He who takes risks...

Alex Hayes ‘Eurobuild CEE’: In spite of its growing economy, many foreign investors regard Romania as one of the riskier markets in the CEE. Is this view justified and what measures are you taking to ameliorate such risks?

Yitzhak Hagag, chairman, Hagag Group Romania is an emerging market and as in any emerging market there is always risk. Nevertheless, risk taking is at the core of the entrepreneurial nature and he who does not risk, does not win. We face these risks by investing in properties that do not devalue and that preserve and even increase their value over time, regardless of how the market changes. No matter where, exclusive properties in country capitals never lose value.

Your recent IPO raised EUR 15 mln. Has all of this money been allocated or can we expect a number of new announcements in the near future? You are not the only Israeli company in Romania, so is there anything special about the country that makes it in any way special for your countrymen.

We are continuing to invest and we have not stopped doing so since entering the Romanian market in 2015. We will be announcing new acquisitions in the near future. Already we have invested time and resources in researching the market and acquiring assets, and we have not compromised in any matter, nor will we do so in the future. In our opinion, Romania offers various opportunities. In the past three years the country has registered constant economic growth and we can observe here a considerable potential for real estate development. Furthermore, Romania is considered to be Europe’s largest “back office”. For example, there are many international companies and various companies from the IT industry that open subsidiaries here or embrace the idea of relocation.

With a total of 17 apartment buildings Pipera Lake is clearly intended to be a rather long-term project. Could you tell me what makes it special? How long will it take to develop? When can we expect the first deliveries?

H Pipera Lake is the largest residential complex that Hagag Development Europe is currently developing in Romania. Rest assured, it is not going to be the grandest of our projects that we plan for Romania. H Pipera Lake is going to be a city within a city – 17 buildings totalling 1,350 residential units is not small. The total investment for the project will rise to EUR 90 mln. The residential complex will be built on a 5.7 ha plot and we will deliver a useable area of 120,000 sqm in three construction phases. Construction work on the first phase of five buildings with 390 apartments is to start this autumn and should be completed in the second half of 2019. The apartments will range in size from 55 sqm to 97 sqm with under-floor heating and top quality finishes as well as large terraces and private gardens for the ground floor apartments.

Your Victoriei project appears to be quite a prestigious undertaking. It is also clearly not a residential development. In what ways do the office and the residential markets differ, and in what ways are they the same?

Our analysis of the real estate market in Bucharest shows a strong recovery after the crisis when it comes to the construction of modern office hubs, and after this the development of offices and residential buildings has followed. The reason seems quite simple: the unemployment rate decreased and those working in the shiny new office hubs have relatively high purchasing power. Athough the economic and political climate is not the most favourable nowadays, we can clearly see an increase in development, and this is a clear consequence of the demand exceeding the supply. We chose to develop H Victoriei 109 not only because we saw this as a challenge to revive an old run-down property, but also because of the cultural heritage of the Calea Victoriei area. Our H Victoriei 109 is a charming mix between the old and the new. Once completed, we will apply for a BREEAM-In-Use certificate with a rating of ‘Very Good’ and it will become a class ‘A’ office building. We plan on restoring the building’s façade to its original appearance, while preserving the architectural features as they were originally designed. The building will enjoy all the conveniences of a modern office centre: premium finishes, natural lighting, improved insulation, charging stations for electric vehicles, bicycles racks, showers, flexible layouts with raised floors.. We are talking about a gba of 7,325 sqm and a gla of 6,000 sqm. All things considered, this project is designed to be the office building diamond of the boulevard and to also provide its tenants with a healthy and harmonious environment in which they can go about their everyday activities. The investment will come to around EUR 8 mln.

A total of 17 apartment buildings are to be built in the H Pipera Lake project

Your Eliade 9 project appears to be somewhat smaller than your Pipera Lake project. Again, when can we expect its completion?

H Eliade 9 Residence is going to represent the contemporary face of modern luxury. The project is being developed on a 0.2 ha plot on M. Eliade Blvd. It will have 35 exclusive apartments and will be delivered in 2020. H Eliade 9 Residence has a prime location and will shine in one of the most prestigious neighbourhoods in Bucharest. The units will range from 2-room apartments of 85 sqm to the 6-room penthouse of 350 sqm. All units will be equipped as smart homes and will be internet-connected with their inhabitants’ mobile devices to control systems, such as the lighting and the heating. ν

Two brothers of Israel

Yitzhak Hagag is the chairman and board controller of Israeli-based Hagag Group He holds a bachelor’s degree in law and administration as well as a master’s degree in law, and has been active in real estate development since 2003, when he and his brother Ido founded the Hagag Group. The company has gone on to become a leading developer of unique projects in some of the most attractive locations throughout Israel. Hagag Development Europe entered the Romanian market in 2015.