On The Rise

Cluj-Napoca, Romania: A Closer Look

By Yardi Blog Staff on Oct 16, 2014 in News

Cluj-Napoca, the second most populous city in Romania, and the home of Yardi Romania, is an emerging new real estate and technology market, boasting a quirky mix of old and new. Founded in 1213, Cluj-Napoca is a city brimming with history, with its eyes set on the future.

An excellent example of the city’s evolution is Riviera Luxury Residence, a 91-unit luxury condominium project that will be one of a handful of green developments in Transylvania. Currently under development in the city’s hottest residential submarket, the Mărăşti and Gheorgheni neighborhoods, the project (pictured, right) has received Class A energy certification and is seeking a BREEAM Excellent certification as well. The $13.6 million (€10 million) development encompasses a bevy of sustainable features such as the use of energy efficient materials, solar panels, recycling and immediate proximity to mass transit. These will result in annual heating costs below $340 for a three-bedroom, 860-square-foot unit.

“Five years into the economic recovery, the real estate market in Cluj-Napoca has finally started to improve. The first quarter of 2014 has seen important growth in all sectors of the industry,” says Anamaria Burca, managing partner at Coldwell banker Transylvania, the Coldwell Banker brokerage office in Cluj, which holds the exclusive marketing rights to Riviera.

“As one of the strongest markets in Romania, second only to Bucharest, Cluj-Napoca attracts increasing numbers of investors who seek to capitalize on the strong demand for market-rate housing–both condos and rental apartments,” Burca added.

Developed by local developer I&C Transilvania Constructii with Hungary-based general contractors Kész Építő és Szerelő Zrt., local architecture firm ARHIMAR and project manager CS Invest Consulting, the project is expected to complete in September 2014.It will comprise two-, three- and four-bedroom units ranging between 484 and 1,776 square feet, featuring

expansive balconies or private gardens offering panoramic views of the city. Community amenities include a 5,262-square-foot spa featuring a fitness center and indoor swimming pool, professionally landscaped green spaces, children’s playground, 24-hour manned security, key-card and intercom access and onsite caretaker.

Riviera Residence is located 300 feet away from a recently overhauled public park and lake and from one of the biggest commercial centers of the city, Iulius Mall, which houses a grocery hypermarket, a 12-screen theater, a medical clinic, a multitude of local, national and international retailers and a multi-story office component. A second, fully-leased phase of the office component, dubbed Iulius 2, is on the fast-track towards completion about 150 feet away from Riviera Residence. The office high-rise will house the consolidated local offices of Genpact and Office Depot.

Riviera Luxury Residence will also mark the launch of a new product in the local real estate market: the guaranteed rental price. The product entails that condo units bought by investors and furnished according to Coldwell’s standards will be leased to renters by Coldwell at a guaranteed price.

Both renters and condo buyers are expected to be plentiful. “The multifamily market is trying to accommodate an influx of new residents to the area, and construction activity is picking up as well, with a large number of apartment units currently underway,” Burca said, adding that the Cluj market is in an interesting position. “The Great Recession hit locally with a delayed effect. The effect began in 2009, but there were still several residential projects that were completed that year. By the end of 2010 and into 2011, however, the market had come to a complete standstill. Nothing sold, not units completed in private developments, not condos put on the market by owners. Had it not been for the First Home Program (a government-assisted housing initiative that aids young couples in purchasing their first residence), the market would have gone completely under. First Home kept us on life support.”

Things have been looking up recently, however. “The local housing market has increased by almost 20 percent over the past 12 months. As the multifamily market tries to accommodate an influx of new residents to the area, construction activity is picking up as well, with a large number of apartment units currently underway,” Burca said.

Many of the new residents are the city’s former students, whom, upon graduation choose to remain in the city, attracted by the entertainment, cultural and economic environment. According to the 2011 census, Cluj has a stable metro population of over 410,000, which swells by an additional 80,000 during the college year, with the student attending the city’s ten universities.

This young and skilled workforce has been a boon for companies seeking to expand and/or establish operations in Romania. Multinational corporations such as KPMG, Emerson and Genpact have established a presence in the city, while more and more IT and software companies open chapters or expand existing operations.

Yardi, 3Pillar, Softvision and Gameloft are only a few of the IT companies taking advantage of the over 4,000 technology and computer sciences students that graduate in Cluj every year. In fact the need for certain such specializations is so great, that

companies have started recruiting from other urban centers, offering relocation support. Otherwise, “all these companies are forced to poach each other’s employees, which they do”, Bercu said, adding that many times superior office quality and office amenities are used as a lure.

Another major job segment established in Cluj is call center operations, also made possible by the city’s college system. Babeş-Bolyai University, Romania’s largest university has a reputable Faculty of Letters, which offers college degrees in 16 different languages including Norwegian, Japanese, Russian, Finnish and Korean.

Banking is also an important industry of the city. Named the best bank in Romania by Global Finance, Banca Transilvania (Transylvania Bank) is headquartered In Cluj and is a major employer in the city, as is BRD – Groupe Society Generale, which operates a regional center out of the city’s tallest office tower (160 feet).

Green initiatives have also started taking root in the office market as well. Leading these initiatives The Office, a 581,000-square-foot green office project currently under development in the Cluj CBD. Phase one, comprising 204,000 square feet of space, completed in May 2014. Phases two and three are expected to hit the market in 2015 and 2016. The project will be a BREEAM-certified  green building and is being developed by entrepreneur Ovidiu Sandor and the South-African investment fund New Europe Property Investments (NEPI) on the site of a former factory. Tenants for the first phase include Yardi, who will be taking over circa 33,000 square feet, Deloitte and 3Pillar.