Reasons to Invest

1. Demand by far Exceeds Supply

Following the establishment of democracy in 1989, over a decade elapsed before significant construction efforts began anew. Consequently, there is pressing need to replace the ailing housing stock with modern residences. According to the National Housing Authority, there is a shortage of approximately 965,000 homes across the entire country. The highest deficit occurs in Bucharest, where 200,000 extra homes are required principally to house the burgeoning middle class.

Conservative estimates indicate that it will be at least another decade before supply begins to satisfy demand. Rental and resale markets will therefore continue to provide healthy investment opportunities for the early investor in this intervening period.

2. Expatriate Romanians to Raise Equity

One consequence of EU membership is that several million Romanian citizens have taken the opportunity to travel and work abroad. The major destination has been either Italy and Spain, where the language most closely represents Romanian. In addition to sending approximately 7 billion Euro per annum to family members in Romania, the express goal of the majority is to earn enough to purchase a property at home. Property prices are set to rocket in approximately 3-5 years time as the pool of expatriates acquires equity.

Our advice to our clients is not to delay their investment in order to take full advantage of the ensuing property rush.

3. Accelerating Economic Growth

One of the fastest growing economies in the world, Romania has enjoyed six years of robust gross domestic product culminating with a 7.7% GDP growth in 2006, the highest growth rate for a decade and among the highest in Europe. This was achieved in concert with declining inflation and interest rates.

4. Favoured Destination for Foreign Investment

Romania has received increasing amounts of direct foreign investment in the last few years, reaching an unprecedented 9.1 billion Euro in 2006. This magnitude of investment, second only to Poland in the region, is set to continue its upwards trend in the foreseeable future.

The positive economic environment, competitive tax policy and the highly skilled labour force have succeeded in attracting major multinational companies including: KPMG, Orange, Oracle, Toyota, IBM, Alpha Bank, Renault, Wrigleys, Deloitte & Touche, P&G, Unilever and L'Oreal. The presence of the world’s top companies represents a vote of confidence in the strength of the Romanian economy and its continuing capacity to grow.

5. Developing Mortgage Market

Although Romania’s mortgage market has grown rapidly over recent years, the sector is still significantly under-developed and accounts for less than 2% of the country’s gross domestic product. This compares to an average of 44% in the European Union and 65% in the United Kingdom.

There is clearly greater scope for development of the Romanian mortgage market. Greater availability of capital will raise house prices significantly and secure the high returns demanded by the overseas property investor.

6. EU Accession

Romania is the latest country to join the EU community. The economic benefits of EU membership have been well demonstrated for previous EU entrants, e.g. Rep. of Ireland. With EU structural funding of 30 billion Euros ear-marked for 2007-2013, there is every possibility of Romania enjoying a similar success story as the Celtic Tiger.

7. Romanian Mentality & Property Ownership

There has been an understandable counter reaction against the uniformity and impoverishment that was enforced during the communist era. Nowadays conspicuous displays of wealth are the means to demonstrate and assert social status. Nowhere is this more evident than in the choice of property. The goal for the majority of Bucharest residents is to forgo cramped soviet-era central flats for the newly built, modern and spacious dwellings in the suburbs.

8. Strategic Location

Romania sits on the crossroads of many historic trade routes that allow access to another 200 million consumers within 1000km- radius of Bucharest. The main channels of these routes are the Danube River and the port of Constanta, -one of the largest ports on the Black Sea, which is linked to the North Sea by a new navigation route through the Rhine –Main - Danube Canal.

Romania acts as the business hub for the rest of South- Eastern Europe, a role drawn from its strategic location between Central Europe, Russia and the Balkans.

9. Tourism

Romania is a country well worth visiting. It has been endowed with breathtaking contrasts between plains, mountains and sandy beaches. Due to the presence of low cost airlines Romania is likely to see an increase in tourism popularity.

The number of tourists that arrived in Romania from January 1 to December last year is 27.3 percent higher than the previous year. Around 94 percent of the foreign tourists came from countries within the European Union.

The country’s business tourism saw a 20 to 30 percent annual increase starting with 2005 and the ticketing industry witnessed a 22.5 percent hike.

10. Competitive Taxation

When it comes to competitive taxation, most of the Eastern European Countries are trying to follow the successful Irish example of achieving faster economic growth through low taxes and a free economy.

Romania has adopted a flat rate taxation of 16%, which is the lowest in CEE.

"I also congratulate the Prime Minister on having a 16 percent flat tax. I'm a little envious. I would like to have been able to achieve the same objective for our tax code, and it was a smart thing to get done, because I think those kinds of policies will enable the Romanian folks to have a bright future".
US President G. W. Bush

The competitive fiscal regime places Romania amongst the most appealing in the region, thus generating a huge interest from international companies which are planning to relocate most of their business in the area.