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Wizmo.ro and Bucharest Imobiliare analysis: The real-estate market for buildings labeled as having seismic risk is constantly growing
According to data provided to ACTMedia by the real estate platform Wizmo.ro and Bucharest Imobiliare agency, foreign investors are the ones that are most interested in properties located in buildings labeled as having a seismic risk. Although the risks are high, so is the profit.
The investors have created an ‘unofficial’ list of sale prices for these properties. They buy mostly large, downtown apartments in need of refurbishment, which they divide into smaller properties, refurbish them at very high standards, and rent them. Many of these properties can be found on AirBNB or similar networks. Their return on investment can reach 6 – 10% per year.
“I personally think the investment in such a building is an opportunity because of their downtown location. For EUR 500 – 600 per sqm, owning a property in central Bucharest is a business, which many perceive as risky but which other investors find attractive and exploit it. Such a property can increase its value after consolidation as much as three times,” Daciana Petrov, the owner of Bucharest Imobiliare, said.
After a 2015 law banned commercial activities involving large crowds from taking place in seismic risk buildings, the number of rentals in these properties dropped significantly. Many owners of such spaces, especially in Bucharest’s Old Town, were left without tenants and lost tens or hundreds of tens of euro. The players who had financial resources to reposition on the market, chose the big commercial boulevards, malls or the ground floor spaces of the new built buildings.
“The interest for this type of properties is apparently growing among online users as well, judging by the number of Google searches. If in July 2016 the combination ‘seismic risk buildings’ was searched approximately 46,000 times, this year, in July, the searches doubled, and reached 92,680, according to Google Keyword Planner data,” Maarten Deboo, general manager of Wizmo.ro, said.
A total of 383 residential buildings in Bucharest and in 26 counties have been classified as having a first-degree seismic risk. Of these, 125 are buildings with several levels, built before 1940, and identified by the authorities as a top priority in reducing seismic risk.