Speedwell is a real estate developer that specializes in mixed-use residential office and retail projects. They put their mark on state-of-the-art buildings like MIRO Office, The Ivy Residential and Record Park, etc.
As co-founders of Speedwell, could you please walk us through the context that led up to the creation of the company and its establishment in Romania?
D.B.: I always had a taste for expat life and arrived for a short-term assignment in Romania in 2006 where, coincidentally, Jan was the architect. 15 Years later we are still here. Jan and I mentally created Speedwell in Moscow while working on a project with serious hick-ups that we ultimately overtook and turned into a success showing our joint willpower.
We chose Romania to set-up Speedwell for its long-term growth potential and more secure political environment (compared to Russia), but also because of the Latin-oriented (out-of-the-box thinking) highly skilled workforce. Here the real estate market is much less leveraged and hence healthier and more stable than in Belgium (my homeland) and for the next 10-15 years at least Romania is a safe-haven for investors.
J.D.: On my side, I started 25 years ago with retail projects in Eastern Europe, in a booming market and soon after I made my way to Romania. As an architect and urbanist, I felt that the challenges Eastern European cities were facing in the next coming years were immense. Capitals and secondary cities are working like magnets and attract people looking for better education, better wages and consequently a better and more enjoyable lifestyle. This is true not only for Eastern European cities but for all the cities all over the world, but we noticed a very specific problem in Eastern European urban environments.
The modernists had a “tabula rasa” attitude and wanted to recreate new cities with a clear division of functions. Work, leisure, administration and services were split and planned in different parts of a new urban vision that was not taking into consideration the history and natural growth of a city. The consequence of this action was that there was a sudden and huge need for new residential developments. Speed was important and the quality was less or even not important. A lot of these developments that were build 60 years ago are still in use today.
If you mix this with the already huge challenges of growing cities like ecology, traffic, public transport and greenery then you can understand the need and demand for qualitative developments.
A qualitative urban environment is an environment that mixes functions and creates communities while respecting the history and the urban grid. Have the courage to develop the functions that are missing and try to bind these functions in a 10-15min walk from where people live. Try to connect to existing and future public transport networks so we can finally put the people above the car.
You describe yourselves as "atypical developers", what sets you apart from the crowd more specifically?
D.B.: When evaluating a plot of land we always create a masterplan design that shows how the finished product will fit into the area. Only when we feel it is going to be a suitable project we move into the financial phase, so we have a backwards method, different from other developers, that first do the math and then start designing. In the end, we build less, but of a much higher quality hence benefitting both the users of our projects as our profitability, and this approach helped us especially during the pandemic. This mindset is starting to spread throughout the market and many of our colleagues are embracing it.
You work in various sectors: residential, office and retail - how do each of them contribute to your wider portfolio?
D.B.: The goal is to have a mix, but from a financial point of view the foundation is definitely the residential sector (60-70% of the portfolio) because the product is the least dependent on macro-economic factors (yields) in the long-term, given that Romania is a market of primary buyers (buying to live, not to invest). We do concentrate our attention on projects with functions that add to the existing mix, but always keep a safe foundation based on residential buildings.
Interestingly, your work in Romania expands well beyond the capital city. How come you chose regional markets and how does business compare between the two options?
D.B.: We didn't actually conduct any in-depth studies, but acted on our instincts and when we identified a good plot of land, we simply went for it - in Cluj-Napoca, Timisoara or wherever it was located. Since in Romania regional cities are smaller than in Poland, for example, liquidity for commercial projects remains a point of attention, but if you develop a good product you can always lease and sell it at a good price.
Bucharest has an eclectic mix of old and new buildings, what was your first impression about the urban landscape you found here? And what would you say are some notable changes you've witnessed Romania going through in terms of architecture?
J.D.: Bucharest used to be an amazing city during interwar years, and after WW2 everything was started anew. But Bucharest is a very complex city to understand as planner, you have the historical city mixed with the modernist communist vision and on top of that there is another grid started by Ceaușescu, so you can say my first impressions were quite chaotic. Around 2000 a lot of people started to develop in function of a land opportunity and not because there was a need for such a development, and if that was successful then developments of the same functions started to pop up around it creating a business district, a sleep city or a commercial region. The downturn is we all needed a car to travel to these separated districts. Traffic was and still is hell in Bucharest and is one of the main pain points to be addressed. But I stay a believer in the fact that out of chaos you can create beauty.
There are highly educated and competent architects here and people are starting to show a sheer interest in architecture. What is becoming apparent lately is that clients are starting to appreciate projects with high aesthetic value, with lush green spaces and relaxation zones - in other words: mixed-use projects. Apartments on the ground floor that were difficult to sell pre-Covid, are now the first to go, because people found out how nice it is to have gardens in front of their balconies.
You speak highly about the real estate market in Romania, but what would be some of the challenges you came across here?
D.B.: A problem that can be found everywhere in Europe is related to building permits and the situation in Romania is no different. The lack of having a sparring partner within the public authorities is our main frustration. Furthermore, since banks don’t finance over 60% of the project cost, much more equity is needed compared to Western Europe where also land can be financed. This keeps pressure on our returns but creates opportunities for larger plots since there is less competition with sufficient financial means.
J.D.: Traffic and relationship with authorities would be some other challenges that we had to navigate while developing projects in Romania. You can’t stop an expanding city, there are no pause buttons available in urban masterplanning and I am afraid a lot of people do not realize the speed and the ferocity in which cities are evolving. Authorities have to keep up with this revolution by increasing efficiency and professionalism while maintaining the quality standards necessary for urban living. We have high hopes that one day we can also offer our experience and know how to local authorities.
Sustainability is a big trend nowadays, what motivates you to pursue this direction and how do you see it reflecting in the local market?
D.B.: Sustainability is more than marketing for us, because we seek to invest only in projects that bring quality of life, adding measures of sustainability that are actually useful to the users. In residential, it is still challenging to implement these measures because people are not yet prepared to pay for them even though they are highly interested in using all the facilities that come as a result. On the other hand, offices are following international standards because they cater to multinational companies, so it's common practice to develop sustainable projects in that sector.
You are rounding up five successful years in Romania, how does the future look like, what are your priorities for the next two-three years?
D.B.: Real estate is a domain where you continually plan and expand so in three years' time we hope to reap what we sow today. The focus for the next few years is to secure good lands for future developments and double our current portfolio.
J.D.: The base of how we handle projects will stay the same, but we'll definitely treat situations with more flexibility, having learnt this from the pandemic. Consolidating our team is also one of the main goals because we want to double our footprint in the next three years.
Do you have a final message about the Romanian real estate market based on your experience here?
D.B.: “Unknown is Unloved” applies to Romania. Many investors and bankers not familiar with the market often classify it as risky and stay away, without even looking deeper if there is an objective reason for the “risk” perception. Our MIRO office project, for instance, demonstrates that the market offers a Western-grade A-class office project with Triple-A tenants such as KPMG at much higher yields than Western or even other Eastern-European capitals. Therefore investors get a prime asset with the best tenants at an unbeatable price. Overlooking the Romanian market is therefore no less than a professional error if you’re an (institutional) investor.
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