Boom-time Bucharest draws Irish developers
Investing in Eastern Europe: Romania is all set for a property boom, Irish style. Last week a clutch of Irish developers were in Bucharest to tell Romanian politicians, developers and financiers about Ireland's experience. Kevin 0'Connorreports
'IT'S VERY simple - land is cheap. That's what's driving the Irish invasion of Romania," says Aidan Joyce. Joyce is an accidental resident who was scouting for a European base seven years ago because the cost of software development was zooming in Ireland. On a whim he took a train from Budapest to Bucharest "not realising it was a 17-hour journey". He came into the city late at night, knowing nobody, and stayed to become a landowner and property dealer.
He compiles parcels of land from among the millions of small strips handed out by the Law of Restitution of 1992, which soughtto compensate Romanians for the Soviet seizures. Many are glad to sell, Joyce contends, because the strips, typically 10sq m, are uneconomic. He adds value by consolidating the small holdings into viable parcels for development and pursues planning permission for residential builds. His investors, many from his native Galway, are buying from him at around €50-€80 per sq m and see a trebling of value with planning.
Another Irishman, northerner Alan McCready, is also established in Romania: he won an international tender to re-make the water system and stayed to become a major developer of residential apartments. "Postbank (Romania's leading investment bank) is our partner and has been supportive during delays, that are common. Gearing for construction investment is fairly recent here, so we have to trust each other - we're learning together."
His company has about €70 million invested in shopping malls, an area that interested Michael Maguire who owns a souvenir shop in Tara, Co Meath. "I'm out here to look at opportunities. I'm a retailer at heart, this is a vast territory to explore."
Tables at the Irish-Romanian Property Conference organised by another Irishman, Sean Hillen, who owns Bucharest Business Week magazine with his wife Columbia, were taken by Romanian financiers and Irish builders. Some were long-term residents, others were there for the day.
Regular commuters are Donegal duo, Brendan Kelly and Danny McMenamin, who have construction interests in regional Romania. They have appointed a Romanian immigrant who lived in Balbriggan for 12 years as local managing director and is now their point-man on the construction of 900 apartments in Baia Mare, in north-west Romania.
The scale of the territory may be judged from the distance of Baia Mare, which is a 10-hour drive from the capital but only four hours from Budapest, the Hungarian capital.
"The people are lovely," says McMenamin, whose business interests brought him here. Brendan Kelly admitted he had missed the Irish boom by about 10 years and wanted to make up for it by investing in a country where it was beginning. And beginning it is, to the extent of a chronic labour shortage.
Much of the conference dialogue was driven by the Irish experience. Romanian investors know they are replicating the Irish boom, as EU grants for roads , rail and bridges effectively subsidised the domestic builders of the Celtic tiger.
Though a cliché to us, this jungle feline - as a brand - is prowling eastern Europe with the ease of a catwalk model, as identifiable as Guinness and Riverdance. How the tiger clawed was the subject of papers from a number of people, including the Irish Ambassador to Romania, Padraic Craddock - who recalled Albert Reynolds's "We have £5 billion in the bag" after a famous round of Brussels negotiations - to David Butler of Enterprise Ireland, who dangled before his hosts the lure of Ireland's low corporate tax rates.
In open-floor dialogues, one Irish builder complained about the gridlock to Bucharest Airport, only to be reminded of Dublin's similar obstacle course for flights.
Conference organiser Sean Hillen felt it was time to bring the Irish experience to his adopted country, where he has prospered for 17 years.
"With huge amounts of EU funding to be sensibly dispensed, Romanians are keen to hear how the Irish coped. What decisions were made by government and why? It seems to me that the Irish used their funding well, investing in education and sanitation and roads as well as construction."
A Romanian civil servant said 60 per cent of their massive EU budget will go to construction. Several builders pointed out to their Romanian partners that EU grants mean developing at a discount, because access roads, sanitation, bridges and landscaping are paid for: in effect a massive funding subsidy from Brussels. "It we had to do that stuff ourselves, it wouldn't make sense and I wouldn't be here," was the reaction of an Antrim builder, citing interminable delays and red tape for planning. As an EU official outlined how she would dispense of €30 billion of grants to a region, he perked up and listed cities on fingers: "That's working out at about €30 million per city - I'm more disposed now to look at Timisoara [in westerm Romania]!"
Coming late to the post-Communist party, Bucharest is enjoying the kind of building boom that is lighting up the former Soviet satellites with billions of inward investment, though its dated ills are glaringly intact.
On a tour of construction sites, Donal Clarke, a chartered engineer pointed out figures working on wooden scaffolding and absence of boots and helmets. "Health and safety has yet to come here," he opined. Clarke was on another mission, having raised funds to donate a defunct Louth council fire engine to a Romanian town in need of one.
Clearly Romania is intent on making up for lost time, its adolescence, so to speak, hijacked by Ceausescu. Now his palace glows at night with the lights of a thousand lamps and with no guilt of carbon footprint. They were floundering in the dark long enough.