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News in this section
Other news sections Fly-to-let: The best places to buy an investment property overseasThe Times March 16th 2008 As recently as a decade ago, who would have thought of buying a flat in Tallinn, Sofia or Prague? A buy-to-let in Manchester or Leeds, perhaps, or maybe a holiday home in the Dordogne or Chiantishire, but that was about it. Few people had even been to Estonia, Bulgaria or the Czech Republic, let alone contemplated investing their hard-earned cash there. That was then. These days, it seems, no self-respecting property portfolio is complete without an “emerging market” or two. Yet just as we are becoming used to these new exotic destinations, so making money in them is proving more difficult than it once was. In the 20 years since they sent the Russians packing, the former communist countries of central and eastern Europe have provided everything the property investor could wish for: as their economies have been restructured along western lines, so incomes and house prices have risen — sometimes at annual rates in double digits — and local interest rates tumbled, fuelled by easy credit. Mark Giddings, 36, who works in operations for a Japanese investment bank in the City of London, is among those putting his money on the region: last February, sensing the long bull market in the stock market was coming to an end, he sold his shares and bought two properties off-plan in Sofia and one in the Romanian city of Brasov for a total of £180,000. "I just felt there is more potential for capital growth in those markets," says Giddings. "Both have recently joined the EU, there is lots of foreign investment going in and there is a young generation in their twenties and thirties who want to go out and work and earn money — and they want to live somewhere better than all those old communist buildings."
Romania seeing real estate boomBalkan Insight February 7th 2008 Real estate transactions soared by 150% in 2007 compared to the previous year, making the country the most booming property market in the Balkans. Romania's real estate business was worth more than €2 billion last year, with the most significant transactions involving the sale of office space in Bucharest and the country's cities, local news agency Mediafax reported. Overseas property: Ready for take-offThe Telegraph February 4th 2008 As new budget airline routes open up, intrepid property buyers are filling the departure lounges, writes Graham Norwood. Arc Property, a London estate agency specialising in emerging markets, sells homes in seven east European locations and says Romania is the most sought-after. "Few people so far want holiday homes, but interest in investment properties has soared in the past year. One-bed buy-to-let flats in Bucharest go from about €100,000 (£75,000) and prices rose 27 per cent in the first half of 2007 alone," says Alastair Norman, director of Arc. The measure of a good overseas investment property is not always how much the sun shines or how low prices are. Increasingly, we look at budget airline routes. This year, the UK's 11 budget carriers are launching 29 new routes and where budget flights go, eager estate agents and second home buyers follow. High flight frequency, low cost, and ease of travel are key requirements, especially if an investment property is to be rented out successfully. On those criteria, Romania seems destined for success. Easyjet has started flights from Gatwick to Bucharest. Wizz Air is expanding its services from Liverpool and Luton to Bucharest, as well as launching a new route from Luton to Cluj in the Transylvania region. Romania has seven budget airlines of its own and is already a busy destination for low-cost services from elsewhere in Europe. All this is good news for investors who got in early, such as Philip Groves, a marketing consultant. He is buying a £50,000, one-bedroom apartment in mediaeval Brasov, Romania's seventh largest city, of just under 300,000 people. He says Romania is a good buy because budget flights are opening up tourist and business markets, EU accession will fund an improved infrastructure and Romanians have high levels of equity - they were "given" their homes when communism fell - and low levels of debt. "It's a strong domestic market so I'm not reliant on international factors to provide tenants or capital growth. Plus there's an airport being built close by which is key, as it will encourage the development of a nearby ski resort," says Philip, who also has investment properties in western Europe. Buyers taking advantage of budget airlines - return flights from London to Bucharest have fallen to around £65 including taxes - can get a rundown house in some areas for €10,000, while those in rural spots around Bucharest cost €100,000. New build three-bed villas near the capital cost €200,000.
Property overseas: Top 20 cities to make moneyThe Telegraph October 27th 2007 Tired of the British property market? Fretting about years of inertia and slowdown? Why not look to new Europe. Spectacular cities in newly arrived members of the European Union have been identified as the "best gambles" for investors in a new, exclusive survey for The Daily Telegraph. Romania, which entered the European fold only this year, and Latvia, Hungary, Poland, Lithuania and Estonia, which joined in 2004, are emerging as front-runners for anyone roving the globe in search of a deal. Already, according to researchers Mintel, about 800,000 homeowners have second homes abroad. As the property bubble deflates at home, so many more people may look overseas to make money from property. On The Daily Telegraph's behalf, Knight Frank has looked at all the biggest cities across Europe and assessed their potential performance over the next decade. Forecasts are based on the strength of their economies - gross domestic product, capacity for employment, changing income levels and economic stability. The rush to property is made possible as countries join the Euro zone, kiss hello to the free market and remove restrictions on property ownership. It is happening against the backcloth of a global property boom which is still motoring, though at reduced pace - prices round the world rose by 9.6 per cent last year but are now moving slightly more slowly at 7.8 per cent. Some markets have risen so swiftly - Riga in Latvia, for example - that a 2 per cent stamp duty has been slapped on to try and curb the speculative property bonanza. Number 1 - Bucharest, Romania A latecomer to the ball, it was slow to leave communism behind and started market reforms only in the late 1990s. In 2004 a government formed by the centre-right Truth and Justice Alliance created some stability. Investment is pouring in with €30m being spent on renovating Bucharest. Wage inflation is 13 per cent a year, GDP growth at 6 per cent and tax is at a flat rate of 16 per cent. Bucharest is a louche, atmospheric mix of old belle-epoch mansions, art deco houses, grim tower blocks and nightclubs. Prices rose by 27 per cent in the first six months of the year. 2 - Riga, Latvia The city is made tempting by its lovely medieval heart, art nouveau districts and soaring church spires. Being the middle of the three former Soviet republics, Latvia still has a sizeable Russian minority, though use of the Russian language in schools is being restricted. Property prices went crazy last year. In the 12 months to June this year, Knight Frank reported a 37.7 per cent rise. GDP at the same time went up 11.9 per cent, leading to jitters about how long the property boom could last. 3 - Tallinn, Estonia Half forest, lake, bog and swamp, Estonia has seen the steepest house prices in Europe. In March 2006, the Royal Institution of Chartered Surveyors reported that prices in the previous 12 months had risen by 28 per cent, and especially steeply in the capital, Tallinn. The annual increase has now fallen to 20.2 per cent, according to Knight Frank. But demand far outstrips supply, the economy is growing at 7-8 per cent a year, and there has been a rush to mortgage, leading to real fears of a lending crisis. Tallinn is only 30 minutes by hovercraft from Helsinki.
4 - Vilnius, Lithuania For a century Lithuania has stayed hidden, its stunning capital, Vilnius, beyond the reach of tourists. The gem here is the historic centre, where the old baroque town lies cradled by the rivers Vilnia and Neris, spun with church spires and now the glass and steel skyscrapers of the free market. It is exciting because it has a vibrant economy, a student population, huge investment rolling in, and has been named European City of Culture for 2009.
Get your teeth into Romania October 2007 Romania is a mystery to many people: cloaked for so long by the Iron Curtain and famous for being the spooky Transylvanian home of Count Dracula, the newest EU member state is now one of Europe’s property hot spots. Even before the country joined the EU in 2007 it was being hailed by popular TV shows as, “The number one place to make money in the next 10 years”. The country, which is receiving over €30bn of European Union money in order to improve infrastructure, is also high in the house-price indexes of several major investment analysts including Colliers and Jones Lasalle—these analysts claim Bucharest is going to be one of the European cities showing strongest growth over the next five years. Property in the city is predicted to rise by between 15% and 20% per annum, for the next 10 years, and average rental yields are currently 12% to 15%. Admittedly, though, prices started at a low level compared to other European locations and, therefore, there has been plenty of room to grow. One of the reasons property is so sought after in Bucharest is the lack of quality buildings, with much of the stock dating back to Soviet times. Former dictator Nicolae Ceausescu ripped out the heart of old Bucharest, and with it many of the historic buildings, in order to build a grand palace and impressive, wide boulevards. This lack of attractive, high-quality property has increased demand for new build, with people jumping at the chance to buy off-plan. The first of these developments is due for completion over the next year, so rental and resale profits are still only presently being guessed at. The introduction of mortgages to Romania has also given the market a boost and with a large swathe of the population earning more than ever before, the knock-on effect is clear to see. Average prices now outdo many other locations with city-centre property costing around €1,500 per square metre on average, and up to €3,500 for something high-end. Popular locations include the northern suburbs, where wealthy families live, but property here is now very expensive. Alastair Norman of Arc Property agrees that the northern suburbs are worth considering if you have a reasonable amount of money, but the south has potential. “The south isn’t as great in terms of facilities, but it’s nearer the central business districts and the feeling is it’s ready to be regenerated.” Norman currently has several projects available, with the Rose Garden in the north selling from €57,000 and Vitan Towers in the south starting at €41,208. The latter, he says, is “selling well” though the area “is a bit of a risk compared with the north”. For those who are less interested in investment and want a holiday property in an unusual location, Transylvania is worth exploring. The region is one of the last great wildernesses of Europe with densely forested mountains, small ski resorts and rural farms. The region’s beauty and links to Dracula (though the real count never actually lived in Bran Castle on which the fictional character’s home was modelled) attracts several tourists. With its convenient location, around an hour from the city, buyers are eyeing up the area but, again, there’s a limited amount of accommodation, which is turning the surrounding countryside into a magnet for those wanting to buy land to build on. “The market is mainly new-build,” says Alastair Norman. “There isn’t really a supply of rural properties for restoration.” Norman claims purpose-built villas are worth around €250,000 once completed. Alternatively, there is a fledgling market of resort complexes offering buy-to-let holiday flats. Cold Mountain Resort is one such prospect, named after the film starring Nicole Kidman that was shot here a few years ago. Properties are currently under construction and cost from €72,500 for a studio that will pull in a guaranteed 9% rental over two years. These particular properties are being sold through Arc Property as Alastair Norman is a big fan of Transylvania. “The amount of visitors is increasing by 10% per year,” he says, “even in comparison to Bucharest, Transylvania is Romania’s number one tourist destination.”
First summer of price hikes for Bucharest apartments September 24th 2007 Apartment prices in Bucharest went up by 10% between June and September, as the price per square metre reached 1,716 euros, indicates an analysis conducted by ZF based on advertisements in the largest ad publication in Romania, anuntul.ro. This increase is a first for the real estate market, given that summer is generally a time when prices stagnate rather than rise. The ZF analysis considered the prices of three-room apartments built between 1980 and 1990. "Unlike in other years, the summer months did not bring about either stagnation or decline, but an increase. During the last week, there has been a rise in the number of transactions, and I think it will continue until the end of September," said Gabriel Dragomir, senior broker with the real estate agency Real Estate Grup. Dragomir says real estate agencies will close fewer transactions in the coming period, which could also cause prices to rise at a slower rate, as a result of the major banks increasing their interest rates. From the beginning of the year until September, Bucharest apartment prices increased by almost 35%, with their market value tripling over the last three years. In 2006, prices went up by almost 40%. In September this year, the average price per square metre reached 1,716 euros, against 1,280 euros in January. In other words, if an 80 square-metre apartment cost on average 102,500 euros at the beginning of the year, now the price has reached around 137,300 euros, i.e. a 4,000-euro increase, per apartment, per month. Romania's on the rise March 15th 2007 The opening scenes of Borat, showing his ramshackle home village and its half-crazed inhabitants, may have been shot in Romania, but the film does this new member of the European Union a disservice. The former communist nation is, in fact, surprisingly sophisticated and expensive. The Prince of Wales has bought a house there, and the country is also home to many fashionable restaurants and bars that wouldn't look out of place in the trendiest cities. An added bonus for foreign investors is strong capital appreciation. Last year, according to the Royal Institution of Chartered Surveyors, property prices in Romania (predominantly Bucharest) grew by 15 per cent. Some developments values rose by 20 to 25 per cent in 2006, primarily because of a dearth of good accommodation. One Briton who is hoping that his investment is sound is Nick Horsley, 36, from Manchester. He recently bought a studio at Planorama, paying €50,000 (£34,000). "I wanted to invest in property in the UK, but £35,000 doesn't buy much at home" he says. "I started researching other countries and decided that buying an apartment in a country that had just joined the EU would be a good idea.” "One of the main reasons for buying in Bucharest is that it will provide me with year-round rental as opposed to relying on a seasonal market" he says. "I looked at buying in Bulgaria, but if you are going to live and work as a professional person anywhere in Romania, it will be here.” Bucharest has an attractive historic city centre. A smattering of Renaissance buildings made it known as "Little Paris” in the 19th century, but it's not pretty in the way that Prague, for example, is. The lack of obvious attractions makes the city an investment destination rather than a second-home buyer's obvious choice. But that's not to say Romania doesn't have alternatives for those seeking a lifestyle purchase. In the Carpathian Mountains, about 100 miles from Bucharest, the pretty town of Brasov has charm to spare. Its cobbled market square lined with cafés and restaurants, around a former church that's now a tourist information centre, looks a bit like something in an Austrian village Who goes there? Romania currently appeals to switched-on investors and the intrepid few who are tempted by the country's remote mountainous interior. How to get there: BA flies twice a day from Heathrow to Bucharest. Tarom Romanian Airlines flies daily from Heathrow. Wizz Air flies three times a week from Luton. Bucharest airport is about ten miles from the city centre.
The Second Wave of the Romanian Real Estate Revolution Over the past few years, the Romanian housing market has been repeatedly been highlighted as one of the outstanding opportunities to make a quick profit with a relatively low investment. With studio flat prices starting under £10k less than four years ago, most investors enjoyed a rapid 100%-200% return on investment during the first year. Due to the infancy of the market, the Romanian real estate sector has witnessed a substantial speculative investment, fuelled in particular by the EU accession at the beginning of 2007. House prices in Bucharest rose by up to 50% over a few months in the 2005-2006 periods, despite the steady flow of new developments on to the market alleviating the demand for the older blocks of flats. This stage in the development of the Bucharest market is now in the past and we have now entered a new phase: multi-national real estate firms are now major players, the banking sector is financing a large number of new projects, and bigger, international developers want a share of the construction market. This has brought a new sense of professionalism to the market place and a new wave of construction activity. House prices continue to rise, but there is a growing sense the landscape is changing and many owners of older apartments are awaiting with interest the impact that the nearly-finished projects will have on the overall market. What is then likely to drive the prices up and attract further investment in the near future? Two factors are likely to strongly influence the market. Firstly, better financing opportunities. As strange as it may sound, the mortgage market in Romania is only a few years old. As recently as five years ago, virtually all real-estate transactions were based on immediate (cash) payment, without involving any banks or financial institutions, and buyers paid from existing savings. Understandably this severely restricted affordability and kept prices artificially low. As mortgages slowly became available, first to the elite and then the middle classes, prices began to rise. However, whilst the property prices have skyrocketed over recent years they still have a good deal further to rise. Mortgages are a new concept for Romanians and the idea of borrowing debts several times your annual income is a daunting prospect in a country where most people have never had even as much as a credit card before. This reluctance to use mortgage financing is diminishing, but its effect on the market is far from over as the level of mortgage debt in Romania is only 2.4% of GDP. In the UK it is 60% of GDP. While the effects of mortgaging ripple out, a more important factor will push prices further up: the strongly unbalanced demand, backed by increasing salaries. Before 1989, the market was fully under the remit of the communist government and the government presided over one of the world’ largest enforced urbanisation policies. City authorities began constructing poor quality, high density concrete blocks of flats. But despite rapid construction rates they struggled to meet the growing urban population and overcrowding became endemic. After the Romanian revolution, the housing market witnessed a period of about 15 years when no major projects were started. This fuelled the demand to alarming levels, and the current rate of ongoing projects is barely affecting this inbalance. Average salaries have risen considerably over the past few years and, as more and more companies consider larger Romanian cities as an attractive off-shoring or relocation alternative, wages continue to rise and the middle class grows, further fueling house prices. As housing availability remains low and prices continue to increase, the rental market is becoming more and more attractive, particularly for young professional singles/couples. At the moment landlords tend to be small investors, individually managing their properties, having therefore little leverage on the market. Most bought their properties several years ago and have since enjoyed three-fold capital growth over the last few years. A new breed of investor is now coming to the market; they tend to be absent landlords with a more professional approach to buy-to-let and this is now creating a demand for property management companies. Written exclusively for Arc Property by Bogdan Ghita of:
Romania and Bulgaria admitted to the EU September 26th 2006 Romania and Bulgaria have welcomed the announcement that they will be admitted to the EU in January 2007, albeit under strict conditions. Bulgarian Prime Minister Sergei Stanishev said the move was the final fall of the Berlin Wall for his nation. His Romanian counterpart, Calin Tariceanu, said his people should be proud of themselves. European Commission President Jose Manuel Barroso said both countries had made enough progress to join the union. But they will be checked for progress in curbing organised crime and corruption, and ensuring food safety and the proper use of EU funds. The conditions are tougher than those imposed on previous new members. The BBC's Oana Lungescu in Strasbourg says they are intended both as a reassurance for EU citizens, only half of whom support further enlargement, and as a warning to Turkey and the Balkan nations still lobbying for EU membership. 'Remarkable transformation' The commission's report confirms that after seven years of talks, Bulgaria and Romania are able to take on the rights and obligations of EU membership. Reading the report, Mr Barroso said the two nations' entry would be a "historic achievement". "Bulgaria and Romania have carried out an extraordinary reform process and they have gone through a remarkable transformation," he said. The two countries missed out on the EU's big eastward expansion in 2004, which saw the EU grow to 25 member states. Correspondents say they will be delighted that they can get in on schedule before Mr Barroso puts a block on further expansion. "This is the genuine and final fall of the Berlin Wall for Bulgaria," said Mr Stanishev. Mr Tariceanu said: "Romanians have a reason to be proud of themselves." But he warned his people: "It would be a typical Romanian mistake to say we have our bags already in the cart and we no longer have obligations." The commission president said there were a number of areas where further progress was needed in the months leading to accession and beyond. Unless Bulgaria cracks down on organised crime, legal decisions taken by its courts could be disregarded in the rest of Europe. Both countries will have to report every six months on progress in fighting corruption. By March, they also need to set up agencies to handle millions of euros worth of EU farm aid, or risk losing a quarter of the cash. Both will face food export bans due to the prevalence of animal diseases like swine fever, while Bulgarian planes could be banned from flying into EU airspace until the country improves its air safety standards. There could also be restrictions on migration to other EU countries for up to three years. 'Limits' An EU official said the commission did not want to punish Bulgaria and Romania, but to make them work harder to carry out reforms. Mr Barroso has said the EU cannot go on with further expansion until it decides what to do about its stalled constitution. The rules of the European club can currently cope to 27 members at most. However, experts say they could be tinkered with to squeeze Croatia in before a major treaty change. "It would be unwise to bring in other member states apart from Romania and Bulgaria," Mr Barroso said on Monday. "There are some limits to our absorption capacity."
Wizz Air announces low fares for Romania June 27th 2006 Wizz Air, Central and Eastern Europe's largest low fare - low cost airline announced at a press conference in Bucharest today that it would significantly expand its operations in Romania with the launch of additional 9 new routes from 3 Romanian cities from January 2007. (The Targu Mures-Budapest route will start already from 14 July 2006). Wizz Air will offer its popular low fares to passengers wishing to travel from Romania's capital city of Bucharest with service to the close in Baneasa Airport, the Western city of Arad and the Northern Central Transylvanian region with service to Targu Mures. Wizz Air will offer direct flight service connections for these Romanian regions to Barcelona, Rome, Milan, London, Dortmund and Budapest. Wizz Air's new routes from Romania include:
This major expansion in Romania follows Wizz Air's earlier market establishment in Poland, Hungary, Bulgaria, Croatia and Slovenia and underpins the carrier's leading position in Central and Eastern Europe. With the Romanian market entry, Wizz Air will offer low fare flights from 15 airports and 7 Central and Eastern Europe countries to 40 destinations on 69 routes in Europe and has carried 3.5 million passengers in its first 2 years of operation.
Romania praised over EU efforts May 17th 2006 European Commission President Jose Manuel Barroso has praised Romania's efforts to meet criteria to join the European Union in 2007. His visit to Bucharest comes after the Commission delayed the final decision on whether both Romania and Bulgaria could join the bloc as planned. The report said they should join only if they fulfilled key conditions. Mr Barroso said he wanted to encourage the Romanian authorities, but added that they had to continue with reforms. Romanian Prime Minister Calin Tariceanu said he was sure that his country would be ready to join the EU on schedule. "The report by the European Commission has mobilised us," AFP quoted him as saying. "We already have an action plan." Mr Barroso and European Enlargement Commissioner Olli Rehn will later visit the Bulgarian capital, Sofia, where they are expected to urge the authorities to keep up the momentum of reform. The Commission said that Bulgaria in particular will have to show tangible results in the fight against corruption and organised crime. Romania has work to do in other areas, mainly covering food safety and setting up agencies to pay EU farm aids. "Romania has made a lot of progress. Now there is the extra mile, the final stretch," Mr Barroso said. "The reform of the judiciary is the priority of all priorities, since an independent and efficient judicial system affects the lives of all in society." He told reporters in Bucharest that each country would be analysed on its own merits, adding that "of course we would like both countries to join on Jan. 1, 2007. That is our goal". The report presented to the European Parliament on Tuesday warned that both states could face serious membership restrictions and cuts to EU funds after they join. The final assessment on whether they can join will be delayed until October. In its progress reports, the commission said the countries' accession could still be postponed until January 2008 if they did not show enough progress by the autumn.
Flat tax and VAT stay but SME tax relief goes BusinessRomania.com Corina Saceanu May 15th 2006 The final version of the modified Fiscal Code will be discussed this week in a government meeting and, if approved, will be enforced from January 1, 2007. Following government approval, the code will be handed to Parliament under urgent procedures, so that debate is over by July 1. The modified draft will not raise the flat tax or VAT but will increase secondary taxes and will also change the way taxes are collected.
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