“The profits of developers have dropped in recent years due to higher land prices. But now those prices have peaked (...) The current profit margin for developers is 20-25 percent,” according to consultancy company Colliers International’s Managing Partner, Bogdan Georgescu.
However, the CEO of development company Globe Trade Center (GTC), Shimon Galon, disagrees: “The times when developers enjoyed a large profit margin are gone. I think land prices will remain steady or even drop, while housing prices will level off.” He added that competition prevents developers from increasing prices.
AFI Europe developer’s CEO, Reuven Havar, also says profits will drop, because of very high land prices. “When I came to Romania, I was expecting a 13-14 percent yield, but now it has dropped to 11-12 percent,” he said.
The representative for Romania of Spanish-based GEA-Prasa, Dorinel Cazacu, said several other factors are impacting on profits, such as lack of market stability, and of a normal upward trend in salaries in the construction and infrastructure segments. Higher profits are only registered on speculative markets, he added.
