The evolution and challenges for real estate education in the Western Region of Romania

1. The evolution and challenges for real estate education in the Western Region of Romania ERES-EDU Seminar, Wien 4-5 December 2009

2. Introduction • In the last four years, the Romanian economy has entered very fast into international economic market and became, thanks to more permissive policies to investors, a favorite destination of foreign money. The lack of experience in properly using of that large amount of money transformed Romania in 2005 - 2008 periods in a place of very favorable real estate speculations. Properties changed owners very quickly, each relying on a 100% profit over the next transaction. • At the present moment, the effects of the crisis manifest itself in rapid failure of all economic sectors. Most seriously affected is real estate domain, with all its components. Devaluation of real estate assets vary between 20% and 80% especially in the land transactions area. Also, the market dropped because of reducing rents by 25% for commercial streets with over 30% in shopping centers and at least 20% for office rents. ERES-EDU Seminar, Wien 4-5 December 2009 2/14

3. Introduction • The real estate education in Romania and especially in the western region of the country has followed an increasing trend during 2005 to 2008. Starting with the 2009/2010 academic year, the crisis in the real estate market affects the area of education through two significant effects: a stagnation in number of students attracted by the masters of the domain and the decline in the demand for graduates of the real estate profile both in the transactions and in the valuation market. • However, these effects in academic sector could be considered only partially related with economic evolution, the decreasing of the real estate sector being more significant than the demand for educational programs in this area. This situation is due both to the psychological expectations regarding the future economic growth and to the increasing number of persons in Romania that choose to follow postgraduate and life-long learning studies. ERES-EDU Seminar, Wien 4-5 December 2009 3/14

4. The real estate education supply • The Faculty of Economics and Business Administration from West University of Timisoara (WUT) register a relative constant number of students in real estate area despite of unfavorable economic developments. • The mission of the master program “Real Estate Administration and Valuation" was defined to meet the requirements of students, professionals and socio - economic environment for forming the specific skills and competencies in the field of management and valuation of real property. • The missions and skills that accomplish the objectives are based on a suitable training offer at the quality standards required by the national accreditation agencies, by the university (WUT) and by the managerial program (MERP). 4/14 ERES-EDU Seminar, Wien 4-5 December 2009

5. The real estate education supply Accomplishing its mission, the master program will generate the following competencies: - to hold the comprehensive information covering areas of interest of the manager of real estate; . - to develop the capability of recognizing the influences of international real estate market development on the real estate market in Romania; . - to develop the ability to apply accurate and appropriate methods for assessing property, and international valuation standards in the field; . - to hold the practical and useful knowledge about land law, estate advertising, planning and environment or property insurance; . - to develop the skills in planning, organization and control of construction and design processes in architecture and urbanism; . - to develop the capability to evaluate and select the best choice from multiple options for financing real estate projects; . - to hold the basic knowledge on technology construction works. ERES-EDU Seminar, Wien 4-5 December 2009 5/14

6. The real estate education supply • The master program, through the objectives and skills developed, is included in management domain. The curriculum was elaborated so as to contain the deepening of specialization disciplines of management and, also, a series of complementary disciplines. • Thus, the curriculum is correlated with the education plan of the undergraduates of management domain, but also with other masters programs, in the fundamental domain Management, or Finance or Economics as complementary fields. • In assigning credits per unit of study program were used same criteria for all semesters, all years of study and all activities of the program. • The criterion of the work volume required (teaching assisted activities + individual study), considering that one credit point must reflect a workload of 15 to 20 hours in order to ensure a load of 40 h / week. • The credits have not been differentiated in relation to the semester or year of study, the importance of discipline or the difficulty of it. ERES-EDU Seminar, Wien 4-5 December 2009 6/14

7. The real estate education supply Workload average credit points has a value of 18.66 h /1 point ECTS credits. determined as the ratio between the number of hours work (560 hours, including preparation for exams) and total 120 ECTS credits. The minimum of 16.75 h / 1 point ECTS credits is allocated for Technology and Management of Urban Design and Architecture and the maximum 20.25 h / point credit for Taxation and Assurances of Real Estates and Valuation International Settlements. To carry-out Dissertation is allocated an amount of work another 275 hours, spread further throughout the year II stud, determining a value of 18.33 h /1 point ECTS credits In curriculum disciplines are classified into: - Fundamental disciplines - define the core competencies of master students; - Economic & Managerial disciplines - defining the competencies in understanding the nature of micro/macro-economic phenomena; - Specialized disciplines - defining the specific competencies. ERES-EDU Seminar, Wien 4-5 December 2009 7/14

8. The real estate education supply Fundamental disciplines: - Business Management (specific objective: the development of managerial skills); - Strategic Analysis (specific objective: to build capacity to adapt the methodology and tools for strategic positioning to specific competitive contexts); - Organizational Behavior (specific objective: to know the determinants of human behavior in organizations: personality, values, skills, attitudes, motivations, as well as the influence of situational factors: organizational culture, organizational structure, management style). Economic & managerial disciplines: - Land and Environmental Law (specific objectives: developing the capacity to carry out certain legal works in the area of land and real estate advertising); - Investment Strategies and Valuation (specific objective: acquiring the techniques and methods of assessing the investment properties and comparative analysis of strategic portfolio matrices); - Statistical Methods for Valuation (specific objective: to optimize the assessment process using statistical and econometric appropriate tools). ERES-EDU Seminar, Wien 4-5 December 2009 8/14

9. The real estate education supply Specialized disciplines:.- Accounting Standards and Procedures (specific objective: to know the basic concepts of financial accounting tools and procedures for developing and understanding the various types of financial reports); .- Economy of Property Markets (specific objective: understanding the domestic property market, its functioning mechanisms and knowledge coordinates property market in Romania and the European Union); . - Real Estate Valuation and Appraisal Methods and International Valuation Settlements (objectives common to both courses: explanation and interpretation of basic terms used the evaluation and the most recent and necessary adjustments in practice); .- Valuation Report Elaboration (specific objectives: knowledge of assumptions underlying the development of an evaluation report and the steps for completing it); .- Taxation and Assurances of Real Estates (specific objective: keeping the methodological and practical notions of general insurance, with customizing the case to ensure assets); .- Technology and Management of Urban Design and Architecture (specific objective: understanding the concept of design in architecture and urban planning and knowledge of the determining factors in running a project); . - The Construction Processes Technology and Management (specific objective: understanding the construction process and regulations area). ERES-EDU Seminar, Wien 4-5 December 2009 9/14

10. The real estate education supply The table presents an analysis of curriculum structure: Analyzing this structure, we could consider that master program achieve its specialization objectives, allocating more than a half of workload to specialized disciplines (that are actually focused on training management and evaluation skills in real estate). For these disciplines, theoretical support and case studies is provided by the fundamental disciplines specific to the management and development-oriented economic logic, occupying just over one third of the curriculum program. Completed practice activity program, having spent the 8th part of the overall amount of time (except that the workload / 1 credit point is greater in this case). ERES-EDU Seminar, Wien 4-5 December 2009 10/14

11. The demand for the real estate education The demand for graduates of the real estate master programs in Romania can be grouped in two major directions: - the administration/management of real estate properties - the valuation/assessment of real estate properties The first component was less affected by the crisis as real estate management market is significantly below the potential in Romania. This is the component that can bring a recovery in the real estate area, which registered severe falls in 2009 and have negative prospective for 2010. ERES-EDU Seminar, Wien 4-5 December 2009 11/14

12. The demand for the real estate education • A major problem is that those who own real estate have not yet realized how important the economic fall is and keep prices at a level far from reality. The banks didn’t take drastic measures, but probably by the end of this year we will see some movement in this direction. • From the exuberance of the period 2006-2008, funding channels have been cut this year. Thus, even powerful actors were forced to freeze projects in development, whether it was office buildings, shopping centers, logistics and housing estates. So it remained state solution injected money into the market by investing in infrastructure promised. • The most sensitive during this period is the residential sector, whose development remains difficult predictable. Prices have not fallen as much as expected, and a new apartment remains hard to achieve as long as an average price of about 80.000 Euro would be paid from the Romanians' net average salary (less than 400 Euro) in 20 years, without taking into account other expenses. ERES-EDU Seminar, Wien 4-5 December 2009 12/14

13. The demand for the real estate education • Housing market remains a sector still too expensive for Romanians opportunities and market players do not seem very willing to lower prices. • Unlike the residential sector, for the office, in malls and logistics space, claims of the owners were largely adapted to the market realities, and rents fell. • Any kind of investment capital available may be willing to finance brings revenue to the attractive returns. A problem for players in the market and competition is the rule, which is financed by the banking market, providing safety and best interest and thus reduce access to credit companies. • Transactions are unlikely to ever reach the levels from two years ago. The danger has not passed yet, because it depends on the situation outside the country, but most likely in two years, we will reach an equilibrium situation. ERES-EDU Seminar, Wien 4-5 December 2009 13/14

14. Final issues • The educational supply has to adapt to the real estate market demand and conditions. It is necessary to provide additional flexibility for educational programs and potentially more possibilities to gain professional skills. • The academic institutions have to make stronger connections with specialists from the real estate market to ensure the compliance of educational offer with requirements from the practice. • To attract more students and teaching staff from other countries, a mandatory issue is to obtain accreditation of courses from national and international professional associations. This is the best way to achieve the recognition in the European Union. In this regard, is necessary to attract a large volume of national and European funds to support all these activities. ERES-EDU Seminar, Wien 4-5 December 2009 14/14

15. Thank you! ERES-EDU Seminar, Wien 4-5 December 2009