The country is only just shedding its wild west tag, and like Bulgaria is targeting an EU accession date of 1 January 2007. You might be tempted to wait until then before investing, but prices are rising so rapidly that delaying could prove costly, says Richard Davies, investment director at overseas property website Propertysecrets.
Until recently, Romania was off limits to UK investors, because no local finance was available to foreign investors, but thats no longer the case.
Regulations have changed and banks are rushing to market new products for foreign property investors, which should give local property prices a further boost, says Davies.
Mortgage details arent available yet, but Davies anticipates the main loan currencies will be the euro, Romanian leu, US dollar and Swiss franc. Borrowing rates should be affordable, around 6 per cent or possibly less if you borrow in euros, with LTV ratios of up to 75 per cent.
Prices in capital Bucharest are set to explode. The city has been booming for several years. People are getting rich fast. They are also keen to have material possessions, clothes, fast cars and a nice modern apartment. Id be very surprised if we didnt see 30 per cent capital growth in the next 12 months, Davies says.
However, Davies is more sceptical about the Black Sea resorts. “After the overdevelopment and hype in Bulgaria, we view them with a very sceptical eye.”
Accessing the Romanian property market could still prove quite a challenge. Conti Financial Services offers mortgages in more than 30 countries, including Bulgaria, the Czech Republic and Poland, but not Romania.
EU accession isn’t a done deal; Romania must still meet criteria on technical matters such as food safety and the distribution of EU agricultural aid. If it falls short, that could hit your investment.
But the rewards of success are enormous. Romania is in line for EU investment of 10.8 billion between 2007 and 2009, and a further 18.3 between 2010 and 2013.
Romania was also named the best EU destination for foreign property investors by Channel 4 programme A Place in the Sun. The average property costs just £17,000, and Channel 4 speculates that a £100,000 property could be worth more than £500,000 in a decade but don’t get carried away.
Dave Wellen, managing director of Chindia Estates, which helps foreign investors buy property in Romania, says the summer season only lasts around four months, so dont bank on too much income from holiday lets, although low prices should compensate. Romania still comes out on top as the best place to profit from property investment due to its recent excellent economic performance, infrastructural improvements and the low cost of property.
Capital growth of 30 per cent and rental yields of 8 to 9 per cent make Romania tempting, if you can accept the risks.
Next:South Africa
