More than a year has passed since the day Romania was admitted to the European Union. The euphoria that gripped the investors, who counted on the same rapid market growth as in Bulgaria, was replaced by more restrained, but still quite optimistic estimates: the market remains attractive and its growth is stable. According to forecasts of analysts of the World Bank, in 2008 in 10 countries - newcomers to the European Union there will be a decline in economic growth. The recession will not affect only Bulgaria and Romania, where the trends of the end of 2007 will continue.It is no secret that Romania has a long way to go to reach the economic level of its EU partners - however, this is another reason to invest in local real estate in very near future. According to Romanian Properties employee Damien Thierry, the 20% increase in property prices that was observed in the previous two years will be replaced by 10-15% (and more for some projects) growth, which will continue over the next three years. At the same time, despite the changes that have taken place, prices for Romanian real estate are still significantly lower than the European average. There are never too many apartments The capital of the country, Bucharest, stands out among the many Romanian cities as the most attractive for foreign real estate investors. The second most popular is the metropolis of Cluj-Napoca, located in the north-west of the country, which houses the offices of international companies. Other rapidly growing cities, such as Brasov, and resort areas on the Black Sea coast, in particular in Kostinesti, a resort town that traditionally remains in the shadow of its Bulgarian neighbors, has also seen a sharp increase in the amount of investment. The excitement that has arisen in the real estate market of Bucharest has been going on for more than one year, and urban projects under construction are in great demand. Ranking first in the national economy, the Romanian capital is experiencing a period of increased demand for real estate from tenants, which stimulates the purchase of housing with the aim of its subsequent lease. The greatest interest among buyers is caused by apartments in new buildings at a cost of 1160-1730 euros per 1 sq. M. m - according to Damien Thierry, such objects will provide an annual income of 6-8% of their value. According to experts of the Arc Property company, the deficit of housing in the country reaches 1 million units, a third of which is in Bucharest. It is obvious that the demand for new buildings will continue in the coming years. The company recommends the Blue Tower project, located on the lakeside in the northeastern part of the city and consisting of 156 apartments at a price of 80,000 euros. Completion of the Blue Tower is scheduled for June 2009. Here, just two bus stops from the Piata Victoriei business center, is another apartment complex, Rose Garden, surrounded by landscaped gardens. Arc Property offers apartments here from 70,000 euros. On the northern outskirts of the city, near the Pipera quarter, the construction of a project for 4,600 apartments will be completed by 2014. Now on sale are projects of the second stage, which the company Real Eastates offers for 70,000 euros or more. The complex, which offers many additional services, will be located next to the Budapest-Bucharest highway, the construction of which will cost approximately 720 million euros. The creation of this highway from the Black Sea Constanta through Bucharest to the Hungarian Budapest is part of a comprehensive plan for the development of the country's infrastructure, thanks to which Romania should become an important transit center between Asia, the Middle East and Europe. There is someone to rent Bucharest - not the only city that seeks to leave behind the socialist past and is working hard on its image in order to attract significant foreign capital for the development of the economy in general and the real estate sector in particular. World-renowned companies, one after another, open their offices in major Romanian cities, and this, undoubtedly, raises the demand for local housing. For example, in Cluj-Napoca, the third largest city in Romania, there are already branches of several international corporations, including such giants as Nokia, which previously opened its research center here and launched production. Real Eastates spokesman Robert Weiner notes: "Following Nokia, many world-renowned companies began to move their offices to this region, thus replenishing the local budget and providing jobs for recent graduates from Cluj universities, which are now practically hunted for." “Numerous students are a great audience for investors buying real estate for the purpose of renting,” says Property Frontiers, which specializes in transition economies. “In terms of capital growth, the prospects are also very good: for example, recently this figure reached 20% per year.” Real Eastates is offering for sale a newly opened project in the city center, which will include four apartment buildings, a business center and a four-star hotel. The first phase of 107 apartments has already been put up for sale (the studio is estimated at 50,000 euros), while their market value will grow by 30% per year. Also worthy of attention are urban real estate investors, the second largest Romanian city of Iasi in the northeast and the small but rapidly developing Brasov in the center of the country. In Brasov, Romanian Properties offers a complex of apartments Adal Residence (the end of construction is scheduled for March 2009), 60% of which will enter the Romanian market at a price of 66,000 euros. In Iasi, where Google, Amazon and IBM are headquartered, Property Frontiers is selling apartments in the Bellevue complex under construction in the urban area of Kopou, with one-bedroom apartments starting at ˆ 85,000. Rules for Buyers Due to the short, only four-month holiday season on the Romanian Black Sea coast, the income from the rental of holiday properties here is less than in neighboring Bulgaria. Nevertheless, according to Property Frontiers, tourists from Eastern Europe come here, primarily to the cities of Constanta, Kostinesti and Mamaia, throughout the summer, thanks to which the annual price increase reached 15%. The minimum price for apartments in the new Sea View Residence complex on the seashore from Romanian Properties is 57,000 euros. In Kostinesti, Real Eastates sells apartments in an apart-hotel that can be rented by owners from 67,000 euros. Contrary to expectations, after Romania's accession to the European Union, the rules for buying land have not changed: in order to buy a house, a foreigner still has to open a business in Romania. However, it is quite simple, most of the Romanian lawyers carry out this procedure successfully. As for costs, the VAT on the purchase of a new object is 19% of the value of the object; registration will cost 1-3%. Real estate transfer tax is 0.3–0.5%, notary services cost 0.5–1.5%, and agent's - within 3%. Capital gains tax for the first three years is 3% if the value does not exceed ˆ 1,650, and 2% on more expensive properties.
