Investing in Romania, is it a good idea?

[RealEstateMoldova]

Good afternoon.

My name is Serghey I from a neighbouring country Moldova. We observed a rise in prices in Romania, to the introduction into the European Union the sharp rise in prices for all real estate was observed. For today, in other words after the introduction of Romania into the European union the rise in prices was slowed down and has stopped.

 

[Transylvania Investment]

Sorry to disappoint you Real Estate Moldova

Good afternoon.

My name is Serghey I from a neighbouring country Moldova. We observed a rise in prices in Romania, to the introduction into the European Union the sharp rise in prices for all real estate was observed. For today, in other words after the introduction of Romania into the European union the rise in prices was slowed down and has stopped.

Sorry to disappoint you RealEstateMoldova, prices in Romania are in a continuous rising. New developments announce increased prices each month, what we are selling is what we call "hot", indecision or hesitation makes many investors lose golden opportunities simply because the prices go high with every month or even with every week, depending on the quality of the property. There are actually 2 years of spectaculous growth and after that at least 4 more years of slower increase. Stagnation is to be expected no sooner than 6 years or even more.
I think it's best (take it as an advice) if you want to sell properties in Moldova to advertise the qualities of your country rather than attack Romania. We would be very interested in what Moldova has to offer, but so far from our collaborators we had negative feedback re investment opportunities there. Send me a private message and let's talk things over.

 

[InvestmentSolutions]

Sorry to disappoint you RealEstateMoldova, prices in Romania are in a continuous rising. New developments announce increased prices each month, what we are selling is what we call "hot", indecision or hesitation makes many investors lose golden opportunities simply because the prices go high with every month or even with every week, depending on the quality of the property. There are actually 2 years of spectaculous growth and after that at least 4 more years of slower increase. Stagnation is to be expected no sooner than 6 years or even more.
I think it's best (take it as an advice) if you want to sell properties in Moldova to advertise the qualities of your country rather than attack Romania. We would be very interested in what Moldova has to offer, but so far from our collaborators we had negative feedback re investment opportunities there. Send me a private message and let's talk things over.

I totally agree with Transylvania Investment. Instead of making a wrong supposition you should rather take a moment and investigate before. The Romanian Real Estate is still doing great, being the country where you can obtain some of the biggest profits in all Europe. And this was before the accession to the E.U. and after...

Have a nice day

 

[sqftmag]

I think investing in Romania is a good idea if you are fluent in a few phrases. These phrases should, ideally, include such life-savers as:
"My appendix has burst, can I trust your surgeon?"
"The cold water pipe has split on the washing machine."
"The thermostat has stuck again and the last 4 electricians I tried aren't answering."

My mother is part Romanian. She never learned these important phrases. (Not much call for them in Hampstead.) If you can do these translations, go ahead. If not, it might prove easier to marry a Romanian (not one from Hampstead obviously) or invest in a country with an easier language.

Just a thought.

Michele

 

[Transylvania Investment]

I think investing in Romania is a good idea if you are fluent in a few phrases. These phrases should, ideally, include such life-savers as:
"My appendix has burst, can I trust your surgeon?"
"The cold water pipe has split on the washing machine."
"The thermostat has stuck again and the last 4 electricians I tried aren't answering."

My mother is part Romanian. She never learned these important phrases. (Not much call for them in Hampstead.) If you can do these translations, go ahead. If not, it might prove easier to marry a Romanian (not one from Hampstead obviously) or invest in a country with an easier language.

Just a thought.

Michele

Michele, I tend to agree with you, but this is how the country is and probably will stay this way for years from now on.
Nevertheless if you look at the investment potential, you have to admit it is very high. I am not recommending you to buy in order to relocate! I am recommending you to buy for relatively small prices now, rent what you bought for a few years and then resell for a higher price!
Not rarely people come here to invest neglecting important aspects such as fiscal issues consultancy or law consultancy, they make bad deals and then they tend to blame the country for their mistake. To be honest I would not bother to invest anywhere without having those fields covered. But to some, cutting costs is so much more important!
As for the language, if only Spanish would be easier! Have you tried learning Spanish, Michele (btw, you have a nice French name, have you tried to learn French? you found it easy to learn, dear?) Or probably you advise us to invest only in the areas where English speaking parts of the globe!

 

[markonugent1]

hi, i am going on an inspection trip with *** on wed 2 bucharest 2 look at property, does any know if *** are a company 2 be trusted or r they just after a sale and have no interest in a real investor, i was going 2 purchace about 10 studios, i was told that there would be a 400% incrase in 10years plus 10%+ rental yields, is this just a sale pitch or r these figures expected.

 

[DC]

Transylvania Investment - What are the typical rental yields that you offer clients, on units.
Do the rents pay the mortgage, if the clients put in 20%?

 

[Greg C]

Just a thought

I think investing in Romania is a good idea if you are fluent in a few phrases. These phrases should, ideally, include such life-savers as:
"My appendix has burst, can I trust your surgeon?"
"The cold water pipe has split on the washing machine."
"The thermostat has stuck again and the last 4 electricians I tried aren't answering."

My mother is part Romanian. She never learned these important phrases. (Not much call for them in Hampstead.) If you can do these translations, go ahead. If not, it might prove easier to marry a Romanian (not one from Hampstead obviously) or invest in a country with an easier language.

Just a thought.

Michele

Michele,

It was obviously just a single thought as more thought would not have given you this opinion. Your perceptions are superficial and if we are talking about investing with the obvious intention of making money in Romania (which I have done and am doing now) I don't understand the relevance of your comment other than exposing your own personal prejudices. I have seen many times in Romania arrogance and a sense of superiority by Westerners when dealing with Romanians. History has not been kind to Romania and even recent events of the last half century, fifty years of communism thanks partly to the generosity of your own Mr Churchill and then a collapsed economy post 1989. Not every country has had the benefit of an empire and been able to harvest it's wealth for generations and still benefitting today. The great saviour of Hampstead is the English Channel otherwise you may be something of different country after visits by Napoleon, the Kaiser and Hitler. That expanse of water has more to do with the British character than anything intrinsicly special about British people. Being Australian I have had many dealings with them as well.

Greg

 

[markf]

You don't read Romanian, isn't it?

Let me translate for you the main ideas behind an article published this evening in an influential Romanian daily newspaper, Cotidianul.

The title states: The performance of the new apartments do not justify the rising prices (Rom. Vinzarile de apartamente noi nu justifica scumpirile)

Main idea: In 2007 developers offered in Bucharest almost 21.000 new apartments. However, only 7.000 were bought. Taking into account that ~30% are usually bought by investment funds, it seems that only 4000-4500 were really bought by final users.

Question that the journalist puts down: then why should we expect to see prices rising for another year, since people aren't hungry to buy? Nobody really knows the answer, but influential analyst Liviu Ureche answers: "The numbers are very low and are under 50% of what was expected. ... Many people can't get a loan from the banks. However, I think that the market will be able to support this year another 15% rise [-this is tipical from any Romanian real estate agent, the facts are black but he/she says that there is a chance that white and black are the same colour] but for some projects that will remain unsold it is possible to see the contrary."

According to reports from the National Union of the Public Notaries submitted to Cotidianul, the performance of old apartments (those build in communist era) in 2007 is also poor, worst than in 2004-2006.

My comment: there is an obvious bubble there, and this bubble is set to burst.

 

[Transylvania Investment]

issues

Goldberg Global - we don't sell anything we can't manage in the best interest of our clients. So the answer is yes: anything our clients buy with us can be rented out to a fee that covers the mortgage.

Markf I agree with you new apartments can be sometimes very expensive and to an extent they don't deserve to be purchased. This is something anyone who knows the Romanian market well enough can tell you: when an office building in Bucharest central area sells for 3500 EUR/1 sq. m. I think anyone can see the growth in that is superficial.
However I would not venture in calling Romania a bubble based on an article when there were thousands of articles so far who praized and overrated the capacity of Romanian real estate market. Better base your comments on economic and financial data rather than quote an article in the Romanian press!

Greg C - lol

 

[cpreston]

Has anyone investigated or invested in the development in Arad from Casa Rom - since transferred in a very unsatisfactory way to Bermo. I would love to know other people's views and experience. I refused to transfer my contract because they could not meet the legal requirements so am still holding the original contract but have received very little communication from Casa Rom, and nothing from Bermo despite several e-mails and phone calls.

 

[markf]

...and finaly first reports regarding falling prices in Bucharest: "Prices for old flats down with 10% in february 2008" - romanian Business Publication DailyBusiness.ro.

 

[David howe]

...and finaly first reports regarding falling prices in Bucharest: "Prices for old flats down with 10% in february 2008" - romanian Business Publication DailyBusiness.ro.

Dear Mark

Are you sure you are in Bucarest and not Budapest? Prices in Bucharest are not down, agents promote stories like this to try to drive demand for new builds in crap areas, hence why they are not selling. The demand is here for New and existing, the trouble with a lot of the New is that it is crap and the Romanians are far from stupid.

Example being I currently have 9 apartments that foreigners boutght through a well known overseas agent in August 06 and the Romanians will not even give me what the foreigners paid 18 months ago. Like any market, buy the right object and you will do well, but be assured prices in Bucharest have in no way dropped.

 

[markf]

Fyi

For anyone who wants to be objectively informed, this is an article in English: zf.ro/articol_167194/ . This article is "hot".

 

[David howe]

Want to be objectively informed??????

For anyone who wants to be objectively informed, this is an article in English: zf.ro/articol_167194/ . This article is "hot".

For an informed opinion on this article have a look at Investment Romania • View topic - Romania: Think twice


This is in my opinion a very badly written rticle that focuses on the stupidity of investors who did not carry out any due dilligence whatsoever, yet the author tries to tar the whole Romanian market by this. The same article could refer to the Manchester buy to let market, and we all know Manchester does not represent the UK.

 

[markf]

This is in my opinion a very badly written rticle that focuses on the stupidity of investors who did not carry out any due dilligence whatsoever, yet the author tries to tar the whole Romanian market by this. The same article could refer to the Manchester buy to let market, and we all know Manchester does not represent the UK.

David, there are a lot of good opportunities in Romania but the potential investor should be informed by people like you that scams are everywhere in Romania. Starting with economic reports that are based on data from 2-3 years ago and finishing with so-called "ultra-central" projects that are built in areas with no facilities, 50km away from the city center. But when one is 3000km away and has only some nice autocad drawings and 3D animations taken from a nifty internet website, these scams are very hard to comprehend.

 

[DC]

Guys, lets keep it to the topic in hand.

From Romanians I speak to, the market has really gone up alot, and alot of stock is moving, personally I believe alot of it is speculation, but there is a need for good new housing stock in alot of towns and cities, but that is different product to offplan expensive foreign investment places.

Sell to the locals is where the action is best, and most recession proof. Land prices seem a bit out of control and still there are at best with land registry and legal issues. It will take time, 5 to 10 more years before it moves to a higher and more sophisticated stage.

Spain after 30 years is far from perfect, so think of Romania, it needs to grow up as a place, like Bulgaria. Long term buy to hold, from what I see, the yields are out of line with prices, which does not bode well. ie. seems over pricing is coming in.

Like all markets there are deals. Just make sure you get one. Just because it is cheap, does not imply it is good value.

 

[cochranehanna]

Property Romania

I've heard many foreign investors saying they need to set up company in order to buy land in Romania. Most of the advisers in Romania teach them this is the only way to purchase land here. However there are serious reasons NOT TO form a company in Romania.
Reasons not to set up a company to buy residential property in Romania.

1. Rates/Council tax whatever you want to call them are 0.5% per year if you buy land in your own name. If you buy through a company they are 1.5%. This will equate to 1% of any gross rental income and probably close to 1.5% net rental income.

2. Costs for doing the accounts for a company will cost you in the region or in excess of 100 EUR per month.

3. Company formation is about 500 EUR and terminating the company will run you into into another 1500-2000 EUR.

4. When you sell as an individual you will be subject to 2% tax on the selling price, this is also applicable to a company. However, as an individual this is all you pay.

5. Additionally as a company you will have to pay 19% VAT on the sale price.

6. As a company you then pay an additional 16% on any profit made on your investment.

7. Then as a company you pay a further 16% on your dividends when you go to take your own money out of your own company.

More to what I've said before:
Buying residential property by setting up a LTD company is economic suicide. The idea is: set up company here ONLY if you consider doing business in Romania.
If you buy a property just to rent it or resell it when its value is rising, don't create a company here just to get the land under the building or if you buy land, the land itself. It's simply too much hassle. The last thing you want is to have to deal with accountants (here the accounting system is very complicated and good accountants are very important, rather hard to find and don't come cheap). Besides, to get over with the company takes a loooong time, so the costs are not only in terms of money, but also in terms of time.

I can tell you the ways on which you CAN buy in your own name.

The regions you want to invest in are around Bucharest, however your budget might prevent you to invest there, or Transylvania.

You can also ask for credit in Romania even as a non-resident citizen.

HI

I would be very interested in any information you could give us on this "Company" thing in Romania. We are buying a house in the Sydney Development in Tunari just outside Bucharest on the way to the airport and a lawyer have just contacted us in relation to setting up a company... cost 1400euros. He had failed to mention accounting costs etc. and all the tax information too.
We would greatly appreciate info on credit in Romania as a non-resident and how we can buy in our own name

Many thanks

 

[David howe]

It appears as if it is the sellers lawyer and not your own when he is giving you such bad advice. Transylvania Investment is correct in what they say. Please proceed with caution.


David Howe

Investment Romania

 

[David howe]

David, there are a lot of good opportunities in Romania but the potential investor should be informed by people like you that scams are everywhere in Romania. Starting with economic reports that are based on data from 2-3 years ago and finishing with so-called "ultra-central" projects that are built in areas with no facilities, 50km away from the city center. But when one is 3000km away and has only some nice autocad drawings and 3D animations taken from a nifty internet website, these scams are very hard to comprehend.

If you take the time to read through our forum you will see we have been trying to safeguard Investors and allow them to make informed decisions. We have done everything in our power to protect, the trouble is people get a flashy bloke with a Rolex and he blinds them with Bull manure and then pressurises them to buy and they succumb. Only now that they are knee deep in manure do they make an effort to look elsewhere and come to us to try to bail them out or at least give them a true understanding of the market. I currently have one client with 3 studios in Greenfields and even with him taking a loss on the price he paid in 2006, the locals will still not buy the properties.

These agents or so called experts are whom people need to be guarded against.


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