Vivenda Block D

The elimination of the reduced VAT rate of 5% from 1 January 2024 will lead to a redesign of the apartment mix in the Stellaris Residencias project, developed by Hercesa Romania near the Steaua stadium in Bucharest, the first building of which has been 50% sold.

”The impact of the increase in the minimum VAT rate from 5% to 9% for apartments with a maximum price of 120,000 euros is already being felt in the residential market and has led us to rethink the apartment mix starting with the second building of the first phase of Stellaris Residencias. In the first building, 75% of the apartments have been designed for a low VAT rate”, said Romeo Ghica, Operations Manager at Hercesa România.

„Developers have been building low-VAT apartments for the past five years because price has been the deciding factor in customers’ purchasing decisions. However, market developments during this period, characterised by price increases, have meant that the reduced VAT rate could only be applied to two-room apartments”, Romeo Ghica added.

Buyers’ preference for two-room apartments in recent years has created a number of disruptions in the residential market, according to Hercesa Romania’s representative. From the point of view of making construction costs more efficient, the smaller the apartments have been in order to fit into the 5% VAT price ceiling, the greater the need for fittings and the smaller the usable area in relation to the built area of the building: more distribution halls are needed, greater difficulty in placing the facade and more expensive parking spaces.

“The increase in the minimum VAT rate from 5% to 9% for apartment purchases has generated a drop in the sales pace in January 2024. In the medium term, however, the impact of this measure will be absorbed by the market and we already have the example of Block L in Vivenda Residencias, a building under construction comprising 80 apartments with prices to which VAT of 19% is applied and where the level of sales has reached 70%,” said Cornel Itu, Sales Director of Hercesa Romania.

Hercesa has been present on the Romanian market since 2004 and has since delivered 1,000 apartments in the Vivenda Residencias project in the Titan area of Bucharest. In 2012, Hercesa Romania reopened the Cișmigiu Hotel, which is still in the company’s portfolio.

Hercesa Romania currently has 1,000 apartments under construction and in preparation in the Stellaris Residencias and Vivenda Residencias projects.

Stellaris Residencias, the second large-scale residential project developed by Hercesa Romania in Bucharest after Vivenda Residencias, targets the middle segment of the residential market and will comprise a total of 4,500 apartments. The first phase of Stellaris Residencias involves an investment of €59 million, will be built in four phases and will comprise 482 apartments. The first residential building in Stellaris Residencias, with a total of 129 apartments, is scheduled for completion at the end of 2024.

At the same time, Hercesa Romania is building in Vivenda Residencias block L, a concept with only two apartments per floor, located next to the Lidl supermarket. Block L is scheduled for completion in September 2024 and comprises 80 apartments with 3 and 4 rooms, with total usable areas ranging from 82 sqm to 115 sqm.

This year, the company will start construction works on Block D, the first stage of the last phase of Vivenda Residencias, which involves an investment of more than €9 million, has a completion date in September 2025 and will comprise 73 apartments out of a total of almost 400 units to be developed in this phase of the project.

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