The costs related to the construction of an office building are 60% higher than five years ago primarily due to the current rising prices of construction materials, but also because of the shortage of a specialised workforce, believes Alex Van Breemen, manager of Cascade Group, the developer of Cascades Business Center office building in Bucharest.

Cascade Group, the developer of Cascades Business Center located on Buzesti street, near to Victoria Square, has started construction on a second office building, Euro Tower, which is located on the intersection between Barbu Vacarescu street and Lacul Tei boulevard, in northern Bucharest. Investments in the project are estimated to be worth 60m euros, ten times the cost of Cascades Business Center, which two years ago was sold to Fabian Romania Property British investment group in a deal worth more than 12m euros.

Cascade Group is a branch of East and Central European Venture Capital, which is registered in the Netherlands and has experience both in commercial and residential development. Compared with the time spent developing the project on Buzesti street, the Cascade manager believes the main market changes are related to construction costs, tenants' requirements and capitalisation rates. As a result, construction costs are estimated to be 60% higher than 5 years ago, because of the international context and also the shortage of specialised labour. In addition, yields have also narrowed a great deal compared with the period when Cascades was developed.

"When the project is completed, we forecast an investment yield of 6%, which should translate into a price of around 80m euros," specified Van Breemen.

The Cascade manager also believes that a higher degree of sophistication from customers is a good thing because several developers tend to deliver buildings that are below a certain standard that s