Romanian Property News

Earlier this year Esop Imobiliare, one of the bigger players on the Romanian real estate, released a market update on the price of property and rent for Bucharest. The report highlights a few of the major changes in Bucharest, ranging from the Sema park (ref) which is soon to become one of the focal points for business and residential alike, up to Bucharest going up 36 places in the chart of most expensive cities in the world, as produced by Mercer Human Resource Consulting. It is interesting to note the structure of the report, focusing mostly on the business sector (office spaces) and the luxury residential market, while the middle class segment is only briefly mentioned towards the end; the listed prices refer exclusively either to villas or newly built flats. This is not a criticism of the report, as it matches the high-profile adopted by Esop Imobiliare (focused on expensive housing rather than middle-class provisioning) and it confirms that Bucharest is building up its reputation of an expensive city to live in.

The price of housing in Bucharest, as highlighted by the report, varies significantly, depending on the area and the market segment. To begin with the frightening news, prices for luxury flats and villas can go as high as 4000€/sqm for the very posh areas of Primaverii, Aviatorilor, and Kisselef. To put things in context, Primaverii was the residence of the communist leaders before the revolution; in the communist era access to it used to be restricted and it benefited from significant state security. Aviatorilor is just around the corner from Primaverii, borrowing some of its posh character but also combining it with the greenery from the parks nearby. Kisselef is historically (world war two and beyond) another posh area, which in the 1970s was partially occupied by embassies and diplomats. Further on the list, there are several other sought-after areas: Herastrau, Dorobanti, and Cotroceni, ranging between 2500-3500€/sqm. According to the report, although the prices are rather prohibitive, they are still likely to go up by 5-10% in the near future due to the large amount of foreign investments attracted by Bucharest since joining the EU.

The report also mentioned a “middle-class-plus” market, with prices between 1600-2500€/sqm. The areas listed here include once again Aviatiei, followed by Alba Iulia, the heavily mentioned Vitan Mall, and the 13 Septembrie area (next to the House of People/Palace of Parliament). The estimations are even more positive for this segment, with a growth of 10-15% in the near future due to the scarce availability of units and land.

Towards the end, the report does mention the middle-class segment, with flats costing between 1000-1500€/sqm, spread over quite a few areas towards the central Bucharest (Militari, Drumul Taberei, Titan, Mihai Bravu, Nicolae Grigorescu) as well as towards the outskirts (Berceni, Prelungirea Ghencea, Vitan, Colentina). Although the report refers to price increases of up to 20%, it is rather evasive to point out buy-to-sell properties, but it talks more about properties due to come on the market in the near future. After all the big figures for property prices, can there be any good news?

Apparently there are: the rental rates. In recognition of the explosive demand, the rental prices listed by Esop are rather encouraging. At the lower end, rent for one bedroom flats ranges between 1500-1800€/month (yeap, no misspelling there, the price is per month). Further up, two bedroom flats will yield between 2000-2500€/month and the larger three bedroom flats can produce up to 3800€/month in rent. Moving over to villas, the prices go even further, up to 3000-5000€/month for villas with more than three bedrooms. So, plenty to recover the rather hefty initial investment and, once again according to Esop, rents are likely to go higher by up to 10% in the near future.

Last posts in Reviews

• Predictions for Romanian house prices in 2008 – slight fluctuations, mostly stagnating
• The house prices crisis – is Romania next?
• Trident pinpoints south of Bucharest for affordable flats
• Rental prices for studio flats in Bucharest – autumn 2007 statistics
• High prices for medium sized land plots in Pipera