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Romania's on the rise
( 15 / March / 2007 )
From The Times
March 15, 2007
Gordon Miller
"Britons come here expecting the locals to be walking around in threadbare clothes, but the opposite is true" says Michael Johns, of The Right Move Abroad (TRMA) estate agents. "I've seen more well-dressed people in Bucharest nightclubs than I have ever seen in Manchester or London. It's an eye-opener and is reflected in the fact that property prices here are far from cheap.” TRMA is selling apartments in a new development, Planorama, in central Bucharest, with prices starting at £36,500 for a studio. Finished with laminate flooring and boutique-style bathrooms, the apartments are due to be completed by August next year. Johns says that he expects the studios to let to locals for €400 to €500 (£270-£338) a month.
"There is a ready-made rental market in Bucharest" he says. "The city has a large professional middle class and a huge student population who are keen to move into new, modern accommodation. Some will buy, but many prefer to rent because mortgages for locals are still relatively expensive.
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. Johns says that in some developments values rose by 20 to 25 per cent in 2006, primarily because of a dearth of good accommodation. Despite the shortages, TRMA has recently agreed to market a 750-unit central development.
"We plan to start building in June" says Johns. "The site has great investment potential. It overlooks the river, is five minutes from the city centre, and close to the upmarket Vi-tan shopping mall. Ultimately, locals will live here, but Britons who buy early will make a good return on their investment, because, when they come to sell, locals can afford to buy the property from them. In so many places in Eastern Europe there's no local resale market, which means it's hard to sell to realise a profit.”
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.”
He visited Bucharest and decided to take the plunge and buy. "I thought Bucharest was a vibrant place. It has good restaurants and a buoyant property market" he says. "There is also a lack of new, good-quality apartments, which forces demand up for rentals among locals. I'm looking for a yield of 7 to 10 per cent a year, or €350-€400 a month.”
Horsley is confident that he will achieve his target by using a professional lettings company.
"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. The area was once part of the Austro-Hungarian Empire and even today, it's said, the locals identify themselves more with the region than they do with Romania.
A dozen miles from the city centre, in a valley surrounded by pine tree forests and snow-capped mountains (Poiana Brasov is Romania's largest ski resort, with ten miles of runs), TRMA is selling log cabins. The chalet-style houses are two up, one down, with a galley kitchen and a veranda. They are priced from €74,000 (£50,000).
Should the seaside be more your idea of a second-home destination, Constanza on Romania's Black Sea Coast may be worth a visit. Here, Romania Revealed is selling Cronos Residence, a development of luxury apartments about 150 yards from a clean, sandy beach. The ground floor and mezzanine are designed for restaurants, cafés, fitness clubs and boutiques. Prices start at €72,130.