The elimination of the reduced VAT rate of 5 percent 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 percent sold.
„The impact of the increase in the minimum VAT rate from 5 percent to 9 percent for apartments with a maximum price of EUR 120,000 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 percent 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 percent 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.
