Investing in Romania, is it a good idea?

Discussion in 'Romania property' started by kevin, Sep 15, 2006.

  1. kevin

    kevin New Member

    Hi everyone,
    I was just wondering if anyone had the heads up on what the outlook is for investing in Romanian property?
    Are there any areas to target or steer clear of and are you aware of any budget airlines that fly out there?
    It seems the developers haven't been over in force and saturated the market yet, would I be right?
    Also, how long on average does it take for a sale to go through?

    Thank you very much.
     
  2. reece

    reece New Member

    Hi Kevin,
    Apparently it can be done but it can also be done badly. Be very careful. rules change all the time and bureaucracy is a nightmare. No budget airlines so no cheap flights. I have heard of people buying a piece of land then finding out that the land they own is a triangle of that land and much smaller, or it belongs to someone else.
    Don't trust anyone and if you speak English the price will double.
    See you again
     
  3. kevin

    kevin New Member

    Hey,
    Thanks for that info sefaela, it's very much appreciated.

    I have heard of similar stories about land ownership in other countries, I am very surprised about the budget airlines though.

    Thanks again.
     
  4. Paddy Chan

    Paddy Chan New Member

    Kevin, did you ever find out more information on investing in Romania?
     
  5. DC

    DC New Member

    Yes, there are budget airlines

    Hi I think you are mistaken because of where you are located in the world, there is already budget airlines flying in and out of romania, the companies name is blue air. I know that as I have bought tickets!!!

    BLUE AIR TRANSPORT AERIAN
    Aeroportul International Bucuresti Baneasa
    Sos. Bucuresti-Ploiesti nr. 40
    Bucuresti, ROMANIA
    marketing@blue-air.ro

    Think Blue Air

    I have very good contacts in Romania, through friends and family connections.

    Investment opportunites sure, if you know where and how to look. Financing is expensive there so use your own money. Be in touch if you want help. thanks Darren

    darren@goldbergglobal.com
     
  6. chrisnolen

    chrisnolen New Member

    Hi

    Regarding investment opportunities i can tell you than Romanian and foreign investors are putting their money into sea side real estate projects, especially tourist frequented locations.

    Experts say that 200t is a good year for industrial spaces,as this market has only begun to grow.

    Also if you are interested in fast returns another option is to buy apartment buildings before the project is finished and then sell it to future owners. This type of business is available for medium size investors with budgets around 500.000 euros.

    If you would like more information about real estate prospects this year you can ontact me at
    eliza_mentor@yahoo.com
     
  7. maria.david

    maria.david New Member

    Hi kevin,
    I'm not much of a specialist. I can tell you about my experiance with Romania: I bought a flat in Bucharest and I'm buying one at the moment in Transylvania. Both deals required 10% deposit until completion ( for the one in Bucharest I have to pay another 15% in one year, as the completion is later on). I am looking at the moment at Cluj, I've heard only good things about it and it is forecast to do great!
    If I can help you with anything, please let me know.
    Have you invested at all in romania?
     
  8. sun321

    sun321 New Member

    Eastern european property

    My experience in investing in a former communist country has been limited to Latvia. The latvian property market has been booming since joining the EU. Prices for apartments are now ridiculous for a number of reasons. A lot of people have bought apartments in state owned buildings, there apartments are now maybe worth maybe 150,000 EUR market price for a 2 room apartment, however one can only insure these apartments for contents insurance as the building is owned by the local govt authority, what happens when the building burns down ? The local authorities that own these buildings cant even maintain them properly let alone compensate everyone market price for their apartments but still people keep paying these stupid prices. Secondly a lot of the apartment blocks built in the communist era during 60's, 1970's were only built to last 25 years they are pre-fab concrete structures a lot of them have concrete cancer you can see the steel re-inforcing exposed to the elements and rusting away but still people spend thousands on internal renovations thinking these buildings will last forever. No one thinks long term in these countries its live fast, look good and make a quick buck and its all built on false economies, a lot of the inflated property pricing in latvia has been blamed on money launders, these are not realistic prices as most people here make 15-20% of a western european salary, so renting a property out once you have bought it, is difficult as well. I would assume Romania would have similair problems except I think things there are still a bit more behind the baltic states so that means more red-tape and booby traps await the uneducated or naive buyer.
     
  9. andreim73

    andreim73 New Member

    Dear sun321 (I hope this is not your name…or?)

    Why are you misleading the readers of this forum? Before investing in Lavia, had you made any enquiry? Or you invested because of any nice lady around? I know very well how it works…sorry, I don’t want to be rude, but I am Romanian and I travelled all over Europe. I lived also in other countries as well as Italy, Czech Republic, etc.

    I have also a large flat completed renovated in an “old communist” block as you say, built in 1978…due to the fact Romania has encountered several earthquakes over time, all the buildings are strong and full of concrete & steel.

    I also have villas and other flat in Brasov.

    Don’t forget there are tens of new developments, built by well known international companies. I wouldn’t insist too much here…if you are interested, check the following website…triplew.intnet.ro

    Cheers
    Andrei
     
  10. sun321

    sun321 New Member

    Facts

    I'm not misleading anyone all the things mentioned in my previous post were facts. New developments are something different ofcourse, but here in latvia it has also been reported in the news papers that apartments in soviet era buildings are depreciating in value, some say they will depreciate by as much as 20%. So my advice is buy apartments in new developments. I do not own an apartment in a soviet building I bought one in a pre-war building these buildings have a lot more character and were built to last. The soviet era buildings are horrible looking and potentially dangerous the only reason they havnt been demolished is because the government does not have the money to build free housing to replace these existing apartment blocks. By the way I knew all about latvia before I invested, my family has 400 years of history here.
     
  11. hello everybody. some very true points have been raised here. indeed bureacracy in Romania can be a nightmare (I know because I am Romanian) and also when you purchase land you have to ensure you do your due diligence (best with a conveyancing solicitor). but in saying that, this is the case everywhere in the world. here in Australia (where I live) you may buy a house and find out later that you don't own the land it sits on because you haven't done the homework. I'm going to invest in land in Romania and I'm looking for other investors who are interested in purchasing agricultural land (which comes in long blocks), bringing services (eg electricity) and re-zoning for residential. For anyone interested there is more information on my website, and I would appreciate any feedback on the website.
     
  12. hello everybody, has been very interesting reading the discussion on romanian investment.
     
  13. Taking Title in Romania is a Safe Procedure

    Hello dear investor!

    I am working for almost 2 years in the property investment field in Romania.
    Taking tile in Romania is, as awkward as it may seem to some, a very safe procedure. If some are so cheap as to disregard legal and financial advice before buying, that is their risk and their problem. However anyone serious enough about his money would do this first: get information re the legal system of purchasing properties in Romania, check the market, find an adviser/financial/legal consultant or all of these and then invest guided by that person. It is maybe better to consider talking to more than one consultant before making a decission re who would represent you.
    Taking title procedure in Romania is as follows: any property must be registered in the Land Book. There it is written who the owner is, what is the surface of the property, etc. A property which is not put in the Land Book can't be legally sold. When you close the deal, you go before the public notary who asks the Land Book for a copy of the statement that testify the things I mentioned above. No public notary will ever close a purchase contract without having the Land Book statement before his eyes. This is common knowledge re purchasing a property in Romania.
    The real and interesting discussion comes from the value of the property you invest in. Here I strongly advise you get someone who knows property investment, a broker, a consultant, anyone with knowledge and honesty.
    The price is not bigger when you are a foreigner. Actually Romanian investors have more money to spend unwisely than the foreigners who negotiate very hard!
    All these things can go smoother, including the negotiation process if you have a local contact who is helping you with everything. This may cost a little extra, but your risk is reduced.
     
  14. K.Fahey

    K.Fahey New Member

    Katherine

    Hi.I am interested in buying some land plot in Romania but do not know the country.I have a very limited budget of around 25,000.00 euro and am looking for somewhere in a goood area where the prices are set to rise/near airport/town and tourist area.Any help with which area i should look at would be appreciated.I know as a foreigner that i cannot buy land without a Company but am worried as there are a lot of unreliable agents out there.Thanks.
     
  15. Hi Katherine

    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.
     
    Last edited by a moderator: Sep 5, 2007
  16. K.Fahey

    K.Fahey New Member

    Property wanted in Romania

     
  17. Dear Katherine

    My name is Diana Marinescu and I am the Managing Partner of an association of specialists that offer property consultancy for foreign investors in Romania.
    Yes, I am in Romania, in Brasov to be more accurate.
    Actually if you look in google or yahoo or even other search engies you'll find us if you type transylvania investment or investment transylvania or property sibiu, property brasov, etc. We also host a forum on our website, dedicated to property issues in Romania.

    Re your question about Bucharest: any place is good for investment in Bucharest. Soon Bucharest will become metropolitan area, which means the outskirts and nearby villages will be considered part of the city. This means land nearby Bucharest is an opportunity.
    However, there are a few details you might like to know before deciding to invest there:
    1. the northern part of Bucharest is expenssive
    2. many try to sell their land for very big money, but if you actually take a look at the land you will find it is by far not that interesting and doesn't have a big growth potential and is already overrated comparing with the market price
    3. many properties are not registered in the Land Book which makes their purchasing impossible. The ones that are registered can have problems too, so you need a specialist to look at the documents very carefully before you make the final transaction.

    I hope to hear from you soon.

    Regards,
    Diana Marinescu
     
  18. meriaKre

    meriaKre New Member

    Y, is a very good business to invest in Romania ... 2 years ago.
    The biggest dollars were made during the integration purpose.
    Of course, now is also a good opportunity.
    If you want to catch the new wave, like the one in Romania, is time to invest Moldova.
    Moldova is the next targeted to be integrated in EU.
    The real estate market has a very big growth potential.
     
  19. Investing in Moldova

    Yes, investing in Moldova can be interesting, however to think that Moldova will join the EU is by far a nice utopia. I wish luck to anyone who are so naive as to think Russia will ever agree to something like that. Moldova is economically controlled by Russia, ruled by the communists and the young population struggles to leave it by all means. Some are lucky to obtain the Romanian citizenship and this actually allow them to travel to other places in Europe to work and earn. Very little return.
    Sure there is potential in Moldova, but for the business people who have knowledge, money (don't fool yourselves to believe it's a country where even the poor can invest) and very good connections, not only in Moldova itself, but also in "Mother Russia".
    As for Romania, it's only at the beginning of its growth. The prices per sqm of building/land show this, no question asked.
     
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