Houses in Romania.
December 7th, 2007
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The state politic during the communist regime was to build huge blocks with many small apartments offering very poor living conditions. People who owned private houses were forced to move out, many of these properties being demolished.
After the communist fall economic crises made difficult for most people to buy or build private house. Only a small percent of the population had resources to invest in real estate in the middle of 90’s, especially in Bucharest and major cities.
Major economic recovery since 1999-2000 changed the situation completely. An increasing number of people were able to move from old communist apartments in new houses, demand in this sector increasing rapidly. Investments in new suburb houses are proved to be very profitable with some major developments close to Bucharest and other big cities.
There are a few differences between Bucharest and major cities market on one side and medium and small cities on the other side. The main factor for those differences is land price.
BUCHAREST AND MAJOR CITIES:
Land is very expensive making very hard for small investors to buy land and build their own house. This is why people prefer to buy houses in residential developments close to city, offering modern facilities (security, play area for kids, kindergarten, common pool or private pool, gym).
In Bucharest North Area is mostly chosen by medium to large income buyers, but the increasing price land has moved the interest of developers targeting medium buyers in the east of the city (Pantelimon, Colentina). Every part of the city has development potential, but residential projects offering only houses will have to be develop far from the city where the land price is still reasonable.
Developers of house projects offer the possibility to buy off plan, with many small investors making considerable profit with just a deposit of 20-30%. The investor will sell the house when is close to finished with the main exit in local demand.
A few things to remember for off plan investors:
- Many Romanian buyers opt to buy unfinished houses for a higher degree of personalization and reduce expenses. Some projects may offer the possibility for the buyer to choose the finishing within a price.
- Is not common for Romanian market to buy houses fully furnished, although a furnished kitchen can be part of an attractive offer.
- Location and access road are very important. Many areas in the city or close by are currently a construction yard. For a fast sale this could be a minus, but this means that the site will have a positive trend. Romanian infrastructure is still poor but has many investments underway. Having a decent route of access is vital for the success of every investment so you have to check if there is one in place or at least in work.
IMPORTANT: Traditionally Romanians have a predilection for concrete houses despite some advantages offered by wooden houses.
A property in a big residential project will sell better. There are a few reasons:
- The place will be all set. Inner roads, green space, everything will be done.
- You will profit from the publicity that big developers usually do. A big residential project will attract the attention of a big number of people with many selling opportunities.
- A big developer is usually more confident and efficient that a smaller one.
PRICES:
For a medium town house (attached) in a project close to Bucharest price starts from €180,000.
A 4-5 bedroom independent house will start from €300,000 in a complex close to Bucharest.
In medium cities prices are 30%-40% under the Bucharest market.
In first part of 2007 alone prices increased with 20-30%.
Price depends of various factors:
- Location (North Bucharest is more expensive)
- Size: for a medium income targeted property size is 120-250 sqm. Luxurious houses have from 200 to 400 sqm.
- Backyard area (backyards are usually very small. A bigger one will be a strong selling point but will increase the price as well)
- Closeness to parks, forest, lake.
- Access road and traffic. In some areas close to big cities traffic is impossible at high hours. Good access will be a very important selling evaluation point.
MEDIUM AND SMALL CITIES
In medium and small cities private buyers can still buy land and build their own houses. There are some small investors who develop 5-20 houses residential projects. The success is given by location and competitive price.
Medium size residential projects are just starting to be developed but are offering some very good investment opportunities.
More about investing in Romanian properties in the Independent Guide
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