Bogdan Doicescu
Development Manager
Bog'Art

05 July 2021

Bog’Art is a group of companies providing integrated building services in Romania, with activity in real estate development, architectural design, construction, project and building management. 

You are directly linked to Bog'Art, the company bearing your name and growing with you ever since you were born. How does the evolution of the real estate market in Bucharest look like through your eyes?

During the last five years, the city's landscape was transformed through various office projects and business hubs developed by investors. 10-15 years ago, skyscrapers were a rare sight, but nowadays they have become a normal piece of the urban puzzle. This evolution is directly linked to better infrastructure, new metro stations, solid investment plans and better predictability. In the past, when 5 or so buildings were developed in the span of 2 years, it was considered a "peak", but nowadays this is a constant pattern, thanks to the growing investment potential available in Romania.

About 50% of your projects are in the office sector, but you also have expertise in other real estate segments. Did the pandemic influence your strategy in any way?

The pandemic only accelerated already existing trends and it's true that we don't build only offices but residential, hotels, retail, industrial as well as public works comprising hospitals, sports facilities, cultural and educational centers, military bases, as well as airports and other infrastructure works. We aim to have a diversified portfolio, beyond the traditional real estate asset classes covering public projects like Brasov International Airport and the refurbishment of the monument building Baneasa Airport that we're working on at the moment. The projects in our construction and development pipeline come as a response to the market's needs and direct investments by private or public institutions and we are capable of building just about anything of a certain volume, subject to specific conditions including the project owner’s credentials, financing, physical location amongst many other parameters; generally we are selective but open to build where there is demand.

You mentioned the pandemic only accelerated the rhythm of change - what are the challenges but also the benefits you drew from this period?

Our business is pro-cyclical and service oriented by nature, therefore must be well calibrated to the general macroeconomic trends. In summary, the momentum carried well into the pandemic and during lockdown many of our sites continued largely unaffected and even managed to get ahead of schedule with greater on-site productivity mainly due to readily available workforce, which was an issue in the past. However, the lagging effect of investment cycles and unexpected surge in commodity prices is definitely a challenge on the construction industry because a half-year ‘wait-and-see’ period weighs heavily when it comes to re-starting a 2-year long average construction timeframe. This year is going to be unpredictable in pricing and decisions on starting new builds due to the postponed decision-making from 2020 combined with massive capital allocated by governments and a flight to real assets by investors, creating a faster-than expected revival of activity which puts high pressure on prices in a period where there is still uncertainty and adjustment in business plans for certain asset classes in the real estate market.

Taking into consideration all the aspects you mentioned, why is Romania's real estate market a good fit for a company like Bog'Art? And what are its challenges?

Bog’Art has the scale and notoriety comparable to that of a multinational company present in Romania, but we operate with a more nimble and down-to-earth family business approach. More importantly, we have achieved as much as possible an integrated platform to cover the entire real estate value chain, allowing us to go from empty land to create a final product and even manage the building throughout the entire lifecycle. This unique framework gives us very distinctive competitive advantages over other international companies, new players and smaller local companies. Our extensive experience and local know-how are earned in time and not easily accessible in a foreign market; this is one of the main reasons Bog’Art maintains its privileged position in the Romanian market.

In terms of challenges - there are specifics of the local market that need to be tackled: notice terms for permitting, interaction with public authorities, knowing how to contest auction results for public acquisitions, up-to-date prices from subcontractors, mitigation of risks we have experienced in the past amongst many other factors that can impact the real estate business. To put it simple: knowing the lay of the land is pivotal. For someone who is not accustomed to delays, the permitting process might seem completely unpredictable for example, but we strive to mitigate this problem through diligent planning and constant adaptation to immediate circumstance, keeping our feet on the ground so to say.

Talking about planning and looking towards the next two-three years - what are the main priorities for Bog'Art?

Going back to what I mentioned before, diversifying our portfolio is definitely one of the most important plans. We'd like to bring balance between projects (residential, industrial, retail and offices) and give equal importance to all of them, not only to the landmark high-rises we are most well-known for. Furthermore, we're looking to focus more on adding significantly more of our own real estate development projects - from buying the plot of land to managing the final building. We intend to offer an integrated solution that covers the entire life cycle of the building through the group of Bog’Art companies. 

Do you have a final message about the Romanian real estate market?

At a macro level, investors can take advantage of all the major benefits found here: economic growth, political context, local assets; but the state of things shows that real success is mainly achievable through collaboration with a local coordinator, entrepreneur or developer. Partnering with a strong local player is customary in many emerging economies and Romania's real estate market demands direct involvement due specifically to these particularities. 

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