The real estate sector was a national “sport” that has brought wealth and well-being to many Romanian investors.
During the real estate boom, ads published by Romanian agents in the foreign press guaranteed annual returns of 50 up to 100% of the amount invested, a mirage which attracted thousands of private investors from abroad. Still there are good businesses in real estate even today. There are professional investors for whom buying real estate properties continues to be a gold mine.
But, for example in 2007, somebody was persuaded by friends to buy together an area of land in order to plot it and resell it. Not only did he borrowed from the bank 20,000 euros, but persuaded the parents to join, using part of the money earned by them from the sale of an apartment.
The land is in an area which, at that time, was in a first stage of development. Prospects for a profitable resale were so promising. And indeed, shortly came interested buyers who offered a good price, but much lower than hoped. Yet he did not sell the land then.
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Expectations were greatly diminished after the crisis began to show its fangs. Unfortunately, for the the investor it was too late. Today, after 5 years since contracting the loan he still pays a monthly rate for a land that produces just … weeds.
Real estate consultants argue that in such a situation the best profit recovery is only possible by assigning the property a surplus value – ie the construction of a building. For example, a mini-block with several apartments. But that requires more money, and it is yet another story.
Situations more or less similar are still met today all across the country. Many Romanians who have tried their luck at the transactions with land or houses lottery, lost not only money but also financial credibility (having been listed as bad payers in the banking system).
According to NBR, delays of more than 30 days (the ones that are automatically recorded in the Credit Bureau) and are provisioned by banks, have skyrocketed this year and in the last four years. Moreover, commercial banks have become today the largest landowners and some of the largest homeowners.
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Today, the number of “players” in real estate has decreased dramatically. However, if the “ordinary” Romanian investor is the great absent of the real estate market, who is behind the transactions (not few in number) and, more importantly, where is the profit hiding? Professionals say that the real estate market in general, remained under the domination of investment companies specialised in this field, among them, playing a leading role, being capital investment funds ( like NEPI or Immofinanz ). Individuals who are active in the market are usually Romanian, but mostly foreign-owned companies are the ones investing most money.
The difference between the two categories is the purchasing power , the source (cost) / credibility of the investor, the investment period and … VAT! In principle, Romanians go for individual purchases for tax is lower. Companies are more active, have more money, are very aggressive in negotiations, have the advantage of the brand and want to create national networks.
Buying real estate it is still worth investing in, but only in certain areas, as previously mentioned, yet offers are plenty. If interested in any type of real estate property feel free to access the best place to find them Businesses-properties.com .
