Martin Dreiseitel
Managing Partner
F&R Worldwide

27 January 2021

F&R Worldwide offers environmental, geotechnical, construction support, and health & safety  services. The company has offices in Romania (HQ), Austria and the United States and serves an international customer base. Their expertize extends beyond real estate, to oil&gas and big infrastructure projects.

Starting off, can you briefly introduce F&R Worldwide's presence in Romania and the setup you have in place here?

We have been doing business here since 2005, just last year we celebrated our 15th anniversary. We are rather unique in the market, because we are an integrated service provider and we deliver services from the moment you decide on a piece of land and the liabilities that come with it, all the way through site investigation, permitting, , construction supervision, commissioning, even until demolition – the full building's life cycle, "cradle-to-cradle", as I like to say.

The overall team currently comprises 70 people, half of whom are core staff - the rest are project based employees, we take them onboard whenever we need them. 

Now that we are going through a global crisis how are things going for you? Was there need to engage many of these project based employees?

Usually people come across one big crisis across their lifetime, but this is the third one for me since I started my business - first the financial crisis, then the oil crisis and now the pandemic. Interestingly enough we grew substantially through each one of them. So we are doing well, we actually hired several people in 2020.

What are some key elements that drove this growth?

 

During difficult times people go back to people they trust, not to the cheapest. I believe this is why our business continued even during the crisis. 

 

This was in fact an interesting exercise in Romania - when we joined the market, we made a decision that we will never compromise on quality or accept bending the rules. We turned down many projects because we wouldn't have been able to deliver at the standards we withheld at the respective price points or because a courtesy expertise was expected.

I wasn't too worried though, I was a firm believer (and time has proven me right) that quality would eventually become a criterion. In many tenders we did not win the first bid round, but we got the job afterwards when the bidder selected just on price failed to deliver. We have now reached a level where even authorities recommend us to clients. 

Speaking specifically about real estate, what makes Romania a good place for your business presently?

Most countries nowadays have an issue with identifying land for development. The smaller the country, the more essential the use of land inside the city area becomes. You do not want to increase the footprint of the city too much or convert too much greenfield into land for construction. 

 

Romania, of all countries in Europe, has the most advantageous ratio of "polluted" land divided by the surface of the country. I am referring here to land that has been used in the past but is currently idle because of environmental issues.

So the reason why I consider Romania interesting is the huge number of such properties. Just look at Bucharest - developers are building on the outskirts and increasing the footprint of the city, but there are so many pieces of land inside the city that are overlooked. 

 

But the ideal scenario is to accelerate brownfield development, and develop those unutilized properties.

There are already a few good examples of projects that are meant to revitalize certain areas of the city...

Indeed, things are moving in the right direction, but there is still so much room for improvement. What holds back progress is a perception that cleaning up brownfields is very costly. Obviously in the case of greenfields remediation costs are not required, which makes it look cheaper at a first glance, but that is not the case.

Take the example of properties developed alongside Bucharest - Pitesti highway. Sure, the land is on the cheaper side, but there is little to no infrastructure, electricity, gas etc. Such costs are often overlooked. Secondly consider how much time it takes for a person working there to get home - there isn't even public transportation available. When you put everything together brownfields inside the city tend to be the better choice.

 

Other countries have clever systems in place to make brownfield development attractive - some make the land available for free, with an obligation to finalize development in a certain timeframe, others have temporary tax exemptions to compensate for the costs of site cleanup etc.

The advantage for the city in the long run is that the tax base increases. And so does the overall quality of the city, which serves everyone's interest. 

 

In your experience,  which phases of the real estate development process tend to raise the greatest difficulties in Romania? 

Most projects are delayed or come to a stop because of misconceptions related to permitting. In other words, the time required to obtain the permits is underestimated. There are also promises from certain providers on the market that they can do it in a short timeframe but it doesn't really work, unless you use a "creative" approach. We go by the rules, we know the law in and out, challenge traditional approaches and provide unconventional solutions.

My first recommendation to anybody that thinks about investing in real estate in Romania is to take a second look at the implementation schedule and check how much time they accounted for permitting - I can tell if the project will work or not just by looking at the schedule for permitting. In most cases the required time for permitting is underestimated.

What other countries in the region stand out in terms of opportunities?

The Balkans in general, and Albania in particular is going through a huge development phase. Still, certain know how has not yet been developed – especially related to brownfield development.

It used to be the case for Romania as well, when I initially came here I had to accept that things were done a certain way. If I wanted to make a difference I simply had to make my project better instead of complaining about the situation. 

The one thing I could not get on board with is this instinct of "bending the law" which is not yet fully gone. Take the example of the incident at Colectiv - it had an immediate impact immediately afterwards, but it's been 5 years now and still many locations operate without the required authorizations.

What is in your view the solution for that?

Things can only change top down. For instance, Romania is one of the best countries in the world in terms of geotechnical standards - I've rarely seen countries that have such strict, detailed standards set forth. Still, they are not fully applied. So on paper everything looks great, in detail not so much. Top down means we need to check whether the standards are truly, properly implemented.

Looking at the coming 2-3 years, what are you trying to achieve with priority?

Over the last two years we positioned  FRW focusing on our integrated services approach. We realized that FRW  was known for single services, but now our clients appreciate the fact that we serve as a “one-stop-shop” over the project life cycle. We are doing much more than providing single services – we add value by taking an integrated approach. 

My vision is that we support safe construction, so that when we work on a project everybody can be sure it is stable, safe, and there is no environmental impact. This is why we are here and how we make a difference - FRW stands for “built on solid ground”.

 

 

 

  

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