The greedy, play-it-by-ear innovative spirit of some local developers has pushed the real estate market into an unnatural state of affairs, however things will return to normal within two years and we will no longer see someone who is willing to pay 1 million euros for a flat that is worth 500,000, believes Marinel Burduja, first vice-president of Raiffeisen Bank.
The official in charge of the corporate business of the third-largest bank on the market, Burduja, 55, says the fast rise in prices on the real estate market was fuelled by foreign funds with "highly speculative operations", which have now stopped.
"I don't see a real real estate crisis in the next three to five years, but a return to the norm is absolutely necessary and will occur in two to three years. Normal means prices calming down, with both reasonable prices and deals conducted at a fair price. When someone owns land and has 5 or 6 million euros in their pockets, they don't really mind paying 1 million euros for a flat that is worth 500,000 euros, yet these situations will come to an end. We will no longer see flats in downtown Bucharest costing more than 10,000 euros per square metre like on La Croisette."
Burduja says that many of the farmland acquisitions were made precisely for speculative purposes, by foreigners, and not for agricultural investments.
"Transactions with land are an infinite stream of income for notaries, lawyers, the land registry and local authorities. There is a 1 to 4 difference between the price a peasant gets for one hectare of land and the end price paid when lots are put together."
Real estate accounts for about 20% of the corporate portfolio of Raiffeisen. The bank's assets went up to 4.4 billion euros last year, after corporate loans amounted to 1.7 billion euros, an increase of 33% on 2006. Part of the funding was granted from Vienna.
