The economic situation in Romania is of course affected by the global economic crisis. The country has some advantages compared to other countries of the south, such as the outside government debt which compares favorably with other countries. Unemployment also compares favorably and statistics show some signs of recovery of the economy.

The property market is probably the most attractive sector for foreign investors, provided a thorough investigation and a feasibility study is made in each case before a commitment is made. The best investments are concentrated on buying a rented property (e.g. an office building, or shop) which can give immediately a return of 10-12%. Some property investors moved to other cities of the north, which they consider safe, e.g. Berlin, but with substantially lower return (4.0-4.5%).

In our opinion, property investments in Romania are equally safe, provided that a proper investigation is made from the beginning, for the following reasons:

1. The constitution of the country includes strong provisions for the private ownership.

2. The country uses a dual currency system which is not affected by the problems faced by the countries of the Eurozone. The law provides that a contract can be made in a foreign currency (e.g. Euro) but at the date of payment a conversion of the euros is made according to the daily exchange rate issued by the BNR (Central Bank of Romania). Immediately the amount of lei can be converted into euros and transferred anywhere in the world.

3. Most multinational companies chose Romania as their centre of operations in the Balcans and the Mediterranean area and therefore a good tenant may be chosen.

4. There are good properties in central and other sought after areas especially in Bucharest which can be let to good tenants.

5. Now is the right time for investors to move in, as in future it is expected that property prices will rise, so the investor who invests now will have also a substantial capital appreciation.

ANOTHER SECTOR in the property market which is very attractive is the sector of the construction. A developer can start now a block of flats in Bucharest or the construction of villas in a suburban area where (where we have ready the building permits).

Concluding, we believe that the above is very attractive for contractors/developers as the population of the Capital is expected to increase dramatically in the next 10 years, which will result in the increase in demand for housing.

 

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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