Romania Property Investment News

Prices of new properties in Romania set to rise in 2008

Real estate analysts are predicting that the Romanian market will see prices of new properties, particularly apartments, rise in 2008. The president of the Romanian Association for Real Estate Agents (known as ARAI in Romania), Ruxandra Cleciu, was quoted on the news website SmartFinancial as saying that prices of new apartments in the country should see an increase of between 10-15% during the next year. There are several factors contributing to this conclusion: the current average salaries earned by Romanians, the increasing demand for real estate in the country, and - most importantly - the number of ongoing development projects.

The Romanian real estate market is no longer witnessing the staggering 100% annual price growth of a few years ago, but 2007 did see the price of apartments in the country rise by an average of 15%, while Bucharest saw increases of 27% in the average cost per sq. m. of the newer of the city’s two-bedroom apartments.

The pressure on the market that these new apartments will create, however, is likely to cause the prices of older properties in Romania to drop, according to some experts. The ‘old’ blocks of flats, those built during the communist era, will seem far less appealing than the new properties that are being built to a good standard and sold at reasonable prices in the case of most developments. Most older apartments in Romania tend to lack aesthetic appeal and are in need of refurbishment, not necessarily ideal for those looking for an investment property in Romania who do not want to take on a renovation project. In an interview for Bloombiz.ro, the manager of EuroProperty Development, Sorin Istrate, estimates that the price of old apartments will drop by 40% starting in 2010.

Predictions such as these should be treated with some equanimity given the volatility of a market like Romania. The first few years of the country’s EU membership should affect the market in all areas, but current opinion seems to be favouring newer apartments when it comes to watching for price growth.