Increasing revenues on the Romanian market and the growing appetite for placing money in real estate have inevitably led to the development of a niche: holiday homes. There's no surprise in people's interest for holiday homes, however, as local wealthy individuals are intensively buying houses in the mountains and at the seaside. The offer is for the moment still limited, say specialists, but several projects in holiday resort areas have recently been launched. Others are expected to follow suit.
Currently less than 1 percent of the Romanian population owns a holiday home, but the percentage is expected to almost triple in the following years, after mortgages become more accessible, believes Lucian Radu of Eurohouse.
Villas in the mountains, apartments at the seaside
For the moment, over 60 percent of the demand for holiday houses comes from foreign private investors with revenues between EUR 4,000 and EUR 6,000. These individuals target houses in Valea Prahovei, in luxury residential areas and resorts like Sinaia, Busteni, Azuga, Breaza and Cornu, says Radu. Such locations are most sought after due to their proximity to the capital city, says Alina Vintila of Colliers. Foreigners who buy villas in the mountains prefer this option compared to paying for a hotel room, which in many cases is of poor quality.
Holiday homes at the seaside are also the focus of attention but the demand at the seaside is higher for holiday apartments, rather than for holiday villas, says Vintila of Colliers.
Areas close to Bucharest, like Snagov or Izvorani, are catching up with their own sets of holiday and weekend villas.
Once resort infrastructure is in place, it will lead to increased demand for holiday retreats in mountain areas. Azuga now has two functioning ski slopes, with a third under construction. Busteni has a modern slope with a cable lift and Predeal had its teleski modernized last year. The improvements have led to an increase in the number of visitors and have triggered growth in the local economy, encouraging investors to build houses to sell. Mountain resorts are expected to see 20 new ski slopes in the following years.
Apart from traditional destinations for tourists, other undiscovered areas for tourism are to see a burst.
The increasing trend of eco-tourism will encourage real estate investments in the Danube Delta, in nature resorts and health spas such as Borsec, Olanesti, and Herculane, popular holiday destinations of the communist era.
In addition, as demand becomes excessive in the Prahova Valley, people will start looking for alternative spots for winter sports; hence the development of ski resorts.
The Romanian seaside could improve significantly in the coming years, if investors build holiday homes and the transport infrastructure is put in place. The resort has little importance at the seaside when deciding to buy a
holiday home. What matters are the proximity to the beach and a view of the sea.
Fancy a EUR 2 million villa?
Holiday units in residential compounds in the mountains sold for some EUR 800 to EUR 1,000 per sqm last year, while for new luxury holiday villas, the prices even reached some EUR 1,300 per sqm, according to Eurohouse data.
Prices can vary between EUR 100,000 for a modest villa and to over EUR 1 million for a villa in Poiana Brasov, says Alina Vintila of Colliers.
Prices have been going up on a yearly basis, due to increases in costs for both plots, which are scarce, and in the price of construction materials as well as the workforce.
The most expensive holiday home Colliers has in its portfolio may top EUR 2 million in price, although the actual amount hasn't been established yet. The villa is located in Poiana Brasov, next to a golf course.
The typical holiday home is made up of a ground floor and first floor, and features three bedrooms, living, bathroom and kitchen, overall covering between 150 and 500 sqm, plus an additional 150 to 500 sqm surrounding grounds. The plots can even reach 1,500 sqm. For a secondary home, the actual area of the house may be smaller, but experts recommend bigger surrounding plots.
Developers of residential compounds on Valea Prahovei are usually building small villa compounds over ten units. At the seaside, however, constructors go for apartment buildings. People are usually looking for holiday homes with three or four rooms, flats in newly-built blocks, hotels and even historical buildings. Apartments are most sought after because they are easier to maintain than villas.
Holiday villa investment returned in up to seven years
Several years ago people used to build their own holiday villas, as the offer on this market was very poor. Developers started to build and now the offer is a little more diversified.
Wooden villas are the most common, as they involve 40 percent smaller costs than the usual brick developments. “The investment in a holiday home may be recuperated in five to seven years, if we consider a 25 percent annual increase, without including the plot of land, which also sees around a 40 percent increase in value,” says Lucian Radu of Eurohouse. The best solution for an investor in a holiday home is to build and rent a house in the mountains, where it can be rented for eight to nine months per year. At the seaside, it is limited to four months, says Radu.
Although holiday homes in Bulgaria are 40 percent cheaper than in Romania and are located close to tourist resorts, which makes the return on investment come quicker, the purchase procedures are more complicated. They also involve higher prices, from the agency's fees, between 3 to 9 percent of the transaction value, bank deposit of at least 10 percent of the property value, notary fees and lawyer fees.
Residential compound Shepherd's Village, located at Magura de Moeciu, in Piatra Craiului national park, is made up of ten holiday villas. It required a EUR 1.5 million investment and is part of a larger holiday project called Transilvania Village, Regatta has announced. Villas are structured on a ground floor and attic, built on a 1,000-sqm plot. The villas are made of brick. Houses are priced around EUR 155,000, which includes the plot. Each villa covers 123 sqm, of which 107 sqm is built area.
A residential project in Olimp, called Sara Sea View and developed by Extenso, will be finished in 2008 and will feature 128 apartments. The company will invest around EUR 15 million in the residential compound.
The two- and three-room apartments cover between 90 and 150 sqm and are priced from EUR 800 per sqm. The developer offers property management during the periods in which the owners are not resident.
Zoltim Haller will build 800 flats in Predeal for some EUR 50 million. The apartments will cover from 40 up to 150 sqm, for the penthouses. Prices start from EUR 70,000 for a studio.