Real estate in the mountains and on the Black Sea coast of Romania is popular among foreigners.
As told to Metrinfo.Ru by Stanislav Singel, president of the foreign real estate agency Gordon Rock, the first investments were made in the capital and financial center of the country - Bucharest, where the most solvent population lives. After that, active development of ski and Black Sea resorts began. Mortgages in Romania became available relatively recently and played the role of a catalyst for active processes in the real estate market.
Romania, unlike neighboring Bulgaria, was initially oriented toward the wallets of local residents; they actually made most of the transactions, although the share of foreign buyers continues to grow. The expert notes an important advantage – prices increased in proportion to the growth of population income and were not artificially inflated.
What foreigners like
Among foreigners (mostly Germans, Austrians, Italians, English, and recently Ukrainians and Russians), real estate in the mountains and on the Black Sea coast is popular. According to Gordon Rock's forecasts, in 2009 up to 10% of the total number of foreigners purchasing real estate on the Black Sea coast and ski resorts of Romania will be Russians, and together with people from CIS countries and especially Ukraine – more than 20%.
Russians prefer the Black Sea coast (resorts of Mamaia, Constanta, Olimp, Neptun, Eforie, Mangalia). Among foreigners who have shown interest in purchasing real estate at ski resorts (Predeal and Brasov), Russians accounted for about 25%. And finally, 10% of Russians are interested in buying real estate in Bucharest, focusing on investment projects.
Romanian real estate is attractive primarily for its developed infrastructure, construction quality, low building density, and, of course, low prices.
Crisis: prices are falling, but not everywhere
Romania felt the impact of the global crisis with a delay – in November 2008. The number of transactions fell by 30%, there was a correction of prices for commercial and residential real estate in Bucharest. Prices dropped by 3-5%. At the same time, the cost of real estate on the Black Sea coast and at ski resorts did not decrease, but also did not increase.
This is also due to the fact that Romania did not experience a major financial crisis like in Western Europe and America, because the mortgage market is relatively young. Most projects in these regions were announced in early 2006 and are now at a high stage of readiness. In addition, there are ready house designs with a good location by the sea or in the mountains, the cost of which has not changed and remains within €1,200-1,400 per square meter. On the other hand, many sellers are now ready to discuss a more flexible payment schedule and additional benefits such as household appliances, furniture, parking spaces, etc.
Investments in affordable square meters
From an investment point of view, Romania is one of the popular places on the European continent. The cost per square meter here is one of the lowest in Europe, and there are still prerequisites for growth, since prices did not depend on the influx of tourists.
It is worth noting the developed infrastructure of the Black Sea coast and ski resorts, low building density, and mortgage availability. Moreover, Romania is the only EU country where, according to the forecast of the European Central Bank, the economy will grow by 3.9% in 2009. Among Eastern European countries, Romania has the highest chances of joining the eurozone as well.
Bucharest is the most interesting for investment. According to local realtors, the high need of the local population for new modern housing and stable demand will continue for the next three years.
Nina Botnaru, a representative of the Romanian company 'Orangeconstruction', claims that cheap Bucharest housing also does not go unnoticed by Russians and Ukrainians. They have plenty to choose from. A one-bedroom apartment of 53 square meters in a new building in the Bucharest district of Pipera, the completion of which is planned for April this year, costs about €101 thousand. A ready-made one-bedroom apartment of 43 square meters with full finishing will cost €104 thousand.
Approximately the same price for apartments in just-started projects. For example, a two-bedroom apartment (72 square meters) in a building under construction in the town of Otopeni, an elite suburb of Bucharest, is offered for $106 thousand.
However, the lion's share of the housing stock of the Romanian capital consists of panel houses built during the time of Nicolae Ceaușescu, who ruled Romania from 1965 to 1989. The cost of apartments in five-story buildings of this type ranges from €30-70 thousand. Only a few three-bedroom apartments with European-quality renovation cost up to €100 thousand.
The Black Sea coast should be named second in investment attractiveness, according to Stanislav Siegel. First of all, Constanta deserves attention – the largest city of the Romanian Black Sea region with developed infrastructure (banks, schools, universities, port, etc.). Here, on the lake, world-famous Formula 1 races are held annually. Constanta is one of the most popular resorts in Romania. It is connected to the capital by a modern highway, which allows one to reach Bucharest in two and a half hours.
Speaking of Constanta, we should not forget about the adjacent Mamaia. Most of the hotels, clubs, and most advanced discos in Romania are located here. Mamaia is the most cheerful city on the coast. It has a unique location: on one side - a lake, on the other - the Black Sea. The houses and villas of the country's president and the entire business and political elite are also located here. Since Romania is famous for its beautiful lakes, many complexes are designed so that from one window you can see the Black Sea, and from the other - the lake.
The cost of real estate in Mamaia is quite low. For example, an apartment of 40 sq. m in a low-rise residential complex is sold for €46,300. A townhouse of 94 sq. m costs €145,400, and an 87 sq. m apartment on the seventh floor of the 11-story Sara Sea View residential complex is offered for €182,200.
Moreover, in the last three years, the popularity of ski resorts has been growing, especially Brașov, into whose infrastructure millions of euros have been invested by Israeli and Austrian developers. Brașov is located in the central part of Romania – in the south of former Transylvania. Previously, it was only famous for the Black Church – the largest church in the entire area from Vienna to Constantinople, which houses the largest organ in Southeastern Europe.
Now the city is called the Romanian Salzburg. Not only because Brașov is rich in Gothic architecture, but also because it has become a major ski resort. Investments in Brașov are profitable as they generate high rental income. Moreover, nearby lived the famous Vlad Țepeș – the legendary Dracula. This name also attracts tourists.
Tourists prefer to stay not in hotels, where rooms cost €75-100 per night, but in apartments, whose rental will cost €125-200 per week. Therefore, at the moment, apartments in new buildings are being snapped up by future landlords.
Thus, a two-bedroom apartment of 99 sq. m in the Pine Garden residential complex under construction is offered for €156,700, and a three-bedroom apartment of 118 sq. m in the same complex for €185 thousand. Apartments in Avantgarden are somewhat cheaper, but the area is smaller. A one-bedroom apartment of 38 sq. m is sold for €65,700.
Let us summarize. Realtors will say that the impact of the crisis is not so dangerous. However, the buyer must carefully weigh everything, including taking into account the risks associated with the crisis – price collapse, risk of unfinished construction, etc. Nevertheless, the art of a private investor lies precisely in investing in real estate at the moment of maximum depreciation. And it is precisely such opportunities that a price downturn brings, after which a rise is inevitable. And the Romanian market is also attractive because it is initially cheap and promises growth in the future.
Sergei Shumakov.
Metrinfo.Ru