Romanian property might have been a good investment several years ago but now, after years of price rises fuelled almost entirely by Western property speculators, it is a classic bubble.

Similar to our current predicament in the UK, this is partly fuelled by the new availability of cheap credit, to the extent that these properties are being bought by Romanians: http://business.scotsman.com/latest.cfm?id=1736372007. This is not sustainable in the current climate.

The fundamentals in Romania will take many years to catch up with the prices being asked of British buyers or the rental returns these buyers are being led to believe they will achieve.

I appreciate the traffic problems in Bucharest (!!incredible.. a different level to anything I have ever seen!!) but I fear the numbers of expensive cars may have something to do with locals spending (wasting?) the money they have taken for their flats/land from Western buyers and/or credit as above. Neither are sustainable.

This is perfectly true.

The last excellent deals in Romania were in 2003. I bought two apartments at 2 km from Casa Poporului for $14000 each (6700 Pounds these days). Now their paper value is about 60000 Euro i.e. more than 42000 Pounds.

At the end of 2003 I bought some land in Cluj-Napoca for 14 E/m^2, I sold it last week for 95 E/m^2.

The point is that the prices in Romania have increased incredibly in the last 4 years and they are far from bargain in 2007. Romania is a classical property bubble.

One has to know very well the country and be visionary in order to find areas with potential and which are cheap in 2007.

I wasn't aware that there was much easy credit in Romania. The HPI in the UK, USA, Ireland and Australia etc have been as a result of cheap credit and lax lending criteria. I didn't think this situation had existed in Romania to the same level.

After 2003 it became easier to get credits. People gather credit garants from their families to get mortgages.

Many people who went abroad after 2002 wanted to buy something in Romania.

After 2006 also foreigners ramped up the prices.

Current prices are way over the top in Romania.

The fact that credit exist in Romania does not mean there is a public debt like in UK or Ireland. In UK or Ireland the public debt is 100% of GDP, while in Romania it's 21.4% of GDP for 2006. So to pretend there is equality between US, UK and Irish real estate markets and Romanian market in term of credits/mortgages it's like saying an elephant is equal in power with a mouse!

More on public debt in Romania: https://www.internationalmonetaryfund.com/e...2006/pn0649.htm

As for the price of properties in Romania, it's lower than Bulgaria, it's lower than Czech Republic, Poland or Hungary, actually it's the lowest price in the EU. The tendency is to rise - naturally, if it would drop it would not worth to invest here in the first place, if it'd stay the same, it would make no difference either in terms of investments.
Of course there are off-plan developers who ask more than it's normally asked on the Romanian market, that's what I call overrate the price. But even so, the price is lower than in the rest of the EU.

this romanian thread is excellent all though you guys seem to have some conflict !

i live in France at the moment and will soon be selling due to divorce.
will have money to invest and want to head to pastures new to buy some land and build my own property.
what is your thought on this i am mid 40s disenchanted with the UK and to a degree with france as property is too expensive and then of course you have the french living here which kind of ruins it !
Of course i would like to meet women to date etc who have some english skills and some interest in brits which the french women plainly dont.
one of the potential downsides to this move would be the standard of food which is superb wether its a restaurant / take away or even a supermarket organic free range chicken for £3.
wine / alcohol doesnt bother me as i rarely touch it.

tell me what to expect - please !


euro

Hi Euro,
I admire your tastes re good living (good food, good wine occasionally, and excellent company)
Romanians make a true obsession about eating. Not everybody affords to eat very well, but in general, eating well means happiness. There are many campaigns on TV re eating healthy (bio food) and people generally prefer this sort of food to the mass produced one. Bought from the supermarket it a bio chicken comes for about 12 RON which means 3.45 EUR, about 2.4 pounds.
Wine in Romania is one of the best in Europe and this year was an excellent year for good wines. The drought helped the production of grapes. It is also a very affordable wine and unfortunately not very much advertised.
The majority of Romanians speak English and women are very beautiful and kind.
Romanians are a Latin nation and that shows both in the temperament and in the way of living.
Of course not everything is la vie en rose in Romania. There is still much poverty and people often try to con you. However if you take your time and deal with professionals, you can't lose.
The prices of properties are still low here. Judging by what you are saying re your dream standard of living, I suggest you not to purchase in Bucharest, but to go for places like Brasov.

Hi do you have an email address please as i have an urgent question - i would like your honest opinion

Why don't you ask DianaM? She is the Romanian property specialist on this site.

I can understand your frustration. I have just recently returned from Romania and wished I had visited 2-3 years ago. Bucharest was expensive and although I liked Brasov as a city I understand what you say about the 'jerk' I met several of them and many had the same story about riches. Unfortunately Brasov looks as if it is going to be the new Bansko and that is bad. I had really wanted to buy there, but the figures just do not add up.

What's the connection between Bansko and Brasov???

Brasov is a medieval city, with lots of history. Bansko is a no-name place.

I just see the markets as similar. The agents are the same as in Bansko and as described by Diana and the normal buy this and it will be worth 50% more. I looked at several dredful developments when I was there. I thought they were very expensive. They were not in nice parts of the city. Some of them were awful yet I had agents telling me how fantastic they were. How much money I would make. The connection between Bansko & Brasov is simple. The property is over priced. The locations are not good. I do not believe they will rent out, if they do it will be for very little. I do not see a resale market. I think it will get worse. These points are the connection between Bansko and Brasov.


As for it being a medieval city, part of it is. The other part is a Communist concrete jungle with little or no appeal.

Knowathingor2 I agree the newest developments in Brasov are crap (sorry, folks, the best word to describe the situation). Developers contacted us and tried to get us into selling that to our clients and we had to turn them down when we saw the offers. I don't see any chance to rent those apartments they are selling.
However everything you buy in the centre or even in the business area you can rent and resell after a while for very good money.
The good developments sold last year when I was telling people how good it is to invest in Brasov, who listened to me then, is not sorry today.
The airport might be another hoax unfortunately, I would very much like to see an airport being built in Brasov, but there's too much hassle and agitation and very little things done, also too much political implication and that is always something wrong in this sort of projects (see more about the subject on http://transylvaniainvestment.phpbbsite.com/index.php)
A more medieval town than Brasov is Sibiu, however the potential of Sibiu is smaller. Capital growth is smaller, rental return is smaller and the town is smaller as well, even if it has an international airport fully operational!
I would not disregard the business area of Brasov - if you visited Brasov you probably know the area where all the banks are. There is money to be made there, as many businesses fled from the constant traffic jams of Bucharest into a more quiet area like Brasov.

Catara is also right here, Brasov will not have the destiny of Bansko. Of course any country has its thick people and probably many Romanians who overworked in Spain will come back to put money in this crap developments. Too bad for them, but it's a result of the mentality: "I don't need a specialist, I can do it myself, I know better"

OK, I perfectly agree with you. Brasov and Bansko are way overpriced.

If you really want to buy in Brasov area, go to Bran-Fundata area and maybe you can still find some cheaper land. The landscape is nice.

As investment, Cluj could be better, there are 3 new areas developing there (Casarom, Tineretului and one I do not remember) .
Cluj is a big university centre. I said could be...

Sorry to disappoint you Catara, I agree Bran-Fundata is nice as landscape, but you have little to no rental potential there. The roads are fairly impossible in winter as the snow can stay on a road for weeks or even months without any competent authority's concern. And prices are way, way too high for what the area actually offers! To this add the fact that Bran is very cold even in the summer.
I did not say properties in Brasov are overpriced, I refered to the off-plans now on sale in Brasov. A clever investor can easily spot value for good price even in the centre of Brasov.

Cluj is good, we have land for sale in the centre there if anyone interested.

Catara, I think you and Dianam are right that it is to expensive. That was my opinion after going there to. What made me nervous was that the properties there were getting beyond the price of the locals and what I found was wages were not high in Brasof so I would need a foreigner to rent and I am not willing to take sucha risk. I also think that what Dianam says is right about centre, but still I have my doubts about rental potential and capital gains. Basically I think it is to late for Brasof as Dianam says we should have been there last year. you have now both made me curious as to Cluj. Is it worth a visit or am I already to late there also? What sort of rental can i get and what cost is a normal 1 bed apartment in a good area.

150 sq. m in the centre of Cluj comes for 200k EUR. The average price per 1 sq. m is around 1200 -1500 EUR. The smaller the apartment, the bigger the price per sq. m.
In the off-plans it can go up to 2000 EUR.

More interesting would be to purchase land in the centre of Cluj and build on it, then sell the flats, but that exceedes the possibilities of a small-medium investor.

Just as in Brasov or even Bucharest the rental revenue is around 5 - 6%.

Everywhere you go in Romania you will discover Romanians are not renters, they tend to own the houses they inhabit. It is a matter of mentality which means it takes a lot of time to change this behavior. Romanians even purchased the flats they inhabit in Spain or Italy (just to give you an indication of how deep this mentality is!

I did not say Brasov is too expensive nowadays, I said it would have been better for you if you bought last year and any hesitation and waiting will make it it less and less interesting for investors to buy properties in Romania, anywhere. I had land in the centre of Brasov for 200 EUR last month and now it's 250 EUR and while my clients were still thinking about it, the price went up and now they complain.
If you compare the price in the centre of Brasov to the price in the centre of Bucharest you will discover the difference is very reasonable. In Brasov, central location it is 1300 - 1500 EUR/1 sq. m while in Bucharest exceedes 2000!
Brasov has another advantage: it is tourist town so you can rent on daily bases as well, which returns even better than letting your flat.

If interested in Cluj, Brasov or even Bucharest, contact me directly and let's talk about the real potential, renting opportunities, etc (diana@transylvaniainvestment.com) we also offer property management solutions (I presume the guys you visited only promissed you big rental returns but took no responsability for their words and did not offer property management after purchase, right?)

You can go to the site

www.edil.ro

Press on Constructii Noi and you have about 283 choices of new apartments in Cluj.

My uncle bought a 1 bedroom apt. about 3 km from the centre in 2006 for 60K Euros.

I am not so sure is a very good investment. You can rent to students but they offer low rents and also can thrash your apartment.

Isn't the real reason that Romania was a communist country until 17years ago and on transition everybody was given their flats for nothing?

Inflation figures showed a suprise rise today in Romania. Expect interest rates to go up sharply and the boom of the past few years come crashing down to earth.

The flats were not given for nothing!!! My parents paid a long time for our apartment in Romania. It is true that the cost was low but the salaries were low too.

The inflation in Romania is driven by the same reasons as the one in UK, the huge spike in food prices. The UK boom will also crash down to earth due to food prices.

I don't know what the reason of this mentality is, figures show Romanians even today prefer to buy their houses rather than rent.
I doubt the boom of last years will disappear, as for the inflation, there have been a few episodes of this sort during each winter time.
One of the reasons for the recent drop of the RON is actually the speculative capitals that made it rise. Bankers expected that and I had this information last spring already.

I guess almost all the people in all countries prefer to buy instead of rent. Exceptions are Germany, Austria and maybe Nordic countries. The only problem in Romania is that 90% of the locals are priced out, whatever means of financing they might try to find.

From 2012 Romania will probably use EURO so it won't make much difference. RON increased like any other currency of emerging countries like Brazil, etc.

I totally agree with you Catara on this one. Flats were actually quite expensive in the communist times, comparing to the wages people received!

Re the crash in the UK, I'd add to your comment the public debt problem in the UK and in Western Europe in general.

Yes it will. And this will be disasterous for inflated 'emerging' property markets. No more speculative UK buyers.

Actually, it'll mean local people might be able to buy some of these new flats being built, both in Romania and in the UK!

For Romania it depends where you buy and what you buy! Anyone venturing on the market without being guided by experts in fiscality and law is taking very much risk.

I wonder if anyone out there can recommend a good solicitor in Romania? I need to take action against an agent (and possibly a solcitor).

Not directly linked to the main points of this thread, but I am currently trying to sell a couple of apartments in Constanta. There is a lot of interest in them but people are struggling to get the finance.

I know of good development land within walking distance of vama veche for sale at 23EUR/ sq.metre, and also prime development land within constanta at 40EUR/ sq.metre. The problem is, nobody can get finance; seems as if everyone is selling and no-one is buying.

When the guy picking me up from the airport was telling me to get into land deals, I knew it was time to sell up.

My wife is Romanian and we follow developments in Romania closely.

As I'm sure you know, a lot of foreign owned banks set up shop in Romania a few years ago and for the first time ordinary Romanians could get access to credit. This is what caused prices to rocket after 2003.

Its interesting to hear that these banks appear to be tightening up now.

I am always interested in whether the high asking prices for Romanian property are ever achieved. You see people asking 150,000-200,000 euros for houses in provincial cities. Do people ever pay this?

How safe is Romania? I have a motorcycle and would like to go there and have a ride round. People keep telling me stories about corrupt police and bandits though.

There are some great roads through some great scenery in Romania. You have to watch out for potholes though and riding at night is not advised due to unlit horses and carts. Late May or September are best times to go as its very hot in high summer. Check out the link below for some more biking in Romania information. I stayed at this place once and can recommend it.

http://www.visionsofromania.co.uk/