After the economic crisis, the evaluation services market has changed significantly, as it has mainly focused on financial reporting assessment. Consequently, there are important changes in the value of the assets. The stockholders and the auditors required more and more accuracy in their financial reports. At the same time, the banks required the revaluation of their collaterals, especially of those that stood behind the loans portfolios. For the evaluation service industry, this generated a higher volume of activity but, on the other side, it also led to a decrease of the fees. Another trend we observed in this period is a significant increase of evaluation for insolvency and company liquidation.
Looking towards the future, given that the evaluators work for investors, the evolution of this industry depends, to a large extent, on the economic recovery. In order to have a positive market development, it is necessary that investors regain their confidence in the economy. Moreover, the banks need to revive their lending activity, and this will not happen until they finish cleaning up their nonperforming loans portfolios. This is a process that started too late and I believe it is necessary to move forward faster. For this to happen, the Romanian National Bank has already suggested a series of steps; moreover, the need of the banks for cash can determine an acceleration of this process. If this happens, than we will see an increase of the lending process, especially for those companies that survived the crisis. The sooner this process takes place and the more transparent it is, banks will consolidate their position on the market and the premises for restarting loans will be set.
The real estate market reached the lowest level since 2008, with a decrease of prices between 50 and 60%. Starting from this point, I believe that, as the assets values are low enough, all the premises are set for them to become attractive for investors again. This decrease is also due to the fact that many assets behind nonperforming loans are being sold by the banks as part of the restructuring process. However, as the economic situation is still not very favourable and given the fact that there is some delay with which the real estate market follows the economic evolution, it is not realistic to expect a positive evolution sooner than 6 to 12 month. Moreover, this will happen only if the European economy improves, as Romania is very connected and dependent on it.
For the residential sector, we notice significant signs that the situation has stabilized. In some big cities - such as Bucharest, Timisoara and Cluj-Napoca - we notice an increase in the value of the residential properties, with a clearer advantage for those properties that are better located and responded to a higher extent to the customers’ requirements.
Which cities will attract more investments in the short and medium term? Generally speaking, in this period of time foreign investments in residential real estate were especially directed towards bigger cities - such as Bucharest, Timisoara or Cluj-Napoca. This happened due to the better infrastructure and the highly qualified workforce they have. Still, looking ahead, given the opportunities, middle cities that have qualified workforce and attractive real estate assets will also became attractive for investors in the medium and long term.