text-align: justify\">\n\tLast week I analysed for you the situation after the new law for PUZ approvals in Romania, as it was presented by minister Udrea. We checked together the positive and negative effects of it, which you can remember <strong><a href=\"http:\/\/www.iliaspapageorgiadis.ro\/en\/2011\/02\/11\/new-law-for-puz-approvals-a-huge-change-for-romanian-real-estate-marketpositive-and-negative-points\/\" target=\"_blank\">here<\/a>.<\/strong>\n<\/p>\n<p style=\"text-align: justify\">\n\tBut except the general analyses, let us check also the actual reality which is about to come during this year. Because, as plenty of you wrote in your emails, the most important of all is the actual effect of each decision in the prices, the supply and demand for properties.\n<\/p>\n<p style=\"text-align: justify\">\n\t<strong>Limited stock of good properties, not many lands with PUZ approved<\/strong>\n<\/p>\n<p style=\"text-align: justify\">\n\tLet us assume that you wake up today and want to buy a land inside Bucharest, in order to develop a residential, office or retail project. You have a budget of 1.000.000 Euro and you might feel &quot;strong&quot;, &quot;an important player&quot;. Do you know how many lands you will find with a price up to 1.000.000 Euro? Less than 100. And as I personally (or my colleagues) know almost 80 &#8211; 90% of them, I strongly doubt that you will find more than\n<\/p>\n<p style=\"text-align: justify\">\n\t<!--more-->\n<\/p>\n<p style=\"text-align: justify\">\n\t5 good properties, combining good location, documentation, urbanism, potential and price to invest in. Your options are more when the available amount is higher and less when the money to invest is lower. Why is this happening? *\n<\/p>\n<p style=\"text-align: justify\">\n\tThis is a clear sign of the market&#039;s immaturity. There is a limited stock of good properties, as most of them have &quot;any kind of problem&quot;. This is why the prices sky-rocketed in the past. Limited supply and enormous demand boosted people&#039;s expectations to incredible levels.\n<\/p>\n<p style=\"text-align: justify\">\n\tOne of the easiest ways to add value to a land inside the city is to invest in its PUZ. But there are not many owners who really did this. Today we have almost the same stock of lands that existed in the end of 2007 and only a small part of these (20%?) have changed their urbanistic parameters after an approved PUZ. So, few good properties, even fewer with PUZ.\n<\/p>\n<p style=\"text-align: justify\">\n\t(* this is why we really struggle to find the right properties for our clients)\n<\/p>\n<p style=\"text-align: justify\">\n\t<strong>After the new law, the (weak) demand will concentrate on lands with PUZ<\/strong>\n<\/p>\n<p style=\"text-align: justify\">\n\tLet us assume that you want to buy a land today. Why would you do that?\n<\/p>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li>\n\t\t<strong>In order to develop a project<\/strong>. So you must buy something in &quot;attractive&quot; price, ideally with approved urbanistic parameters, in order to be able to create your project knowing and controlling your costs.\n\t<\/li>\n<li>\n\t\t<strong>In order to sell in the future with higher price<\/strong>. You will also search for opportunities, plus you would definitely prefer to know the exact status of the property you want to purchase, so as to identify the upscale potential.\n\t<\/li>\n<\/ul>\n<p style=\"text-align: justify\">\n\tSo if you are an investor today, you would go for location (always), price and the best possible urbanistic parameters. You will also measure a land using the parameter of &quot;cost per built sq.m. This means that you will probably favour lands with PUZ approved (Because the other options are lands whose owners still did not accept that without a PUZ, their price per built sq.m. is high and their value should decrease in order to adjust).\n<\/p>\n<p style=\"text-align: justify\">\n\tBeing an investor, you heard that most of the lands can not obtain a new PUZ. So isn&#039;t normal for you to calculate the offers according to today&#039;s standards? Doesn&#039;t this mean that a property without PUZ should be offered to you in a lower price comparing to the past, in order to attract your interest?\n<\/p>\n<p style=\"text-align: justify\">\n\t<strong>How the prices will contract:<\/strong>\n<\/p>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li>\n\t\t<span class=\"list\">Let us assume that there are 2 lands, one next to each other, with surface of 1.000 sq.m. each. <\/span>\n\t<\/li>\n<li class=\"list\">\n\t\tIn land A there is a PUZ approved and you can build 5.000 sq.m.\n\t<\/li>\n<li class=\"list\">\n\t\tIn land B there is no PUZ approved and you can build 2.500 sq.m.\n\t<\/li>\n<li class=\"list\">\n\t\tLet us assume that before the crisis land A was for sale for 2.000.000 Euro.\n\t<\/li>\n<li class=\"list\">\n\t\tThe owner of land B was asking the same price too. His argument was that &quot;if the man next to me managed to obtain a PUZ, I can do it too. So you should pay me the same price and I will bring you all the necessary documents&quot; (in its &quot;vulgar&quot; version, the owner would suggest to the investor to do the procedure himself, after he would have bought his property).\n\t<\/li>\n<li class=\"list\">\n\t\tNow with the crisis, the value of land A has dropped to 1.000.000 Euro, even less.\n\t<\/li>\n<li class=\"list\">\n\t\tSo, if the neighbour did not arrange for the PUZ to be approved, now he does not have it. So he can build just half of the sq.m. And after the new law, he does not have the chance to apply for a new PUZ in the future.\n\t<\/li>\n<li class=\"list\">\n\t\tBut if land A with 5.000 built sq.m. costs 1.000.000 Euro now&#8230;\n\t<\/li>\n<li class=\"list\">\n\t\tLand B with 2.500 built sq.m. should cost 500.000, half.\n\t<\/li>\n<\/ul>\n<ul class=\"unIndentedList\" style=\"text-align: justify\">\n<li>\n\t\t<strong>Result 1: So, the new law eliminates the potential of new PUZ and lands people&#039;s expectations to reality of their actual urbanistic parameters.<\/strong>\n\t<\/li>\n<li>\n\t\t<strong>Result 2: Without the possibility for a PUZ to be approved, the lands without it will lose the status of &quot;property with potential PUZ in it&quot;.<\/strong> They are compared to the properties with PUZ in the same area and, inevitably, see their prices falling.\n\t<\/li>\n<\/ul>\n<p style=\"text-align: justify\">\n\t<strong>First reaction: &quot;Let us avoid trouble, let us focus on properties with clear urbanistic status&quot;<\/strong><br \/>\n\tThe vast majority of investors nowadays prefers properties with &quot;all problems solved&quot; (= legal and technical due diligence in order). They prefer to &quot;avoid trouble&quot; and choose only safe choices. So they will not sit down to discuss according to stories like &quot;despite the new law, we can still obtain a PUZ, so the price should be higher&quot;. They will just calculate the actual figures they see in front of them, justified and easy to process.\n<\/p>\n<p style=\"text-align: justify\">\n\t<strong>This means that the prices for lands with approved PUZ will stabilize, probably increase too.<\/strong>\n<\/p>\n<p style=\"text-align: justify\">\n\t<strong>But as most of owners here are &quot;a bit in a hurry&quot;: The majority of owners with lands having PUZ will soon &quot;lose their mind again&quot;, asking for crazy prices for their properties.<\/strong>\n<\/p>\n<p style=\"text-align: justify\">\n\tSo, the lands without PUZ will be the second option for many investors and their price will fall. Then why do I expect them to rise again in the near future?\n<\/p>\n<p style=\"text-align: justify\">\n\t<strong>Find out tomorrow!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Part 1 Last week I analysed for you the situation after the new law for PUZ approvals in Romania, as it was presented by minister Udrea. We checked together the positive and negative effects of it, which you can remember here. But except the general analyses, let us check also the actual reality which is [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":59454,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[216,17,236],"tags":[],"_links":{"self":[{"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/posts\/6088"}],"collection":[{"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/comments?post=6088"}],"version-history":[{"count":0,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/posts\/6088\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/media\/59454"}],"wp:attachment":[{"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/media?parent=6088"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/categories?post=6088"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/tags?post=6088"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}