Investing in Romania, is it a good idea?

[K.Fahey]

Originally Posted by Transylvania Investment

My name is Diana Marinescu and I am the Managing Partner of an association of specialists that offer property consultancy for foreign investors in Romania.
Yes, I am in Romania, in Brasov to be more accurate.
Actually if you look in google or yahoo or even other search engies you'll find us if you type transylvania investment or investment transylvania or property sibiu, property brasov, etc. We also host a forum on our website, dedicated to property issues in Romania.

Re your question about Bucharest: any place is good for investment in Bucharest. Soon Bucharest will become metropolitan area, which means the outskirts and nearby villages will be considered part of the city. This means land nearby Bucharest is an opportunity.
However, there are a few details you might like to know before deciding to invest there:
1. the northern part of Bucharest is expenssive
2. many try to sell their land for very big money, but if you actually take a look at the land you will find it is by far not that interesting and doesn't have a big growth potential and is already overrated comparing with the market price
3. many properties are not registered in the Land Book which makes their purchasing impossible. The ones that are registered can have problems too, so you need a specialist to look at the documents very carefully before you make the final transaction.

I hope to hear from you soon.

Regards,
Diana Marinescu

ThanksDiana, have you a website andwhat areas do you suggest.Katherine

[Transylvania Investment]

Hi Katherine,

Due to the fact that this forum offered very little interested people on buying in Romania, we've decided not to pay a subscription here. However, we might change our mind at any time and include it in our advertising budget.
Yes, we have a website. You can find us quite easily if you type in google or yahoo: transylvania investment.
We also host a forum on our website dedicated to the ones who are interested in buying properties in Romania/starting business in Romania, mostly former clients of ours.
I hope to hear from you soon.

Best regards,
Diana Marinescu

[meriaKre]

Originally Posted by Transylvania Investment

Yes, investing in Moldova can be interesting, however to think that Moldova will join the EU is by far a nice utopia. I wish luck to anyone who are so naive as to think Russia will ever agree to something like that. Moldova is economically controlled by Russia, ruled by the communists and the young population struggles to leave it by all means. Some are lucky to obtain the Romanian citizenship and this actually allow them to travel to other places in Europe to work and earn. Very little return.
Sure there is potential in Moldova, but for the business people who have knowledge, money (don't fool yourselves to believe it's a country where even the poor can invest) and very good connections, not only in Moldova itself, but also in "Mother Russia".
As for Romania, it's only at the beginning of its growth. The prices per sqm of building/land show this, no question asked.

OK, Transilvania Invest.
You are right, ..., in your vision.
However, I would like to think that, me, being in Moldova, making business in Moldova, have a clearer view then foreign people about the situation in the country.

No worries. I wont take your clients away

Tell me, is it worth it to buy the subscription here?
100$ is not much, but would like to give them for free.

Thanks in advance.

[Transylvania Investment]

Dear Maria,
I wish you good luck with your business in Moldova and I have no doubt that living there you have more inside information re the country.
Far from me the thought that you may take away my clients! I simply don't believe in Moldova as an investment destination, I don't believe Moldova will ever join the EU as you stated here (Serbia is a more likely candidate, but even they struggle a lot and might just not get it as EU already has problems digesting the newly entered such as Romania and Bulgaria!
As for the subscription, clients generally don't come from forums. There are more specialized websites to source them. I assure you, there the subscription is more than 100$. I don't know how people make money in Moldova, but here in Romania, professionals would never spend 1 eurocent on something without having certainty that will return them clients.
The purpose of forums is simply different and, no, I don't believe in paying for the right to speak. However, I respect the rules of this forum and post here accordingly. Have no doubt, if I am certain this website will get me clients, I'll pay the 100$ right a way!
Kind regards,
Diana Marinescu

[ironfever]

Hi,

Bucherest is proving to be a real hotspot for property at the moment. First of all I emphasize Bucherest retains 55% of FDI in Romania.

Over the last nine months the market in certain sectors of the capital have witnessed 30% growth, and, it would seem that the world bank´s projections are correct so far (to be the biggest Return on Investment in the European Property Market over the next decade).

To cut a long story short, the capital itself is divided into 6 sectors, 2 to 6 setting the scene for high rising block and characterising your expected communist traits. Sector 1 is much greener with its parks, forests and lakes. Yes you guessed it, this areas was preserved for those who were slightly more equal than others during the communism era.

forwarding to today,,, and the reason why I, the world bank, PWC, and any other serious investors reccommend Sector one as an investment (in Brief):

A shortage of 40000 high quality housing
A growing Middle Class
A high volume are expats due bluechip co´s setting up HQs in secotr one (tax benefits)

TRANSPORT (A must for a thriving economy)
metro (underground) line expansion, modernisation
inclusion of new line 5
20 new trains acquired

Surface transport
11 tram lines, 16 trolley buses (to be extended 2007 to 2010), 40 bus lines

ECONOMY
the captial generates around 21% of the country´s GDP
1/4 of its industrial production

nearly all of your romanian firms have their HQ in the captial, the city currently serves 186,000 HQs (national and International)

other important industries, include furniture, software and technoliogy.


All in all youre looking at high rental yields (11% - 13% net), target the long term rental market, corporate letting is the way to go, sort out 2 to 3 year contracts, and this is the general expat contract for senior positions. look towards a 2 to 3 bed apartment, townhouse or duplex. Yes, it will cost you more, but those FDs, MDs, CEOs, Engineers, Programmers etc are bringing there families with them.

there is much more to this thriving economy, I recommend you look at this market with mith you head.

[CJGEORGE]

Originally Posted by ironfever

Hi,

Bucherest is proving to be a real hotspot for property at the moment. First of all I emphasize Bucherest retains 55% of FDI in Romania.

Over the last nine months the market in certain sectors of the capital have witnessed 30% growth, and, it would seem that the world bank´s projections are correct so far (to be the biggest Return on Investment in the European Property Market over the next decade).

To cut a long story short, the capital itself is divided into 6 sectors, 2 to 6 setting the scene for high rising block and characterising your expected communist traits. Sector 1 is much greener with its parks, forests and lakes. Yes you guessed it, this areas was preserved for those who were slightly more equal than others during the communism era.

forwarding to today,,, and the reason why I, the world bank, PWC, and any other serious investors reccommend Sector one as an investment (in Brief):

A shortage of 40000 high quality housing
A growing Middle Class
A high volume are expats due bluechip co´s setting up HQs in secotr one (tax benefits)

TRANSPORT (A must for a thriving economy)
metro (underground) line expansion, modernisation
inclusion of new line 5
20 new trains acquired

Surface transport
11 tram lines, 16 trolley buses (to be extended 2007 to 2010), 40 bus lines

ECONOMY
the captial generates around 21% of the country´s GDP
1/4 of its industrial production

nearly all of your romanian firms have their HQ in the captial, the city currently serves 186,000 HQs (national and International)

other important industries, include furniture, software and technoliogy.


All in all youre looking at high rental yields (11% - 13% net), target the long term rental market, corporate letting is the way to go, sort out 2 to 3 year contracts, and this is the general expat contract for senior positions. look towards a 2 to 3 bed apartment, townhouse or duplex. Yes, it will cost you more, but those FDs, MDs, CEOs, Engineers, Programmers etc are bringing there families with them.

there is much more to this thriving economy, I recommend you look at this market with mith you head.

Sir
Please can please give the average price of 3 bed flat or house in the 1st or 2nd 9affluent area) sector? Please also let me know the rent for the same.
Please can you inform me the procedutre for buying property for a British national?

Dr.C.J.George

[ironfever]

Dear Dr

At present, if you look at any up-to-date website which promotes the developers price, and not an inflated price, a 3 bedroom 3 bath duplex in an affulant area of Bucherest such as Tunari (S1)(located about 20 minutes from the centre) is currently available for around €237,000. 3 bed 3 bath townhouses are available at €356,000 in the same location. Both offplan. Another area worth looking at is Baneasa, a fast growing suburb with many plans.

Rent is easily worked out, you can safely expect between 11 - 13% net (15% gross), working it out on the lower outcome you can expect:

3b3b Duplex @ €237,000 @ 11%= €26,070 p/a

3b3b Townhouse @ €356,00 @ 11%= €39,160 p/a

consider an 18-24month construction + three year rental at the above yield, the reason i say to expect this rental for the first three years is because:

1) As more properties are built, the 40000 unit shortfall will begin to narrow, and although the supply vs demand will not have been reached yet, year 4 and beyond will show you a healthy , but slightly lower return.

Hence the reason I reccommend this as a 5 to 7 year investment.

The buying process for a UK National is straight forward:

typically a reservation fee is required, ie €3000, as you´d expect, this takes the property off the market for 30 days.

Within 30 days, a deposit is required, again you can typically expect a 30% deposit, ie in the case of the 3b3b duplex = €72000 (rounded-up), at this point a preliminary contract is signed. (NOTE, make sure the transactions takes place with a Lawyer, preferably with the finds going to an escrow account).

Upon completion the remaining 70% is due. this can either be cash or (now) with a Romanian Mortgage. You can expect up to 75% LTV (Music to your ears Im sure), up to 25 years (age 75) with interest rates at around 6.5 -7% ´capital repayment at the moment. of course with the LTV mortgage, wait until nearer completion, which will give you one benefit, but will also allow the mortgage system to mature, and with any joy lower Interest rates.

by the way, should you go for the 5 year plan, ie 18 - 24 month construction and 3 years Rental + Capital growth, you can get an interest-only Mortgage.

on top of all of this, remember VAT (16%) is incorporated in the price, and Legal, Stamp duty, land registry and notary costs are around 5 -7 %.

Hope that helps you out Doctor, any other questions? if not, good luck with the investment.

[David howe]

Dear DR

The above information is farcial in relation to rental returns. 3-4 years ago returns like this were achievable on comercial properties when Romania was deemed high risk. This is no longer achievable in any way or form. Romanian's are highly intelligent and now more about investing here than the vast majority of forigners. If you return 5% on these properties mentioned you will be doing very well. Also, Tunari is 20 minutes for the center of Bucharest by helicopter including take off and touch down. You will not do the center in 20 minutes by car between 7 am and 10 pm, after this maybe at high speed it might be achievable, but unlikely.

As for the straight forward buying process I am curious if this is an investment you are making and one you have thought through. Have you been instructed as to the straight forward fiscal liabilities of your purchase?

There seems to be a strong push on this site to sell Tunari which is fine if the facts are correct. Personally speaking I find them grossly exagerated from an investment perspective. there are currently so many investment funds in Romania trying to buy up investments that such opportunity would not be left available

[Transylvania Investment]

Originally Posted by ironfever

Dear Dr

At present, if you look at any up-to-date website which promotes the developers price, and not an inflated price, a 3 bedroom 3 bath duplex in an affulant area of Bucherest such as Tunari (S1)(located about 20 minutes from the centre) is currently available for around €237,000. 3 bed 3 bath townhouses are available at €356,000 in the same location. Both offplan. Another area worth looking at is Baneasa, a fast growing suburb with many plans.

Rent is easily worked out, you can safely expect between 11 - 13% net (15% gross), working it out on the lower outcome you can expect:

3b3b Duplex @ €237,000 @ 11%= €26,070 p/a

3b3b Townhouse @ €356,00 @ 11%= €39,160 p/a

consider an 18-24month construction + three year rental at the above yield, the reason i say to expect this rental for the first three years is because:

1) As more properties are built, the 40000 unit shortfall will begin to narrow, and although the supply vs demand will not have been reached yet, year 4 and beyond will show you a healthy , but slightly lower return.

Hence the reason I reccommend this as a 5 to 7 year investment.

The buying process for a UK National is straight forward:

typically a reservation fee is required, ie €3000, as you´d expect, this takes the property off the market for 30 days.

Within 30 days, a deposit is required, again you can typically expect a 30% deposit, ie in the case of the 3b3b duplex = €72000 (rounded-up), at this point a preliminary contract is signed. (NOTE, make sure the transactions takes place with a Lawyer, preferably with the finds going to an escrow account).

Upon completion the remaining 70% is due. this can either be cash or (now) with a Romanian Mortgage. You can expect up to 75% LTV (Music to your ears Im sure), up to 25 years (age 75) with interest rates at around 6.5 -7% ´capital repayment at the moment. of course with the LTV mortgage, wait until nearer completion, which will give you one benefit, but will also allow the mortgage system to mature, and with any joy lower Interest rates.

by the way, should you go for the 5 year plan, ie 18 - 24 month construction and 3 years Rental + Capital growth, you can get an interest-only Mortgage.

on top of all of this, remember VAT (16%) is incorporated in the price, and Legal, Stamp duty, land registry and notary costs are around 5 -7 %.

Hope that helps you out Doctor, any other questions? if not, good luck with the investment.

Dear DR,

I suggest you address to a financial consultant also, not only to a lawyer, before you decide to buy anything in Romania. There are taxes the real estate agents/developers don't mention to you when they advise you set up company in order to buy for example.
Also I am very reluctant to believe such rental return can be achieved nowadays in Romania.
Tunari is far from the centre of Bucharest, certainly not 20min away with any means of locomotion known to man these days, except probably to the SF means like teleporting!
Send me a PM if interested in knowing more about Romanian market in general and Bucharest in particular, also the pitfalls that might occur on the way.


Regards,
Diana Marinescu
Transylvania Investment

[Accession]

Read the Property Secrets country report for Romania - it has some very good analysis of the overall market and will answer all your questions. I do not work for them BTW!