After eight years work experience at Baneasa Development, Michael Lloyd relinquished his responsibilities as Managing Partner of Baneasa Project in order to set up his own management vehicle. Former head of Baneasa Project said the most visible sign of the crisis had been that all of a sudden, every businessman had seemed to be a property developer, regardless of whether they had any qualification in or experience of the market.
First signs of the crisis: sharp increase in land and banks’ lack of interest
The first signs of an impending correction to Michael Lloyd were the rapid increase in land values and residential prices to levels way beyond the normal ratio of price that a buyer could pay.
“To see prices rise hundreds of percent in a few years is totally unsustainable”, said Lloyd, adding that the banking sector was becoming far too liberal and careless in the way they had assessed clients and projects in the rush to secure market share.
“The simplest sign was that all of a sudden, every businessman seemed to be a property developer, regardless of whether they had any qualification in or experience of the market”, Lloyd told Wall-Street.
As for the effects in the local market, Michael Lloyd, said the first impact would be the withdrawing of credit facilities which would mean that far few projects would get built as developers would have no further access to debt. Secondly this will impact on companies and their ability to trade, potentially causing a loss of consumer confidence and even the loss of jobs.
“All of this affects the demand for space which affects the chance of developers letting their products. These ‘bear’ market condition will exist for at least the next 12-18 months”, said Michael Lloyd.
Developers rethink their market strategies
As for the market evolution, Lloyd said Romania still has a long way t
