GENERAL RULE: Business is risk, where there is no risk there is no business.

Where a greater risk is envisaged, a bigger return is expected. Among various investment proposals, the less risky business is investment in properties. In this area of investment there are possibilities for greater return with relatively small risk.

One of the basic points to be decided upon, is the choosing of the country after considering various factors, such as:

1) The risk involved comparing various options, i.e. in one of the ex communist countries versus in one of the ‘mature’ markets suck as London or Berlin.

2) The stage of the economy in the proposed country, in view of the world economic crisis.

3) The expected return on investment, taking into account the prospects of capital appreciation.

4) The choosing of a reputable firm of investment consultants is also important, who will help the investor who probably has no knowledge of the prevailing conditions in the selected country.

A brief examination of the above is attempted below:

1) An investor feels more confident to place his investments in one of the “mature” markets mentioned above, but with relatively lower return. So a consideration of the risk in one of the ex communist (emerging) markets such as Romania. From our long experience of this market, we feel that provided a thorough investigation of an investment proposal is made before a commitment, offers equally safe place of investment compared to the property market in London or Berlin.

2) The economy in Romania is stabilising with signs of recovery, especially in the housing market where a substantial price increase of 3.5% has been recorded in the 1st quarter of 2013.

3) Our investigation shows a substantial difference between a property investment return in London and Bucharest with the second giving a return of 2.5-3.0 times higher. For example in Bucharest an investor can buy a shop or office which is rented with a return of 10-12% and with a similar return in London one cannot expect a return of more than 4%. And in this the capital appreciation expected from the investment in Bucharest is expected to be much higher, because presently prices are much lower.

4) The seeking of the services of a reputable consultant is very important especially in the case of property investments in Romania.

The consultant will investigate the market according to the investment orientation of the client-investor, will present to him the best investment proposals, and after the choice is made will investigate the titles of the property and arrange thereafter the sale purchase agreement and all procedures to acquiring the property. After that will manage the investment, and report regularly to the investor.

 

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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