Florian Ionescu, Wednesday, 22 January 2014
This article is part of a series of 8 articles about buying property in Romania. The other articles in the series cover the following topics:
Investment Opportunities throughout Romania
Romania’s real estate potential lies mainly in its tourist locations and city areas and the imbalance between the demand and supply here. This ascent
started with the country’s accession to the European Union back in 2007 which introduced it and its investment potential to foreign investors and was
very sudden, the sales already increasing two-fold within the first four months of 2008. Thus, Romania became one of the main targets of foreign
investors in Eastern Europe.
One of the main sources of insight into Romania’s investment opportunities lies with the International Property Investment Network (IPIN), which
presents interested parties with the best investment opportunities within the Romanian territory and manipulates them so as to meet their investment
needs.
Financial aspects regarding the evolution of the Romanian real estate market
The increasing interest in the Romanian real estate market has led to an increase in the local population of Romania, the success of the Romanian
real
estate market being tightly connected to the unparalleled access to mortgage products and very low interest terms foreign investors benefit from.
Another explanation lies in its very low prices and the very high interest in its prime locations. Of course, the former are also due to the global
economic crisis and therefore are bound to increase as the country’s economy advances. In fact, the economy is already on an ascending curve,
registering an increase by 0.5% quarter-on-quarter and 1.5% year-on-year in the second quarter of 2013. The annual increase is expected to reach 1.6%
after the 0.3% increase in 2012, 2.2% increase in 2011 and the 1.1% and 6.6% drops in 2010 and 2009 respectively.
The selling prices of houses dropped by 3% during the first eight months of 2013, whereas those of apartments dropped by 5.89%, reaching an average
threshold of 910 EUR per square meter. The main cities in Romania have dropped their selling prices as follows:
- the capital, Bucharest, has dropped its selling prices by 6.6% to reach a threshold of 1,054 EUR per square meter
- Brasov by 4.2% to 814 EUR per square meter
- Timisoara by 1.5% to 812 EUR per square meter
- Constanta – the oldest city – by 0.6% to 869 EUR per square meter
- Cluj-Napoca – the city with the second highest population in Romania – by 0.1% to 904 EUR per square meter.
As for the recent history of the Romanian real estate market, the prices reached their peak right before Romania’s accession to the European Union in
2007 and then collapsed as the economic crisis hit Europe. Thus, the house prices dropped by 20.62% in 2009, by another 15.88% in 2010, another 4.07%
in 2011 and, finally, an additional 1.31% in 2012.
Attractive places in Romania
Romania is an ideal destination for those fond of fairytales and vampire or werewolf stories with its medieval castles and even natural factors. The
Bran Castle associated with Count Dracula’s legend is probably the number one attraction for foreigners, but this is just the starting point for the
country’s tourist potential.
Medieval towns defined by different architectural styles and different landmarks are spread all along the Carpathian Mountains, one of the three main
natural factors associated with the country along with the Danube River and the Black Sea. These landmarks include pre-war buildings and numerous
Saxon and Gothic churches, among others, some of them featuring on the UNESCO heritage list. Neoclassical architectural influences can also be found
in some areas, these being associated mainly with the modern lifestyle.
With four distinct seasons, high temperatures in summer and low temperatures from December to March, Romania offers a lot of opportunities to
tourists
thanks to its natural factors. Thus, Valea Prahovei and Poiana Brasov are two of its ideal winter destinations with their numerous skiing slopes
whereas the Black Sea Coast offers quite a few holiday destinations which include Mamaia or Costinesti.
The country is also renowned for its natural beauty, approximately 25% of its surface being covered in forests. The Carpathian Mountains also have a
lot more to offer than just skiing resorts as they are home to an incredible range of fauna and create some remarkable landscapes. As for the Danube
River, it spills into the Black Sea, accounting for a large number of hills, plateaus, fruit orchards, farmlands and vineyards.
Finally, the investment potential of Romania is increased by its numerous power resources which include oil, hydro power, coal, nuclear power and
natural gas.
Main reasons for investing in Romania
So, why invest in Romania? The recent history of the real estate market has revealed quite a few reasons.
Economically speaking, the investment prices have dropped significantly since the country’s accession to the European Union and thus opened the gates
toward property prices and living costs approximately 50% lower than in other European countries. The commercial sector has known quite an ascent
recently, but the international activity has also stirred the interest in the prime city and tourist Romanian destinations, leading to a 7.9% annual
growth of the tourist sector. Also, the mortgage plan created by banks is highly advantageous for foreigners and so is the exchange rate with the
national currency.
As for the natural and cultural factors, the Carpathian Mountains, the Danube River and the Black Sea create a very interesting and beautiful
environment for a variety of tourist destinations. From medieval towns to skiing resorts, foreigners can enjoy a wide range of experiences within the
Romanian territory and come into contact with the well-known hospitability of Romanians.