Colliers International has valuated, in the past five years, a total of over 500,000 commercial and residential properties worth 40 billion euro. The most complex and comprehensive appraising process in Colliers International’s portfolio was for BCR Palace from University Square.
Owned by BCR, the historical building located in the heart of Bucharest was finalized in 1906, based on Oscar Maughsch’s architectural plans, and before becoming BCR’s property it was the headquarters of “Generala” Insurance Society.
Today, BCR Palace occupies 4,000 square meters of land, including the former garden of the Sutu Palace, currently the Bucharest Municipality Museum, and has 12,000 useful square meters distributed in two buildings with five levels each, of which one is underground, and an attic on only one of the buildings.
The valuation of the property was carried out in stages throughout a period of four months, which is atypical considering that a classic valuation process for a building, based on ANEVAR standards, generally requires no more than two weeks.
“Such a unique building required specialists with experience and expertise in similar properties, in areas including architecture, valuation of artistical components, engineering and reconstruction cost estimates. Once the team was formed, the next step was collecting all the data about the property’s history, construction and renovation works, measurements and cadastral layouts and structure surveys, all requiring extensive efforts which took several weeks”, explains Raluca Buciuc, Head of Valuation and Hospitality Advisory Services within Colliers International.
The most complex part of BCR’s historical building appraisal was to complete the highest and best use analysis of the property, considering the perspectives of a potential investor: physical possibility of transformation, legal limitations from urbanistic point of view and economic feasibility.
The valuation team worked with two scenarios for the building’s reconversion, either into office spaces or a hotel.
The analysis of the potential income, occupancy and exit value lead to the conclusion that transforming the building into a luxury hotel is more feasible, with final calculations showing that this scenario would be 15% more profitable for an investor comparing with the office scenario.
In order to accommodate an international chain affiliated luxury hotel, a building must offer at least 100 rooms, while BCR Palace could accommodate around 150 rooms.
BCR Palace is not the first historical building valuated by Colliers International. The real estate consultancy company has been involved in the valuation of buildings such as the one now hosting the Hilton Garden Inn hotel in Bucharest’s city center, the old Marmorosch Blank building, which is currently being reconverted in the Autograph by Marriott hotel or Unirea Hotel from Iasi.
All valuations were conducted strictly for determining the economic potential of those buildings.