IL Postcard

Double Your Money in 3 Years in Eastern Europe

Date: 02/05/2008

Wednesday, Feb. 6, 2008
Bucharest, Romania

Read more about foreign real estate investing in International Living Postcards—your daily escape

Some Romanian-based real estate commentators have made bold forecasts that prices in Bucharest will grow for another 15 years. I wouldn’t dare to make such far-sighted claims, but I do believe the property market will continue to rise for at least the next two to three years.

The reason I can say this? Because I’ve researched and reported on European real estate markets for International Living for the last 15 years. And in that time, I’ve seen trends that suggest certain markets can be fairly predictable.

Over the last six or seven years, many of these Central and Eastern European countries—and their capitals, in particular—have seen massive real estate growth. In some cases, prices increased by more than 100% in three to four years.

The activity taking place in Bucharest and other large cities in Romania over the last 18 to 24 months suggests the country is set to follow the pattern of countries that joined the EU over a decade ago.

Because the price of land in the capital is too expensive for most people, there is little chance that the Bucharest market will become oversupplied or saturated with new developments—at least in the short term. Fewer than 8,000 new housing units came onto the market over 2005–2006.

A “potential” maximum of 30,000 new units will be available through 2010, a report by the Colliers real estate group estimates (based on ongoing developments and projects). Colliers qualifies this further: “However, based on our experience, less than 50% of the projects announced are developed. So the real stock of new apartments for sale by 2010 will not exceed 15,000 units.”

The demand is certainly there at the moment. In September 2007, Spanish developer Hercesa sold all 142 apartments in the first phase of its eastern Bucharest-based Vivenda Residencias in under a month.

Overall, apartment prices in Bucharest rose by an average of 20% in 2006. The final figure for 2007 is likely to be in the 15% to 20% range.

Leaving aside really high-end developments and communist matchbox apartments, prices including tax are now mostly in the $170 to $280 per-square-foot range.

With square-foot prices for new developments not significantly higher than for the old apartments, I think buying new makes more sense.

Steenie Harvey
Roving Europe Editor, International Living

Editor’s note: In the current issue of the International Living magazine, Steenie further explains why Bucharest makes sense as one of the hottest investment havens of 2008 in her article, “Cash in on Eastern Europe’s Next Property Boom.” To get instant access to this article, subscribe to International Living .

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- The Best Way to Buy in Romania

- Cash in on Eastern Europe—Buy Bucharest Now

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