The new apartment buildings developed in Romania failed to target a specific market: the typical middle class family. They targeted a more and more narrow market niche as the prices went up. The way that the bubble developed is not very important right now, but the opportunities opened.
The market tends to be less and less concerned about the prices per squared meter, and more and more focused on the overall prices. The governmental program pushed even more in this direction setting the 60.000 Euros barrier.
If the focus lacked during the last years, it should be oriented at last on the middle class typical family. It has 3 to 4 members and earns about 1200 – 1500 Euros monthly. They have almost no savings, but they pay now 200-300 Euros for the rent.
Their future apartment should meet their needs and should be affordable.
A sustainable monthly mortgage should not exceed 300-350 Euros for the next 20-25 years, which represents the value of a home priced about 55.000 Euros.
The future apartments should be at least 2 bedrooms and resolve some of the issues that affect the “old” apartments: the lack of a proper dinner space and the rigidity of the plans. It is almost impossible to transform them from 2 to 3 bedrooms or vice versa and the bureaucracy required to make even the smallest change is huge.
The “bubble luxury apartments” are often too large and too expensive and most of the time they failed to be innovative.
The Architectural Challenges
Even that construction costs went down for both construction materials and labor force, specific Romanian conditions are very demanding: the earthquake risks and the local regulations that sets that 1 underground parking plot have to be build for every apartment.
- Both conditions can only rise the construction costs: the expenses for the structure are larger than in Western Europe and the 1-2 underground floors would rise even more those expenses.
The architects and Engineers should design more efficient earthquake buildings. The architecture plans have to allow the structural engineers to design more balanced structures, as symmetrical as possible, reducing structural efforts as torsions, using the most cost effective solutions.
The solution resides in the proper collaboration between architects and engineers and a better study of the construction sites before they are bought.
The land prices show little differences for very unequal plots: the prices asked by the owners are reported to the size and location, and they do not reflect the architectural opportunities. This way, plot of lands similar as surface but very different in geometry are valued the same by the market even that one could force the architects to solutions that are not economically efficient.
The image is one of a new trend in apartment architecture: there is an opportunity for affordable homes with small surfaces but with smart design that will allow low construction costs and smart places to live.
The new apartments should allow the buyers to change the plans, to transform them to large studios or to more rooms as their family structure evolves. Besides this can be a good possibility to low the construction cost, using less plaster walls, less doors as a standard offer.
The dangers of future apartment building developments
- Competition: Both old apartments and bubble apartments are important competitors for the new development. The first ones are bought for 1000-2000-3000 Euros back in the 90’s so their value can adapt quickly to any change. More, old people own many of them and they will be more and more on the market. The other ones are affected by the bankruptcy of developers, investors and constructors and can be more and more subjects of foreclosures.
- The land prices: they are the last to adapt the market changes. Many owners tend to wait for better days and they are not selling. The land price can start from 20% of the total cost and can go up to 50%.
- The project itself. The objective to build affordable is so challenging. Any false liberty took during the selection of the land; the design and the construction could represent a total failure. The market is tighter than ever and there is no room for errors.
More than ever, the solutions lay in the design that architects and engineers provide and in the way that the future land is selected, when, again, the architects should provide valuable consulting services.
The crisis shows a new direction, more client-oriented. The final buyer is the sole beneficiary of both investment and architectural project.