Romania Property Investment News

Demand for Romanian property outweighs supply

Romania is facing a shortfall in housing levels, particularly in its expanding cities, as interest from local buyers and overseas investors continues to rise above the rate of construction. A combination of the investment activity sparked by its EU accession in January this year, along with the country’s own emerging middle class, means that demand now outweighs supply, and developers are eager to meet that demand.

According to a report released earlier this year, conducted by Jones Lang LaSalle and the Polish residential consultancy REAS, Bucharest has one of the most severe housing shortages of the ten Central and Eastern European cities that were studied. Bucharest was reported to have a shortage of 130,000 units, equating to 16.8% of Romania’s available housing stock. The report also found that Bucharest had the second highest level of demand from the 20 – 34 age group, who – as first-time buyers and young families - traditionally contribute the most to activity in the property market. This group accounts for 22% of Romania’s population.

The Economist Intelligence Unit ranks Bucharest as having the fastest growing city economy in Europe – 2006 saw GDP growth in excess of 9% in 2006 – and as the domestic population becomes more affluent, the demand for housing increases.

Estimates from city planners in Bucharest put the deficit at 200,000 homes. As the mortgage market opens up in Romania, property purchase becomes more accessible to a wider group of buyers. Also, the country is receiving a considerable level of foreign direct investment – in 2006 it was said to have received €8.3 billion, making it the biggest receiver of foreign investment in South-eastern and Central Europe. This is attracting workers to the main cities from other countries and from within Romania itself, which suggests that the growth in demand for housing is likely to continue.