I was with some friends recently, where conversation started about the situation in Romania.

I shall call them friend A, friend B and me.

-FRIEND A: I Invested some money in Romania a few years ago and is a complete failure. I bought a piece of land to make plots, I paid for the conversion of the land into buildable and now there is no demand for such land.

-FRIEND B: I bought a plot in a good area of Bucharest a few years ago, I built a block of offices, and now I rent the offices with a very good return, around 15% on my investment.

-FRIEND A: What happened  to me as I said, if I had money to invest now I would not invest in Romania, I would rather invest in London or Berlin.

Friend B: If I had money to invest, I would not invest in London or Berlin, for the simple reason that there prices are so high and the return is extremely low. I would not invest for a 2% return … I would invest in Romania in income fetching property in a good location in Bucharest for example with a return of 10%  (or even more) plus the capital appreciation in the coming years.

FRIEND A & B: Then they both asked me to tell my opinion regarding the above points, as having a 20 years experience I can give them correct answers on this subject.

MYSELF:

OK I shall give you the statistics of some key factors of the Romanian economy, and some other figures and you understand:

  1. The average income of the Romanians, although steadily increasing,  is lower than the average of the European Residents, but the average  income for the residents of Bucharest is about 120% compared with the average income of the European residents.
  2. Romania attracts about 80% of the International companies  which use South East Europe as their basis of operations with the majority found in the Capital of Romania, Bucharest. These companies offer salaries to residents, and pay good rents for their offices.
  3. The Gross Domestic Income in Romania is increasing and is expected to continue like this for many years to come.
  4. Romania has settled   its loan to the IMF, whereas other countries are deeply in debt.
  5. Housing demand is not covered by the new buildings being built  and it is estimated that many years are needed to cover the huge demand.
  6. Taxation is being lowered, VAT is reduced to 20% (9% on food products) Dividends are taxed now only 5%

The above statements from myself made my friends to think again about their investment orientations.

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