Sema Parc is one of three major deals closed by River Invest last year. The Romanian company is also involved in building new roads and highways in the country.

Mixed-use development Sema Parc is expected to generate strong rental demand for Romanian developers River Invest and their Austrian partners

ONE of the largest integrated urban development projects in Bucharest announced to date is the mixed-use Sema Parc scheme, launched by the Romanian company River Invest. Located close to downtown Bucharest, on the right bank of the Dambovita River in the sixth district, this massive development will comprise a total built area of 659,000 square meters, not including the underground space. The cost of the scheme is estimated at €700 million ($930.5 million).

For financing, Ion Radulea, Chairman of River Invest, says his company has partnered with an Austrian investor, to which it has already sold the office buildings. “The fact that we are owners of the land means we are guaranteed part of the equity,” he remarks, adding that other investors have voiced interest as well.

The huge project will be developed in two phases. Half of the office buildings, the entire residential project and the commercial area are expected to be ready by 2010; the remaining office space will come on-line by 2015.

ION RADULEA Chairman of River Invest

Mr. Radulea, Chairman of River Invest, notes, “The real estate sector is what Romania is best known for because the potential continues to be remarkable. Professionalism is something you can rely on when it comes to this sector. We are no longer at the experimental stage, and we no longer produce projects of poor quality.”

The brownfield site of the Sema development was the location of a former industrial facility and is located alongside the Dambovita River, opposite Bucharest’s biggest student campus. Mr. Radulea says the decision to shift from industrial to mixed use did not come overnight, but was rather a long time in coming.

“Ours is an integrated project. While we have to cover all stages at a relatively fast pace, we do not want to create an imbalance in the market by offering things like too much office space, et cetera. We chose the middle path by offering not only residential but also office and commercial space. It will all be ready by 2009.

“The transition to mixed use also gave us the opportunity to be creative as well as effective in our designs,” he adds. “People can enjoy a scenic view of the park while taking a stroll from the office towards the mall.”

The company closed three major deals in 2006, one of which is Sema Parc. Mr. Radulea points out that owing to Romania’s need to come up to par with the European Union in terms of infrastructure development, the company is also involved in building new roads and highways.

The construction of Sema Parc will be carried out under a three-pronged development plan: a business park housing office buildings and stretching over 363,000 sqm; a commercial area that will include a mall and a hypermarket, encompassing 170,000 sqm; and a residential area covering more than 122,000 sqm.

The residential area will consist of more than 1,200 apartments with surface areas ranging between 80 and 260 sqm. The blocks of flats, which will be four to five stories high, will have a total constructed surface of 363,950 sqm. Facilities will include a kindergarten, medical and fitness centers and playgrounds. There will also be underground parking available.

For the commercial area, the company is angling to bring in international fashion designers in addition to hosting cultural, sporting, art, science and media activities. The commercial area will also include a four-star, 22-level hotel with 18,000 sqm. The first two floors will house shops, restaurants and conference centers.

In the office building development, the Austrian-based real estate investment fund Europolis has acquired two office buildings for €90 million. The deal was signed in 2006, and the two buildings are scheduled for completion at the end of 2007 and the first half of 2008.

Mr. Radulea says that the partnership was a result of the company’s promotional efforts. “The project has been made public for about two years. We wanted to have a more international scope so we announced our plans in fairs, seminars and conferences. We have a company here that makes investments in the Romanian market, and it is from this that River Invest started the partnership with the Austrian investor.”

He adds that given the size of the project, various investors, banks and investment funds have expressed keen interest in taking part in the development.

Speaking about the origins of the project, the company chairman notes, “It was not complicated. Real estate development was the best use for the property that we owned (the industrial facility, Semanato area). This was based on the collective decisions of renowned consultants.”

“Professionalism is something you can rely on. Romania no longer produces projects of poor quality”

He adds, “River Invest developed a good relationship with these consultants and they became our best advisors. Working with a number of experts led to remarkable results. We pooled our concepts and resources, and came up with the Sema Parc project. This was just as well, as Bucharest badly needed a development like Sema Parc because it is full of industrial areas. We believe that these areas should be converted into real estate developments for the benefit of the Romanian people.”

With regard to the company’s shareholding structure, River Invest is in charge of the development of the entire project. “Various stages of the project go into special purpose vehicles (SPVs),” says Mr. Radulea. “River Invest is, in turn, in charge of the development of the SPVs, and makes a selection of the best contracts in terms of designers, project managers, et cetera.”

For the future, Mr. Radulea says the main goal is for River Invest to be the number one developer of brownfield sites and one of the top five developers in the Romanian market. The company is also likely to expand to become a large-scale Southeastern European developer. However, he notes that “at this point it is impossible to find projects as impressive as Sema Parc in Romania.”