Tourism

 With its stable political situation and rapidly improving economy, Romania is asserting itself as a holiday destination with rapidly rising popularity, and immense potential for real estate investment. The World Travel and Tourism Council (WTTC) predicts that Romania will be the fourth fastest growing tourism sector in the world, with a growth projection of a robust 7.9% per year from 2007 to 2016. All of this bodes very well for the future buy-to-let market. Airfares to Romania are inexpensive and sundry costs such as travel and eating out within the country are affordable, which translates to a fantastic buy-to-let potential for investors.
 The number of tourists is growing every year and tourism is becoming an increasingly important source of Romania’s GDP. The National Statistics Institute reported that almost 520,000 foreigners visited Romania in December, with around 43% arriving from EU countries. In 2006, foreign arrivals rose by 7.1% from 2005 to 6.2 million.  Romania’s economy is characterized by a huge potential for tourism, and tourism in Romania received €450 million in 2006, highlighting the current investment potential of the buy-to-let market.
  In addition to the traditionally popular beach and city holidays, both of which are growing in popularity in Romania, spa tourism is a fast-expanding industry within the country with nearly 200 resorts built throughout the mountain, hill, plain and coastal resorts. The comparatively cheap spa resorts of Romania attract revenue from foreign visitors across the board, and this sub-sector of tourism is predicted to be one of Romania’s most successful in the future. Romania also has a number of popular ski resorts, where demand is rising for rental accommodation during the country’s long ski season and through its shorter summer season.
 Another boost to the tourism market is the construction of the new €2 billion super-highway being built with the financial backing of the EU. This new super-highway will be completed by the year 2012 and will substantially change the face of the country. Travel time between Bucharest and major European cities will be reduced significantly and new areas of the country will be opened up to tourists wishing to venture further afield than the capital. This will also, therefore, increase the number of locations ripe for the buy-to-let market.                                              

Economy

 Romania is now an upper-middle income economy. After its 1989 regime change, the country has enjoyed a strong and expanding economy with low unemployment, particularly since 2000 when strong demands for exports within the EU market helped strengthen the country’s economy. In 2006, the unemployment rate was 5.7%, and Unicredit Romania estimates further decreases in unemployment figures up to 2010 of 0.1% annually. Such signs of strength and stability in the country’s economy are welcomed by potential property investors, as they suggest both future growth and security in the property market.
 Romania’s economy has performed particularly strongly since 2000. In 2004, ‘HVB Bank Austria’ reported that Romania recorded an impressive GDP growth of 8.5%, just behind Latvia (8.7%) at the top of the Central and Eastern Europe league table. Exports from Romania are increasing, with the first quarter of 2006 showing a staggering 24.8% year-on-year increase. The country is also benefiting from fast-growing foreign investment, increasing at a rate of 26.8% between 2004 and 2005 and having quadrupled in the four-year period from 2003 - 2006. Major multinational companies including Nestle, Orange, Procter & Gamble, Wella, Equant,and GE now have a presence in the capital Bucharest, which is a boost to Romania’s economy, its employment levels, and the growth of its property market.
 Romania’s economy had a further boost in January 2007, when the country officially became a member of the EU. During its accession talks in 2006, Romania was congratulated by the president of the European Commission for its “solid” and “far-reaching” progress during the period of accession talks. The positive effects of Romania’s EU membership will be extensive, including a more consistent income level across the country, greater ease of trade between EU countries, reformation of Romania’s legal system to bring it in line with the rest of Europe, and further infrastructural improvements to boost the country’s already strengthening economy. Membership of the EU will also allow Romania to trade more openly and easily with Europe, which will boost and stabilize its economy further.
                                                                                                                  

 Prices & Returns

 Romania has received widespread positive media coverage as one of Europe’s best options for property investment. A study carried out by PricewaterhouseCoopers, on behalf of the Channel 4 programme 'A Place In The Sun', reported in 2006 that house prices in the country are expected to quadruple within a decade. It placed Romania as number one in their top twenty best places to make money on property in the next ten years. Reasons cited include the country’s extremely good economic prospects as well as the “massive returns” expected to follow its regeneration and infrastructural investments as a new member of the EU. The programme’s report forecast a huge 414% return on investment, suggesting that €100,000 invested in 2006 could be worth a staggering €514,000 in 2016, the increase largely due to the impact of EU membership on the property market. Property prices are said to have increased by 25% on average year-on-year since 2003, presenting property investors with a fantastic potential for capital growth in the future.
 Although property prices are rising quickly in Romania, they remain cheap by Western standards. Throughout 2006, the return on property investment was among the highest in Europe, and the average rental yield for a property in Romania is an impressive 11%. Its EU accession will mean further growth for the country’s economy as it receives subsidies as well as significant levels of Foreign Direct Investment (FDI). Also, as Romania develops an entirely free market economy, greater demand for property will cause an upward pressure on prices. The opportunity for an impressive return on investment will be on-going, with prices forecast to rise by up to 30% in 2007. Prices for new studios in Bucharest start at around €60,000 (£40,000), and in the rest of the country prices for a new property are between €20,000 and €150,000.
 The Black Sea Coast of Romania enjoys a summer holiday season stretching from May to October, affording buyers a potentially lucrative investment opportunity as well as a selection of resorts to choose from.
 Romania’s metropolitan zones also offer excellent opportunities for real estate investors. The capital city of Bucharest is very much the economic hub of the country, generating around a fifth of the country’s GDP despite having only 10% of its population. International travel to the main cities of Romania is catered for by increasingly frequent low-cost flights, with carriers operating throughout mainland Europe and the UK. An average rental yield for an apartment in central Bucharest would be between 7.8- 8.4%. In the suburbs, higher yields of 8.1% to 10.5% are available.
 Investors wishing to capitalize on the buy-to-let market currently have a choice of locations where they can purchase Romanian property at favorable prices, even compared to the other Eastern European emerging markets, with a view to making impressive returns.
                                                                                                                  
This web site provides general advice for guidance purposes only. It is recommended to seek professional advice before making any purchase. Contact us for additional information or services.