Full of Eastern promise: Romania to boom sooner rather than later
Here’s a fact that surprises a lot of people: Romania is the second largest country by population in Central and Eastern Europe, after Poland, with 23 million consumers.
One school of thought has it that prices can be expected to rise by at least 25% before the start of 2007 and accession. That’s just over two years from now.
These are modest predictions, we believe. 15%-30% growth a year is more realistic. And this kind of growth will go on long beyond accession.
According to Romanian property market expert, Octavian Bota, there is an imbalance in the market at all levels, even at the luxury end.
There are several factors already driving up prices and these will increase in significance.
The most important is the impressive growth of the economy.
Inflation has fallen from astronomical levels and is continuing to fall –from 154% in 1997 to 14% last year with a rate of 9% expected this year.
GDP continues to motor – with 5.6% predicted for 2004, up from 4.9%in 2003.
That means wages will rise, and this in combination with the wider availability of mortgages will drive the domestic market. Once again, we are looking at the emerging middle classes as the place to aim your investment.
New regulations have opened up the mortgage market domestically and it is expanding rapidly. Interest rates are still high by western standards – some 7 to 9% above base, but when you consider inflation (including wage inflation) this does not look so high.
