Saturday, Jan. 19, 2008
Learn more about investing in foreign real estate in International Living Postcards—Saturday Edition
I was bullish on the renovation market in Bucharest in 2005. But I’m hot on the whole country of Romania for 2008. The market has moved on from renovations…to pre-construction. And forces are aligning to catapult this market to boom status.
Two important phenomena are at work:
1. What happened in Ireland during its Celtic Tiger boom is happening here. Romanians who fled their homeland during the years of trouble are returning. This is causing an increase in population…but the expansion of households is far outpacing population growth. Children are moving out of their parents’ homes sooner than at any time in this country’s history. As the economy improves to compete with other EU countries, there are plenty of good, well-paid jobs for young Romanians. These young workers are eager to spend their money on digs of their own…just like Ireland in the 1990s.
This new demand, which I believe is far from tapped out, is spurring an expanding construction industry…and rapid property value appreciation. Even as supply increases, I predict values will continue up.
2. Romania is enjoying increased tourism (for skiing in winter, and hiking and castle-hopping in summer), an increased U.S. military presence, and an ever-increasing number of big international companies opening factories and distribution centers. This will create a direct positive impact on the economy…and increase the number of foreign property buyers.
The easiest and most effective way to participate in this growth is to invest in a pre-construction apartment. I first made this recommendation last year (I told subscribers to the IL magazine about this market in January 2007) and I make it more urgently now—your window to get in early in Bucharest is closing. (Bucharest is the obvious choice for a buy—it’s the country’s political and economic capital.)
Bottom line: I expect double-digit appreciation year on year in this country for the next five to seven years.
Lief Simon
For International Living
P.S. While foreigners can’t own real estate directly in Romania, setting up a Romanian corporation to hold the property is straightforward. And the corporation can be owned 100% by a foreigner. I covered this, along with more specific recommendations for Romania, in my recent Property Alert to members of International Living’s Publisher’s Roundtable. Membership of this elite group may not be for everyone…but if you can afford the enrollment fee, my Property Alerts alone (a small part of what you get) are worth more than the cost of joining.
