Andrei Diaconescu, One United Properties: ESG is the driver for increasing company value and building a strong city brand for Bucharest
One United Properties, the leading real estate developer in Bucharest, has centered its strategy for the following years on building green and healthy communities, revitalizing abandoned areas in the city and restoring historical landmarks, says cofounder and co-CEO Andrei Diaconescu. The company follows several key concepts in its developments: responsible production, urban regeneration, infrastructure and mobility, innovative and clean energy solutions.
The current context, where the final consumers are becoming more interested in the safety and sustainability of developments, will continue to push up the demand for quality, energy-efficient buildings, believes Andrei Diaconescu.
“Our objective is to continue to build in a responsible manner and generate new landmarks on the city map, while integrating the latest solutions in terms of construction, energy efficiency and design,” he says.
Urban regeneration projects play an important role in One United’s strategy as does the restoration of historical landmarks in Bucharest, such as the Braikoff House (One Athénée) and the former Ford factory in Floreasca (One Gallery).
“We see urban regeneration both in terms of revitalizing abandoned areas in the city and transforming them into new and lively communities, and in terms of preserving the cultural heritage of the city by investments in restoration,” Andrei Diaconescu explains.
“This is how we look at real estate and with such principles in action we believe Bucharest can benefit from responsible urban development. We believe that in our case, ESG is not only the driver for increasing the overall value of the company, but also contributing to building a strong city brand for Bucharest,” he adds.
In the interview below, Andrei Diaconescu, cofounder and CO-CEO of One United Properties talks about:
- One United’s sustainability strategy
- The company’s focus on urban regeneration projects
- The restoration of historical landmarks in Bucharest
- The importance of mixed-use projects in ONE’s long-term strategy
- The services included in the company’s multifunctional developments
- Innovative solutions used to make the developments more sustainable and cost-effective
- ONE’s financial results for 2022 and first quarter of 2023
As a leading real estate developer in Romania, what is your objective for the upcoming years, in a time when all businesses are meant to be both profitable and sustainable?
Andrei Diaconescu: One United Properties’ purpose is to improve existing and to build new communities, by developing quality, energy-efficient buildings, as well as to generate long-term value growth for the shareholders. We have pioneered the mixed-use development concept in Romania, being the most important player in this segment on the local market. Our objective is to continue to build in a responsible manner and generate new landmarks on the city map, while integrating the latest solutions in terms of construction, energy efficiency and design.
Our company is respecting and being considerate for Bucharest's urban regeneration needs and with state-of-the-art ESG standards always in mind. We estimate that in the current context, where the safety and sustainability of developments finally grow in importance for the end consumers, the demand for living in the communities we create will continue to accelerate. All our residential developments are Green Certified by Romanian Green Building Council, and all office developments are WELL Health and Safety and LEED Certified (received or ongoing). New developments will target LEED Zero Carbon.
Our sustainability strategy is focused on building green and healthy communities and we do that with several key concepts in mind: responsible production, urban regeneration, infrastructure and mobility, innovative and clean energy solutions. We have also established the first ESG Committee to the Board of Directors of a Romanian blue chip, appointed in March 2022 to drive the sustainability agenda, and we are a member of UN Global Compact as of December 2021.
In terms of business performance, we posted a consolidated turnover of EUR 235.4 million in 2022, a 4% increase compared to 2021, and ended the year with a strong cash position of EUR 114.6 million, higher by 12% compared to the beginning of the year, due to capital increase contribution, which brought EUR 51.5 million in Q3 2022 and despite continuous investments and dividend pay-outs of EUR 15.9 million in 2022.
Furthermore, we had a remarkably strong start to the year 2023, marked by one of the best quarters in our company's history in terms of apartment sales and pre-sales. One United Properties posted a consolidated turnover of EUR 89.3 million in Q1 2023, a 27% increase compared to Q1 2022, while the net profit amounted to EUR 30.8 million, an increase of 120% compared to Q1 2022. Our exceptional performance in Q1 2023 is a testament to our unwavering commitment to delivering high-quality properties that meet the needs and aspirations of our customers. We take great pride in our ability to create communities that resonate with a wide range of buyers and tenants.
You have repeatedly stated that one of your major purposes is urban regeneration. How do you see this happening in Bucharest?
Andrei Diaconescu: Urban regeneration is part of our company’s DNA, and our developments bring innovation from a social and environmental point of view. We see urban regeneration both in terms of revitalizing abandoned areas in the city and transforming them into new and lively communities, and in terms of preserving the cultural heritage of the city by investments in restoration. As a developer we feel responsible for the areas we build in, for the local communities. Developments such as One Herăstrău Towers or One Herăstrău Park were built on the site of abandoned structures, thus revitalizing the entire neighbourhoods, and bringing advantages to all the residents. Large-scale developments such as One Cotroceni Park and the upcoming One Cotroceni Towers rebuild abandoned industrial platforms and transform them into new communities, offering people quick access to various services, under the concept of the "15-minute city". Our landmark development One Floreasca City is another example of involvement in sustainable urban development: a new community is formed on the premises of a forgotten place, and, at the same time, we contributed to the modernization of the infrastructure in the area and the widening of the road, following an investment of EUR 1 million.
This is how we look at real estate and with such principles in action we believe Bucharest can benefit from responsible urban development. We believe that in our case, ESG is not only the driver for increasing the overall value of the company, but also contributing to building a strong city brand for Bucharest. Therefore, restoration of historical landmarks, as well as creation of modern landmarks such as One Floreasca City, is our priority.
In the past few years you have intensified your investments in restoring historical buildings in Bucharest. Why now? Do you plan to continue this strategy?
Andrei Diaconescu: Being part of the preservation of the local cultural heritage is very important to us. Bucharest has a large number of historical buildings that are in an advanced state of decay, though they are part of our history, of our evolution as a community. Our children deserve to have access to this part of the history, to learn about the past and architecture is one important way to do this. However, such projects require notable investments, so we entered this market when our company had already grown to the point of allowing us to do so. We invested for the first time in a historical monument in 2021, when we acquired the well-known Braikoff House, located near the Romanian Athenaeum. The historic building is currently undergoing a complete renovation and will be known as One Athénée, which will become a mixed-use development, located in the heart of Bucharest. In addition, in March 2022, we acquired the former Ford factory, located within One Floreasca City development, which is currently undergoing restoration and will be transformed into a retail space called One Gallery. More recently, in December 2022, we invested in two other projects that will be renovated: One Downtown, located in the centre of Bucharest, whose final use will be decided later with residential and hotel options currently being considered, and One Plaza Athénée, located on the same street as One Athénée, which will be transformed in a five-star lifestyle hotel.
These initiatives are part of our long-term strategy to be actively involved in the development of Bucharest, in order to give the community concrete benefits related to a contemporary, sustainable lifestyle in the heart of a European capital. We do this not only by developing green buildings, be they residential, office or commercial, but also by getting involved in the protection and restoration of Bucharest's cultural heritage. We have had this vision ever since we started the story of One United Properties as a company, that of changing the face of the city for the better. This is precisely why we are now known for the positive impact we have in the areas and neighbourhoods where we build.
How are things going at One Athénée?
Andrei Diaconescu: We have recently obtained the authorization to start the restoration of the building and we estimate that the whole process will take about one and a half to two years. The process is a complex one as it requires the preservation of certain original elements, while integrating modern ones. The challenges of such a project are different from those of a development built from scratch. For the buildings that are catalogued as historical monuments there are clear rules to preserve the original architecture, certain elements, therefore multiple challenges appear for the team of engineers and architects.
When do you estimate finishing the restoration of the former Ford factory and what are the most important challenges in this project?
Andrei Diaconescu: Currently, restoration works have already begun for this building. The process is a complex one, as the original facades are preserved, the structure is rebuilt, then the facades are attached to the new structure. This is a very common restoration procedure used by specialists around the world to preserve the original appearance of the restored historic building. It is a process by which modern construction materials and techniques are integrated into the original project.
We estimate the completion of the restoration process in the first quarter of 2025. The gross development value (GDV) for this project is EUR 90 million. The biggest challenges are given by the complexity of developing the two basement levels interconnected with the existing parking, while the above-ground construction remains in place.
After the restoration, the building will become One Gallery, a modern space that preserves its historical accents, with commercial and office functions. One Gallery will complement the services offered by One Floreasca City development, so that all residents and tenants, as well as the residents of the neighbourhood, will be able to enjoy an extended range of commercial facilities. The new space will benefit from the latest equipment in terms of installations and mechanics. In addition, the building will have highly performant solar panels installed on the roof, which will allow us to minimize dependence on gas and grid power.
Why are mixed-use developments so important in your long-term strategy?
Andrei Diaconescu: One United Properties has focused on the concept of mixed-use developments, as well as the regeneration and revitalization of urban areas, through iconic developments that are embedded in the urban landscape. Examples of such projects include One Floreasca City, as well as One Cotroceni Park, currently under development. We want to offer customers, tenants, and local communities a safe and healthy environment, which will contribute to the prevention of uncontrolled urban sprawl and the reduction of traffic congestion within the city. By developing mixed-use buildings, One United Properties helps build healthier communities and reduce the neighbourhood’s carbon footprint. By limiting car use and street congestion and promoting walking and cycling, mixed-use communities minimize air pollution and promote energy conservation.
At the same time, they have the advantage of offering a wide range of services right on the premises – office, restaurants, shops, leisure and sport areas, drug stores, coffee shops, pools, schools and many more – which considerably reduces the time spent in traffic to shop, go out for lunch or take your children to school. Cities such as Bucharest need a vertical development that is opposed to the one on the horizontal, which leads to longer commute hours spent in traffic and an increased use of cars. One United Properties' mixed-use developments place residential, recreational, and commercial spaces in close proximity, where residents can walk, bike, or use public transport to travel wherever they need to go – making the shift from cars to people. Through the mixed-use developments of One United Properties, Bucharest gains new public spaces. We want to offer all our customers and local communities a safe and healthy environment, which will contribute to the prevention of uncontrolled urban sprawl and the reduction of traffic congestion within the sectors of Bucharest.
You have mentioned the concept of living in a multifunctional development that can cover up most of the daily needs of the residents. What kind of services do you integrate in your projects?
Andrei Diaconescu: We always aim to make developments with complete social infrastructure, which include green areas, shops and restaurants, roads, sidewalks, urban furniture. Precisely because of this, our land acquisition strategy is always focused on identifying large plots of land where multi-functional urban-scale projects can be designed. We pay special attention to all the services our developments provide to ONE community, and we also offer special benefits in commercial units for our residents and tenants.
Educational units are also an important element we consider for our future developments. We have recently announced a 6 million euros investment in building two schools in Tei and Plumbuita Lakes area in Sector 2 of Bucharest. The first educational unit will be located within One Lake District development, while the second school will be situated between One Lake Club and One High District developments. Each of these schools will include classes from the 1st to the 8th grade, as well as a nursery and kindergarten, and will benefit from sports halls, serving on average 250-300 children. The schools will be managed by authorized educational units. Each new ONE development means a new community that needs tangible benefits, and educational units certainly represent a central element in the daily routine of many families. Through this investment in schools that will serve both One United Properties developments in the area and the local community, we aim to provide necessary solutions for future residents and build connected and sustainable compounds.
All of these facilities located within or near the compounds contribute to creating better-connected cities and reducing traffic, an important aspect for Bucharest, which is already in the top 10 most congested cities in the world. Therefore, we will continue to invest in developing the necessary infrastructure, solutions, and services for the community as a whole.
Energy efficiency has become paramount in the general context marked by inflation, war, climate change and unpredictable markets overall. What solution have you identified?
Andrei Diaconescu: We have a partnership with Veolia România Soluții Integrate (VRSI) to implement the geoexchange systems, which represent innovative energy solutions that will further improve the sustainability parameters of ONE residential developments. We pay particular attention to reducing carbon emissions to minimize climate change, and streamlining the operational activities to ensure that the developed constructions will maintain their qualities years after their completion.
Geoexchange system is among the most energy-efficient solutions, environmentally clean, and cost-effective space conditioning systems available. Geoexchange solution does not emit carbon dioxide, carbon monoxide, or other greenhouse gases that contribute to air pollution. In addition, since the geoexchange systems do not burn significant amounts of fuel such as gas, oil, propane, or coal, they operate at a lower cost and are much cleaner. Consequently, the costs for heating and cooling with geoexchange solutions are lower than traditional solutions and it will be predictable and long-term consumption autonomy.
*This interview was edited by Romania Insider for One United Properties.