Economic Factors In Romania

There are many economic reasons that make Romania such a promising property location. Below are some of the key factors you should be aware of during your investment research.


Foreign investment

In 2008 all types of investors, from investment funds to smaller private developments, are continuing to hedge their bets on Romania. According to the Romanian Agency for Foreign Investment (ARIS), foreign investment from January to April 2008 increased by over 100%, compared with the same period in 2007, making Romania one of the main recipients of foreign direct investment in all of Eastern Europe.

As Romania’s financial and economic core, Bucharest now contributes to 21% of the country’s GDP, and it is a primary destination for overseas real estate investors in Romania. As the nation is in the process of working to bring its infrastructure and economy even further on par with Western European standards, many shrewd investors are regarding now as the ideal time to act.

Bucharest

The increased presence of multinational companies - some 55% of foreign investments are coming to Bucharest - is bringing with it strong rental demand and a ready market for quality new developments. Indeed, increased foreign investment and economic activity means that Bucharest could double its population (now approx. 2.5 million) within the next ten to fifteen years, according to the World Bank.

Covering over 500,000 m2, the largest technology and commercial zones in central/eastern Europe will be based in Bucharest, accommodating commercial giants such as BMW, Carrefour, Mobexpert and Ikea. The city also boasts the largest entertainment complex in Romania, plus a huge shopping city with well-known brands like Massimo Dutti, Bershka, Zara and Oysho. Large multinational IT and software companies such as IBM, Microsoft, Oracle and Sun Microsystems have all located their European headquarters in Bucharest.

Growth

The current global economic crisis cannot be overlooked; however, Romania holds its own terms of GDP, with 2007 figures reflecting growth of 5.8%, and 5.5% in the first quarter of 2008. Inflation, for now is expected by the International Monetary Fund (IMF) to remain relatively high at 6.5% by the end of 2008, but with tight monetary controls now in operation, inflation should decline according to the National Bank of Romania’s targets for 2009.

The real estate market is to profit from the country’s growing economic activity and, according to UK Channel 4’s ‘A Place in the Sun’, industry experts predict that prices in Romania could grow up to four times within the next ten years.

The April 2008 Ernst & Young SEE Attractiveness Survey also reveals that Romania is regarded at the most attractive European country in which to invest, beating Turkey and Greece.

Tourism

The World Travel and Tourism Council (WTTC) predicts that Romania is to become the sixth fastest growing tourism sector in the world, with a growth projection of 7.9% per year from 2008 to 2016. The Tourism Plan, launched in 2007, aims to hit an annual target of 10 million visitors by 2016.

Vibrant, historic cities, castles, stories from Bram Stoker’s “Dracula”, as well as ski and beach resorts all combine to give Romania great potential as an increasingly successful tourism destination.

Affordability

Romania inspires confidence due to a low cost of living, drawing expats, retirees and investors. Despite a growing property market, Romania still enjoys one of the lowest costs of living – up to 50% lower – than in the rest of Europe. The exchange rates mean that British investors and tourists have a great deal of buying power in Romania. With increased numbers of people moving to Romania, today’s investors have an ideal exit strategy in the form of a ready market for their properties.

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