Innovative land & property investments
Romania Property Investment News
Romanian land offers alternative investment potential
A system of land restitution, implemented by the Romanian government after the fall of communism in 1989, has created an alternative opportunity, promising high returns for investors and with the support of the Romanian authorities and the Romanian people that it benefits.
The purpose of the system was to return confiscated land to the Romanian people after its expropriation by Romania’s communist government after the second world war. However, in reality, restitution resulted in many people owning effectively unusable land, and gaining little or nothing from it. The shape and size of the plots – typically thin strips - means they are of little value to sell or farm individually. Many owners live in cities and towns and do not use their plots; many other owners that live in rural areas are not able to farm their allocated strip for profit.
The investment opportunity lies in the process of consolidating a number of these strips to create a larger plot of useful size, re-zoning it, and selling it on to individual buyers or developers, thus providing substantial capital returns for investors. This process is welcomed by the majority of land owners, who are able to sell an asset which has otherwise been useless to them, and also by Romanian Town Councils who are keen to help facilitate the process of developing land for much needed housing, funded as it is by private investment. Without this process, these large tracts of land are effectively out of bounds for development; meanwhile Romania faces a shortage of around 1 million homes.
Up until recently, this process has not been easily accessible for overseas investors; however, the infrastructure is now in place for individual foreign investors to invest in a Romanian LLC to buy the land, while experts ‘on the ground’ in Romania work with local authorities to ensure the viability of the project, and oversee the process of purchase, consolidation, re-zoning and finally sale.
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