Real Estate in Romania - The last ten years

In the last ten years the Romanian real estate market grew at extraordinary rates in all categories.

Land prices were very low because land was given back to previous owners after 50 years of communism regime and people didn't knew the value of their new, "overnight" properties, plus that the demand was very low, so in the first years (1994-1996) you could buy land for 1-2 USD/ sqm in areas close to Bucharest, that lately became residential areas with prices like 200-300 USD/ sqm.

Apartments were owned by the state and rented to population and after 1990 they were sold to the tenants at low prices (because of the inflation some people paid half of the price from one monthly salary). So most of the people owned their own places. The demand was very low, it took months to sell a 3 rooms apartment in a nice area, at a price like 13.000 USD. Slowly the demand grew, but the incomes were low so the people couldn't raise the whole amount to buy an apartment and often lived with their parents, and even grandparents. Around the year 2000 banks loosened their conditions and people were able to take credit to buy a house so the demand grew instantly (it was cheaper to pay the credit than to pay the rent) and so did the prices. In 2006 the same 13.000 USD 3 rooms apartment cost 70.000 EUR and was sold in a week.

Old houses were valued for their position and land and were used to raise new buildings and followed the general land trend.

New houses were built close to the city, in new residential areas, former agriculture land, they had huge surfaces and huge yards. As land prices begone to rise the yards got smaller, builders raised small residential parks of 5-10 houses and houses were built farther from the city. In this quick development the authorities didn't get involved so the new residential areas were chaotic, with narrow streets, luxury villas close to open land, inhabited finished houses and building sites in the same residential complex for 1-2 years.The price grew slow, doubled in 5 years, in the last year there were cases of builders that made less profit from selling the new house than they could do if they keep the land free and waited for time to pass.

Offices - There were no office buildings in Romania so the market was huge, and it was filled. Major foreign investors oriented to this kind of business, and developed projects in all areas of the city, but mainly in the center and in the north. The rent level was constant in the last years (around 18-20 EUR / sqm) but some developers sold the rented buildings to investment funds for a good profit.

Residential rent - the average rent level for old apartments doubled in the last 5 years but didn't keep up with the selling prices, because in Romania most people prefer to own the house rather than to rent it, even if they have to pay the credit for 30 years. Rent for new apartments is now around 10 EUR/ sqm and is used as an alternative for offices or for residence of foreigners that live in Romania.

Right now the market follows the ascendent trend but more moderate, in waiting for the integration in the EU.