Full of Eastern promise: Romania to boom sooner rather than later
And, of course, higher inflation always makes borrowing money more attractive because the loan gets cheaper faster with time.
Generally, prices in Romania increased by some 30% in 2003.
And, just to prove our point about aiming an investment not at the luxury end of the market, but at far more modest units suitable for the aspirant middle classes, Octavian Bota points out that the biggest rise – more than 50% - was for block apartments built before 1989, which usually sell for below 30,000 euros.
Bota puts it like this: “Probably the most important segment of the market, which is still in an incipient stage, will be urban developments to be built for middle-income families, with the support of the government, under the provisions of the mortgage law.
“Almost all municipalities have drawn plans for such developments, and it is hoped foreign investors will compete for their construction.”
What is going to drive the economic engine of Romania, along with property prices - as it will those of other new members of the EU - is a massive influx of foreign investment.
In this regard Romania, now it has improved its fiscal and judicial systems and resolved property restitution problems, and generally come up to EU standards, really stands out.
Why? Because huge infrastructure spending is in the pipeline - especially for telecoms - AND it has a motivated and educated labour pool that is still incredibly cheap. The average monthly salary in Romania is 150 euros; in Hungary, by comparison, it’s 450 euros.
Romania, then, offers the kind of combination that is highly attractive to foreign business investors.
In the last seven years, the construction market alone has seen investments of around $20 billion.
In 2003, the country received $10,433 billion in FDI overall - a 59% increase on 2002. This kind of money in a country with such low labour costs is going to revolutionise the economy. And the property market will be pulled along in the wake.
