To prove its point, Gleeds is negotiating three project management contracts in the capital – a car part manufacturing plant, an office block and a business park.
Why should this former communist state attract interest? Steer believes the country provides a foothold in central Europe for firms that missed out in Poland, Hungary and the Czech Republic. Banks and supermarkets, including Tesco and Marks & Spencer, are understood to be interested in expanding there.
Another attraction for QSs is its excellent profit margins. "We expect profit margins to be higher than in the UK because of the greater risk and lack of competition," says Steer.
This view is echoed by Charles Lewis, international operations director at QS Capita Beard Dove, which is already working in Romania. The firm was project manager on construction of Bucharest's Hilton Hotel. "There is a lot of interest in Romania at the moment," he says. "Austrian, French and American firms are looking for the next growth market." These are mainly office, retail and communications clients. Consultants' fees can be up to 12% higher than in Hungary, Poland or the Czech Republic, he adds.
Don't expect immediate returns
Of course, firms cannot expect to arrive in Romania and immediately start collecting commissions. "You have to remember there is a lot of knowledge and experience to pick up," says Lewis, "it won't happen overnight." What are the risks involved in emerging markets such as Romania? Steer explains: "When you work in a mature market, there is a system. In newly emerging markets, there might not be a fully developed legal structure, for instance, and a lot of things are being tried for the first time."
Obtaining planning permission is also time-consuming. Detailed planning permission needs to be in place much earlier and consultants have to be prepared for one-to-one negotiations. This means project promoters can tell at an early stage whether a plan is likely to be accepted. Project managers may also find they have to persuade Romanian trade contractors to raise standards. Steer says: "International clients look to us to ensure quality control. When we are using local plasterers, they get used to a certain level of finish and have lower expectations."
Romania may be this season's favourite central European market but the much-publicised Polish boom is still in full swing. "For workload, you would have to go a long way to beat Warsaw and other Polish cities," says Michael Davies, managing director of Mace International. "In developing countries, there is a tremendous appetite for inward investment. Each one is trying its best to prove that it has the right characteristics for people to move there."
Poland continues to profit from large amounts of inward investment from the likes of Burger King and McDonald's. Mercedes Benz and Volkswagen are also major players. Foreign companies invested £18.75bn in Poland, mainly in manufacturing, between 1990 and the end of 1998.
Capita Beard Dove has 50 staff in central Europe – in Bratislava, Prague and Warsaw. The firm also wants to recruit up to 10 QSs in the next few months.
Multidisciplinary firm AYH is working as project and cost management consultant on two Warsaw fit-out schemes for Chase Manhattan and Citibank. Citibank is opening its first branch in the country in anticipation of a credit card boom. If business takes off, it plans to open others. AYH believes it is well placed to benefit from any future work for Citibank.
Polish boom expected to continue
AYH director Nigel Maidment believes the Polish boom will continue. "A lot of people are going out there, and there are tremendous opportunities on the retail and leisure side," he says. "There isn't so much competition and [Poland] is still reliant on the expertise of Western consultants."
One drawback of working in former communist countries is that many items have to be imported, such as sliding doors and specialist cladding materials, and the resulting form-filling pushes up costs and lengthens project times.
Russia looked to be a potential boom area until its economy collapsed last year. But Steer is optimistic about Russia's potential and Gleeds still has a presence there. "We have downtuned it," he says. "But we are hanging on in there."
Maidment, however, wrote off Russia some years ago. "We looked at the feasibility of Russia some time ago but we were concerned about sending staff over there for safety reasons." In the European Union, Spain continues to be a hot spot for developments. "Spain is on the top of many people's lists," says Pierre Baillargeon, director of architect HOK International. "UK developers are very active in Spain and a lot of Dutch developers are pursuing projects. Where they go, architects will follow."
Baillargeon says the opening of the Guggenheim Museum in Bilbao has helped spread the Spanish boom beyond Madrid and Barcelona. The Canary Islands, too, are benefiting from a surge of interest. HOK is working on the detailed design for a 450-room, five-star hotel in Tenerife for Norwegian outfit Finca Erques.
But, again, overseas firms cannot expect to reap the benefits of a boom as soon as they arrive. Specialist mechanical and electrical consultant Roberts & Partners opened an office in Madrid five years ago. International managing director Robert Ward admits: "The first three years were very slow, but we are glad we stayed because the American and British developers started up."
Germany and France may be economic giants but neither one is providing many development opportunities. AYH is working on four offices in Germany but Maidment describes the market as flat. "If anything, we are seeing a downturn in Germany," he says. "Our office is looking for work outside Germany, for example in Hungary. A lot of German consultants are looking for work in Poland."
The picture is similar in France, with the exception of US telecommunications group Nortel, which is investing heavily in new offices. Maidment says France has always been a difficult market to penetrate and to maintain a consistent workload in.
Ward says: "We pick up intelligence from large corporate clients and a number have said that there are fewer opportunities in these countries because it is a mature market."
There are opportunities in Europe but firms have to get in early and stick with a country before they can see a return on their investment. Activity in Spain and central Europe has proved this. The markets may be patchy across the continent, but, as Steer concludes: "More and more companies are embracing pan-European presences."
Romania at a glanceCapital: Bucharest Population: 22.6 million Land area: 238 391 m2 Major investors: Austria, France, Israel and UK (increasing) Development control: City councils control development and issue construction authorisation Active companies in Romania: Shell, Hilton International, Unilever, Emcom-Siemens and Enterprise Oil Work style:
- Romanians are used to free-market working practices and often work late and over weekends
- English is widely understood among the professional classes
- Commercial life centres on Bucharest. Weak infrastructure hinders development outside the capital
- It’s not all dingy drinking dens. At night, visiting workers can find sophisticated nightclubs, restaurants and casinos in Bucharest.