By Corina Saceanu
“I would certainly consider buying property in Romania, but my business travel to Romania makes it a pragmatic choice,” replies David Webster, director of the Anglo-Romanian Economical and Political Forum and British businessman, when asked whether he'd be interested in buying Romanian property. The question was raised by a wave of news reports indicating British interest in Romanian and Bulgarian property.
Last year a popular UK TV program called “A Place in the Sun” identified Romania as the best property investment market in Europe.
This TV show praising Romanian opportunities triggered further interest among British people, and now a report shows one in seven British people are interested in acquiring property in Romania or Bulgaria.
The report was recently publicised by MRI Overseas Property. “The two countries' EU accession is an important opportunity for investments in properties,” says John Triton of MRI Overseas Property.
The ex-communist countries that joined the EU in 2004 have witnessed property price increases, and the same growth scenario may be projected for Romania and Bulgaria, according to Triton.
“In the last two years, the percentage of British people expressing interest in buying property in Romania has increased by 45 percent. Of those, only 35 percent have actually bought properties,” explains Oana Taraze, associate managing director with Eurohouse real estate agency.
Back in 2006, “A Place in the Sun” underlined the 414 percent return on investment over ten years that a property investment in Romania would bring, followed by Poland and by Portugal. The information is still backed up by local specialists.
“Compared to France, Spain and Great Britain, where the average annual profit from real estate does not exceed 5 percent, Romania is still five times cheaper and generates a 2.5 to 5 times bigger yield,” Taraze went on.
Briton David Webster, who travels back and forth to Romania, believes the country suffers from UK people knowing little about it, unlike its EU accession colleague, Bulgaria, which enjoys more popularity. “I suspect if you were to survey people on which country – Romania or Bulgaria – they are considering investing in, that Bulgaria would be the overwhelming favorite,” Webster told Business Review.
He would consider buying property in Bucharest as a place to stay when he is there and as an investment opportunity. “A place in the mountains is also very tempting as I do very much enjoy going there,” Webster adds.
The British who are buying property in Romania are aged between 30 and 55 and are in managerial positions with international companies, and earn over EUR 120,000 per year, according to Eurohouse. Around 60 percent of these buyers are acquiring homes for their own use or to be rented out, while the rest is being bought by multinational companies to for employees or company use.
romania trails spain, france, italy
The British quest for properties overseas started when local prices started to go up. “Property ownership is part of the British mentality,” says David Webster. In the 80's, Spain was the favored destination, as that country joined the EU in 1986.
The huge interest caused prices of Spanish properties to triple in the first ten years after accession. Moreover, in this particular case it led to more official corruption. In the 90's, British people switched to France and Italy.
These three countries are still popular among the British, but as the EU has enlarged, so has the markets UK inhabitants consider, explains Webster.
Because of their experience in property price rises in the UK, many people will speculate that something similar might happen in other countries and that buying a property or several properties can represent an investment, he goes on.
The residential market in Romania is the main attraction for British buyers.
Last year, residences accounted for 65 percent of purchases by foreign citizens in Romania, according to Taraze of Eurohouse. British interest is divided between apartments still in their project phase, all located in Bucharest, and new houses in the Pipera, Baneasa and Iancu Nicolae areas. They are also interested in buildings from the period between the two world wars in neighborhoods like Aviatorilor, Kisseleff and Primaverii.
British people could consider properties outside Bucharest but that likely will not occur until Romania is seen as a more attractive and viable tourist destination. “There will certainly be some people who do already own holiday homes in parts of Romania, but I suspect Romania is not yet seen as a good location for this,” explained Webster.
Romania still doesn't have a community of British homeowners, like Bulgaria does. It is existence of such a community that makes them feel comfortable buying in the country.
The development of tourism is also an important factor linked to property investment, as many foreign buyers are visiting the country and prospecting the offers prior to investing.