A lot of people are asking me the following question:

How is the property market in Romania?

In order to give the right answer to the above question, we have to examine the past and the present of the property market.

The Past:

Since the fall of the communist regime about 2 decades ago, the country is still trying to harmonise with the situation in western countries, including of course, the property market. At that time property prices were surprisingly low (the main reason being scarcity of money), and started rising gradually, but prices did not reach the levels of prices in similar western countries.

Then the economic crisis came about 2 years ago, which caused the fall in prices of apartments between 20-40%. Similar situation prevailed in commercial properties and offices. An example for the above, is where an office building of about 1,100 sq.m., cost 10 years ago 500,000 dollars (building costs and land cost), it could be sold 2 years ago 4 times as much, and now, where prices reached their bottom, it can be sold for 3 times the above cost (exchange fluctuations are ignored as figures are approximate)

The present and the near future:

At present there is a huge deficit of housing units, and it is usual to see in one small apartment (built during communist times) a family with the grand parents, the parents and the children. Additionally, studies made by international organizations, like IMF, conclude that the population of the capital will double in 10-12 years. Bearing this in mind, together with the already existing shortage, one can imagine the situation which will prevail in the near future, as the incomes of people are increasing, and the supply of money (e.g. bank loans) is also improving.

A similar situation is foreseen to be also for office spaces as the economic situation and commercial activities in the country improve and more international companies use Romania, mainly Bucharest, as their basis for their activities in the Balkans and middle east (Romania is the biggest EU member in the Balkans).

Another category, which some people are asking, is the land in the city and the surrounding areas. A lot of investors preferred to buy land and split it into plots. Prices for this category, fell sharply in the same way as prices appreciated in recent years, due to increased demand created by these investors. Those who made a good choice of the location, i.e. near a village in a radius of up to 30-40 km from the centre of Bucharest, where there are facilities, such as access roads, electricity, water etc., if they wait for a period of say, 3-5 years, they can earn from their investments, especially if they develop their lands with all necessities (roads, electricity, water sewerage etc).

Unfortunately I cannot say the same for those who trusted unprofessional people and bought land in the middle of nowhere.

Finally, at present the market of shops or offices in good location, started moving, with let properties which give immediate return (between 9-11%) plus of course the expected capital appreciation.


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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