Romanian Property News

It’s been a long, hot summer…no, not for the UK, as we’ve seen some sunshine only in September. It’s been a long hot summer for Romania, with temperatures over 40 Celsius for a good few weeks.

I come back, after the rather long pause, apologies, with a hot subject – land! Land in Bucharest, land around Bucharest, land throughout Romania. Starting with the slightly intricate law: unfortunately you cannot buy (yet, for another four and a half years) land in Romania. Why? According to virtually all official sources, to protect the market and avoid explosion of prices. Is there any solution? Yes, you can establish a company in Romania and (your company can) buy land (which would belong to that company). Is it difficult? Not likely; as all the niche markets, there are already plenty of lawyer firms ready with an all-in-one package.

So, why is Romanian land such a hot subject? Because of its price. No, we’re definitely not talking about price of land in the centre of Bucharest; the price for the few remaining plots in central Bucharest is prohibitive for any small or medium investors – anything under €1500-2000/sqm is considered an absolute bargain. Ironically, projects currently starting in Bucharest will owe more than 50% of the price of the units to land, whether they are houses or flats. We’re talking about price of land in the outskirts of Bucharest, between the current ring road and the planned Metropolitan Bucharest Area.  Valued typically up to a few tens of euros per square meter, such land is still a good investment, if not for own small projects, definitely for reselling in a few years time.

So, what does the market look like?

This is the subject worth looking at and talking about. The offer includes two types of sellers: large ones, acting through an estate agent (or, even better, large enough to act as an estate agent), and small ones, the one-man-and-its-dog affair. The first category is the sensible one; however, due to a few large owners, such as Euroest,  the offer slightly resembles a monopoly and you, the buyer, are very unlikely to have the leverage of competing sellers when haggling for a better price. The second one is a rather interesting alternative – similar to the UK owners that decide to sell their own properties,  plenty of Romanian land owners fragment the market by self-advertising through all available means – from advertisements in the paper to a cardboard hanging by a tree by the side of the road.

I drove around Bucharest on a couple of routes towards the south-east and gathered quite a few pictures, which I promise to have in a near future post. Do not expect more than the land itself – the gas and water may be nearby for some of them, but you will have to wait another few years to be able to be within their reach (you might be luckier with electricity, but don’t hold your breath). This is, surprisingly, good news; for plots that have one or two of the utilities within reach, the price at least doubles. Same goes for access to the (main) road – although some of the signs you see might be by the side of the road, the plots they advertise are more likely to be a few hundred meters away from the road, with current routes being nothing more than lines on the area planning drawings.

Is buying land nearby Bucharest a good investment? My sincere opinion is yes. Ok, fair enough, you will have to take all the “x times the profit in y months” with a (substantial) pinch of salt. However, the market is there, fresh and bubbling, still emerging and still a bit confused; the foreign investors are..slightly reluctant to invest, due to the law requirements; finally, the situation is not yet attractive enough for residential developers, with limited access to gas, water, and electricity. All these will change though in a few years…

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