Michael Lloyd, managing partner of Baneasa real estate project in northern Bucharest, which is expected to receive investments worth around 1.8bn euros, believes that in light of the real estate market's current climate (which is witnessing a chaotic development) Baneasa shareholders would not begin a project of this size.

According to Lloyd, over the past year the domestic real estate market has seen land prices shoot up, a situation difficult to anticipate several years ago.

"We estimated land prices would drop in July 2007 due to the shrinking number of speculative projects, but we can't confirm this until the end of this year.

I believe that under the circumstances, we wouldn't have started such a big project as Baneasa," explains Lloyd, who also believes several low quality projects have been carried out in recent years.

As a result, the construction of office space at Baneasa will be dictated by rental conditions, while the residential area will be developed as fast as sales go.

"From next year, Baneasa project will be developed depending on market conditions, as we have already finalised a large part of infrastructure investments. For instance, if the housing market shrinks in the near future, we can halt the project's development for a certain period of time," states Lloyd.

Baneasa project's shareholders, Gabriel Puiu Popoviciu, Radu Dimofte, as well as the University of Agricultural Sciences and Veterinary Medicine, have so far invested 200m euros in the real estate project, a value that excludes infrastructure investments.

"So far, we have contracted loans worth 120m euros from banks and have already paid back part of them. We will contract further bank loans for the project, however we are not considering stock market floatation to secure financing," says the official of Baneasa Investments, the project's developer, which is the biggest of its type in Romania.

According to company estimates, Baneasa Investments will step into the black next year, aided by the trend of the overall real estate market, the constructions segment and rising rental prices.

When the project is completed, company representatives expect net income to revolve around 400 million euros. According to Lloyd, the company does not have a master plan that clearly outlines a future plan for the capital city.

Baneasa real estate project will eventually cover 221 hectares (owned by the University of Agricultural Sciences and Veterinary Medicine), with 50 hectares of green space, and will increase Bucharest's size by 1%.