Introduction
Demand for new property in Romania is at an all-time high and stock is very lmiited. In fact, it has been estimated that there is a shortage of around 965,000 homes across the whole country, with the highest deficit being in Bucharest. These conditions alone would send a market spiraling up.
But in addition, Romania joined the EU at the beginning of the year. In doing so, it had to meet very strict economic, political and financial criteria that now pave the way for foreign investment and increasing demand for property.
So the Bucharest market is set to be one of the hottest property markets of 2007 – a fact supported in recent reports by Jones Lang Lasalle and Ernst&Young that listed the city as the top place to invest during the next 5 years. This view is also shared by many companies who have recently relocated to the city - Deutsche Bank, Orange, Vodafone, Toyota and Goldman Sachs to name but a few.
Such companies are improving salaries and employment opportunities and are attracting more inhabitants to the city in search of jobs. With a maturing mortgage market and with interest rates increasingly under control, there is a new emerging middle class who are eager to move out of crumbling, communist-era blocks and into newly affordable, high-quality family accommodation.
Located in a secure and gated community, our villas at Forest View are a perfect mix of price, style and location to attract this growing sector. In fact, a recent survey done by a local university found that 43% of Bucharesti want to move to individual houses.
With an average discount of 34%, under £17,000 deposits and non-status mortgages available straight from the developer, these villas offer an enticing investment opportunity in a fast growing market.
Read on to find out more and as ever, give us a call on 01273 627 900 to speak to one of our property consultants.
Warm regards,
Alise and Jonty Crossick
The Bucharest property market
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The property market in Bucharest is experiencing a boom. Not only is the purchasing power of the local population rapidly improving with growing salaries and increasing availability of mortgages, but international interest is also shifting to the city.
Jones Lang Lasalle has forecast Bucharest to be the top place to invest in Central and Eastern Europe over the next 5 years1. Ernst&Young qualify Romania as the most attractive country for investment2. And Colliers International have also predicted that Romanian real estate transactions will grow by 14% per annum for the next 5 years3.
The demand for property in Bucharest stems from the growing middle class who are keen to move out of old and crumbling communist-era blocks in the inner city to more spacious accommodation at a commuting distance. To date, most of the development has concentrated to the north of the city and the inner city, where prices are high. For instance, to the north of the city, land prices have risen from €200-€400 per square metre to €2,000-€2,500 per square metre in the space of just 4 years4!
As there has been increasing interest from the developers and investors to the more spacious southern areas5, we believe the price growth of the north could also be mirrored in the south of the city.Forest View, being one of the first developments in the area, will benefit the most from this growth.
€7 billion and rising
The total amount of real estate transactions in the Romanian market during 2005 was €7 billion. An average increase of 14% p.a. on this figure has been forecast for the next 5 years.
Why southern Bucharest?
Northern Bucharest has been a focus for residential development since the early 1990s and has become expensive and congested. For instance, land prices have grown from €200-€400 per m2 to €2,000-€2,500 in the space of just 4 years!
The eastern area of the city is an industrial zone with factories and warehouses dotting the landscape. It is a relatively unattractive area for residential development.
Western Bucharest is in the beginning of industrial production but by and large it is an undeveloped, forested area.
The property prices in the inner city are high compared to the Forest View area. The quality of housing is often sub-standard, crumbling and crowded.
Southern Bucharest has plenty of open space yet there are a variety of small villages providing much-required amenities for residential buildings. The area also has excellent transport links to the inner city, reducing the commuting times and increasing the attraction for the working population.
Bucharest comparable prices
The graph below represents how the Forest View prices compare against the prices of other regions in Bucharest. A full list of comparables is available upon request.