Bucharest – Dramatic Drop in Residential Prices

 Before the crisis struck, residential prices in Bucharest were a prime example of an overheated market in Eastern European cities, caused by high mostly bank-financed demand. But the economic development caused a considerable down-scaling of residential prices. According to CB Richard Ellis the square meter prices for newly built flats dropped by 25-50% between 2008 and 2009 and this trend is still continuing in 2010.

The price range for newly built flats before the crisis was between 900 and 4 500 Euro per square meter, however in 2009 it decreased to 700 to a maximum of 4 000 Euro. The most dramatic decline was registered in the districts of Primaverii (by 20% to 40%), Herastrau (approx. 30%), Floreasca (up to 50%) and Baneasa-Pipera (over 50%). The most sought-after districts still remain Herastrau, Dorobanti, Aviatorilor-Kiseleff and Primaverii. The demand for the north of Bucharest – namely Baneasa-Pipera – which showed high building acitivities in the years prior to the crisis, declined due to its location far from the city center.

One specific of the market in Bucharest is that more than 80% of the population are property owners. Compared to other CEE markets this is a very high share. Regarding this a high demand for new quality property is to be expected when the ecomomy and consumer situation finally recover.