Adi Steiner, Managing Partner of STC Partners spoke to Property Forum about the developer’s new residential project in Bucharest and new investment opportunities being explored nationwide, as well as the increasingly sophisticated requirements of home buyers, with a focus on sustainability.
This interview was first published in Property Forum’s annual listing of "The 50 most influential people on Romania’s real estate market”.
How is the construction of Quartier Azuga progressing and when do you expect to complete the project?
Work at Quartier Azuga phase I started in the mid of November 2022. Site organization, demolition of existing structures and land clearing were completed by the end of 2022, followed by the construction of drilled reinforced concrete piles as safety excavation measures as well as foundation piles for the stability of the buildings, while the excavation works have been going in parallel. Meanwhile, the lake shore in front of the property was cleaned and we look forward to having a promenade area. The works for the reinforced concrete building structures for buildings A & B (phase I) will commence shortly, with the plan to finalize the construction of the two apartment buildings by mid-2024, meaning the handover of units and movement of first residents during Q3 2024.
How is the new residential complex of STC Partners received in the market?
The project has been very well received by the market with close to 40% of the phase I apartment units sold at the beginning of March 2023. The clients who have contracted the units are mostly final clients, who purchase to become residents and appreciate the location (besides the Lakeview, the location is very close to the new Doamna Ghica passage, which will facilitate excellent access to Bucharest’s main office hub in the Aviației/Pipera area) and overall development concept with facilities such as the Clubhouse, including fully furnished kitchen and lounge area for the community, which can also be used as a co-working space during weekdays, the generous kids’ playground, fenced exterior dog area and high standard technical specifications with very energy efficient solutions (PV plant, heat pumps and individual heat recovery ventilation system), being a pre-certified Green Homes project since September 2022.
How were the negotiations with Banca Transilvania for the financing of the first phase of Quartier Azuga?
It has not been an easy task to access bank development financing, as generally, the banks have become more reluctant to finance the residential sector in the last 12 months. The team from Banca Transilvania appreciated our professional experience and vision for the Quartier Azuga project, offering us flexibility and very good financing conditions to suit the project’s needs. Having as financing partner Banca Transilvania, the largest bank in Romania, it’s another strong validation of the great project that is being built up.
What other sources of funding do you have for the development of the ensemble in Bucharest?
We invested our own capital as well as raised funds from investors. We managed to raise capital from investors via several sources, individuals or companies, local or foreign entities, with or without experience in the real estate sector.
The trust from such a diverse pool of investors with various backgrounds, besides the trust from our clients, project partners and Banca Transilvania, offered us even more confidence in the project. It is a capital-raising business model that we will replicate on other residential projects in the future.
How did you establish the concept of the residential compound from the perspective of energy efficiency?
The nZEB standard is mandatory from the beginning of 2021 for any new residential building. We’ve assessed several alternatives for supplying the energy needs of the residential compound, prior to deciding on the current technical solution. We’ve been focused on ensuring energy efficiency at a significantly higher level than the minimum nZEB standard, leading to gas & electricity saving bills as high as 70% for our residents. This is indeed a subject that will shape the residential sector over the years to come and we look forward to bringing the latest technical solutions into our residential developments.
What prospects does the residential market in Bucharest have this year in terms of new investments given the difficult authorization process?
Lack of predictability and transparency in the authorisation process is an issue that pushes back residential development investments in the city, which needs new modern dwellings.
Some developers and investors have already given up on their investment plans in Bucharest, something that for sure is not benefitting the city. We hope the future will bring more predictability and transparency in this sense.
What are the aspects that a buyer of a home takes into account within Quartier Azuga?
There are many aspects that clients consider when making a purchase and the market is becoming more educated in this sense, which is a very good sign, and it will push for the development of better-quality residential compounds.
Clients really consider a “mix of everything” when deciding to purchase in our project. It’s important to take very good care of the entire development process to ensure excellent results, something that we strive to do in our projects. From this point of view, we’ve built up a very competent internal team and brought in experienced partners that support us in achieving such great results.
How do you manage the costs of construction, especially the building materials component?
There are different strategies that a construction manager can employ to mitigate construction-related risks, including the pricing of building materials, which has fluctuated considerably since the start of the Pandemic. Personally, I’ve been involved in the Romanian construction market for close to 20 years now, successfully delivering from my role as a general contractor some of the landmark projects in the country, including Sky Tower Office and Park Lake Mall in Bucharest. We are building a highly competent construction management team to position us at the forefront of what we can deliver for our clients (quality, cost and timing). While the strategy around building materials is important, good construction management goes well beyond this.
Are you planning new real estate investments in the capital or in regional cities? Do the plans still relate to the residential segment?
We’re looking for new investment opportunities in Bucharest as well as regional cities. We have built a trusted network of collaborators that provide us with interesting residential development opportunities as well as investors that are keen on setting up new projects together. We’re interested in expanding and doing new projects, but we do not want to scale up too quickly at the risk of going into opportunities that are not 100% clear of the value creation potential or placing us at risk of losing sight of Quartier Azuga.
Following the successful delivery of Quartier Gramont, our first residential project in Bucharest, it’s essential for us to deliver Quartier Azuga to the desired quality. We look forward to building the capabilities to take on multiple projects, but it will be a staged approach. Our core focus for the near future remains the residential segment.
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