Yitzhak Hagag, Co-founder & Chairman of Hagag Development Europe, spoke to Property Forum about the firm's strategic focus on diversifying into hospitality and energy while maintaining strong growth in its core office and residential segments. He noted that rental income rose by 32% as the company prepares for major luxury retail and hotel project deliveries.
This interview was first published in Property Forum’s annual listing of "The 50 most influential people in Romania’s real estate market”.
How did your commercial portfolio perform last year regarding rental income and what are your targets for 2026?
Our commercial portfolio delivered a strong performance across all business segments. Rental income from both office and retail assets increased by approximately 32% compared to 2024, supported by improved occupancy rates and enhanced commercial activity. A notable contribution came from H Private, our serviced office concept, alongside solid performance from H Herăstrău Park and the successful leasing of the remaining vacant spaces within H Tudor Arghezi 21.
For 2026, in the context of a high occupancy rate across our office and retail portfolio, including assets such as H Lake Plaza and H Știrbei Palace, we aim to further consolidate this growth trajectory by maximising income stability, strengthening tenant retention, and continuing to refine our product offering in line with evolving occupier expectations.
What is the strategy for residential sales this year and what were the initial results from Q1 2026?
In the residential segment, our focus remains on accelerating sales within ongoing developments while maintaining pricing discipline. Projects such as H Pipera Lake and H East Residence recorded solid momentum, confirming sustained demand and strong market absorption. Out of the 728 units currently under construction, we expect to reach approximately 65% sold by the end of Q2 2026, marking a 10% increase compared to December 2025. Our objective is to achieve at least a 75% sales rate by year end, ideally approaching 80%, provided there are no adverse fiscal changes. If this trajectory is maintained, we plan to initiate Phase III of H Pipera Lake by the end of Q3 and complete the entire project by Q4 2028, with final delivery in early 2029.
How is the restoration of H Ştirbei Palace positioning Calea Victoriei as a destination for luxury retail?
The restoration of H Ştirbei Palace represents a landmark initiative in redefining Calea Victoriei as a prime luxury destination. By preserving the architectural heritage while integrating contemporary retail and cultural functions, the project creates a unique environment tailored to premium brands and curated experiences. The introduction of high-end concepts, such as TOFF Galleries, signals the emergence of a new luxury ecosystem in central Bucharest, combining exclusivity, heritage, and experiential retail. This transformation contributes not only to the repositioning of the area but also to the broader evolution of the city's high-street retail landscape.
With the conversion of H Vasile Lascar marking your entry into the hotel market, what are the key hospitality milestones for the coming year?
The hospitality segment is a strategic new direction for us. For H Vasile Lascar, we have already submitted the documentation required to obtain the building permit, with construction targeted to begin by the end of this year. In parallel, we are actively exploring the acquisition of an additional centrally located property in Bucharest, well-suited for hotel conversion, and we are already in discussions with a potential operator. Furthermore, our project in Predeal is advancing, with the concept nearing completion and negotiations ongoing with an international hotel brand. These steps reflect our commitment to building a diversified hospitality portfolio with strong operational partnerships.
How are you navigating the inflationary pressures and legislative volatility that marked the Romanian real estate sector in late 2025?
We address these challenges through disciplined risk management, financial flexibility, and a strong emphasis on product quality and market relevance. Early stage planning is critical for us, supported by experienced internal analysts and external consultants who focus on forecasting, optimisation, and project management. Nevertheless, cost volatility and capacity constraints in the construction sector remain key risks, potentially impacting budgets and delivery timelines. Macroeconomic uncertainty continues to influence both affordability and investment appetite. In addition, regulatory unpredictability, including changes in taxation or permitting processes, requires constant vigilance and adaptability in our strategy.
Given your expansion into secondary markets like Predeal, how do these regional investments balance your Bucharest-heavy portfolio?
Our expansion beyond Bucharest is a natural evolution of our long-term strategy. The project in Predeal is only the beginning, as we are actively exploring opportunities in other major cities, including Braşov, with a focus on large-scale mixed-use developments. These regional investments will gradually bring balance to our portfolio, while our expansion will remain phased and carefully calibrated. This approach allows us to mitigate risk while capitalising on emerging opportunities in high-potential regional markets.
What specific trends in boutique office demand are you observing in the Bucharest CBD as we move through 2026?
We are seeing sustained demand for boutique office spaces, particularly in prime central locations where accessibility, design quality, and amenities play a decisive role. Flexibility and service integration are increasingly important, which keeps fully serviced private office concepts in strong demand. A relevant example is H Private Arghezi, our business centre in the CBD, which reached an occupancy rate of 89% in April, supported by an impressive retention rate of nearly 95%. Notably, some clients have scaled their operations within our portfolio, transitioning from serviced offices to conventional spaces in our buildings. This highlights both the attractiveness of the product and the importance of service quality and long-term tenant relationships.
How does the launch of an energy division complement your ongoing investments in the real estate field?
The launch of our energy division adds value to our local expansion plan. We see real estate and energy as interconnected, both essential to how cities grow and function. By integrating energy infrastructure into our investments platform, we aim to enhance the resilience, efficiency, and long-term value for our developments. This strategic extension strengthens our ability to respond to evolving market expectations, while reinforcing a more sustainable and future-oriented approach to development. Ultimately, it allows us to move beyond individual projects and contribute to the broader evolution of urban environments.
