It was some time in year 1996 when I visited Romania for the first time. Seven years had passed from the time when Ceausescu was overthrown and the country changed from the communist regime to the free economy system. At that time, although 7 years had passed from the date of change, a visitor could see many differences if he tried to compare with a country which did not experience the comunist system. Very poor infrastructure, old buildings with small apartments, few cars in the roads, although sometimes you could see a few expensive cars. This is understandable, and is also evident to the visitor what people had to undergo, when from one day to the other everything changed. No jobs, no money, nothing, because the country had to reorganise everything from scratch.

A few years after the change, it was the best time for an investor to enter the market in Romania,especially in the property market, although now is still a good time, as prices are well below the equivalent capital cities of western european countries. I say this, because after the change, would be investors wanted to see the new situation and be persuaded that their investment would be relatively secure. And investments were indeed secure, as the Governments of Romania aimed to attract foreign investments so that the country would catch up on this sector, which of course a few years earlier this was not possible. One who would look into the new constitution of the country could easily see how strong are the provisions to safeguard private ownership, both for residents and non-residents.

Now, approximately 2 years after the world economic crisis, there are signs of stabilization and recovery. Apartment prices did not fall in the last 2-3 months, whereas during the last 2 years prices had fallen between 25-40%. This is not very bad, if we consider that before the crisis, housing prices had appreciated more than 80% in a period of 5 years. It is true that the country, and especially the capital, needs housing units, residential, offices, and commercial.

Romania, as member of the European Union, is rapidly developing, IMF has approved loans in excess of 20 billion euros, which are released gradually, plus other loans e.g. multi million loan from the European bank for the extension and modernization of the Bucharest Metro. For this reason the Romanian Government took recently very hard austerity measures.

Concluding, it is my strong believe that now is the right time for an investor to enter the Romanian market especially in the property sector. There are examples of offices or shops in central areas of Bucharest, which are let and and are offered for sale at a price which gives a return on investment of over 10%. To this the investor can count also on the capital appreciation, which definetly will be substantial.

THESE ARE MY VIEWS, DEAR READERS, WHICH I COME FROM MY 13 YEAR PRESENCE IN ROMANIA.

 

ANDREAS KAKOFENGITIS is Chief Executive of Bestservus Group, a qualified accountant and banker with long experience in the financial sector in Cyprus, England and Romania. He is also a humorous guy with a lot of stories to share.

 

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