Since the start of the decade, Bucharest's real estate market has seen dramatic gains - over 1000% in a lot of cases.
The real estate market in Bucharest has a series of specific features that even determine the economic status of the Romanian capital. If, in Ceausescu’s time, foreign investors were not allowed to buy real estate in Romania, after the Revolution of 1989, they had access to a virgin market that created the possibility of big gains.
In the early 2000’s, an apartment in the central area was worth around €7,000 – 14,000, and currently the same apartment is sold for €100,000 – 150,000; the real estate boom is generated by coordinates like population growth, foreign investments or Romania’s joining the European Union. Also, an important incentive for the development of the Romanian real estate market was the introduction of the mortgage credit, thus connecting the local market to the international financial markets and introducing principles of global real estate market.
Prior to Romania’s joining the European Union, the real estate market in Bucharest increased by more than 100%, so that, if 1 sqm of land in the capital’s northern area, in 2003, was $5/sqm, in January 2007 the same land was estimated at €130/sqm. A significant increase occurred in the “luxury” segment: villa and apartment complexes, as well as in the commercial sector represented by office buildings. At present, in Bucharest, the real estate area is divided as follows: the northern area, represented by residential complexes, and the southeastern area, represented by the industrial sector.
The crisis of price increases has transferred from the housing in Bucharest to the areas around the capital, where house complexes and residential complexes are being built, the tendency to live “in a house on the ground” turning into a social trend generated by the increase in the standards of living at general level, as well as by the access to credits with lower interest rates. No doubt the target of real estate investments for the next two or three years will be the great residential complexes within the capital.
With regard to the rents, although a great increase was expected after Romania’s joining the European Union, the real estate boom before the 1st of January 2007 has made it possible, until now, for the real estate market not to see as great price increases as expected. The only segment of the real estate market that records a very significant increase is the commercial one; due to high demand for commercial premises. The office buildings are built in record time, the premises being rented before starting construction, at prices between €15 and €50/sqm. The status of the rents for dwellings remains stable as a whole in Bucharest, although there will be insignificant fluctuations of a few percentage points.
Now, the demand on the market exceeds by far the supply in all segments, fact that generates an increase in prices, regardless of whether it is a rental or a sale.
In conclusion, the real estate market in Bucharest, as well as the real estate market throughout Romania, is still continually growing and any investment in the real estate field will have good prospects, as this may lead to doubling the investment.
