Bucharest Residential Market

The Economist Intelligence Unit ranks Bucharest as the fastest growing city economy in Europe; 2006 saw GDP growth in excess of 9%. Against this rising tide of affluence, the market for new residences in Bucharest is severely underserved. 22 major residential projects are on-going, which will provide only ~15,000 apartments in the next three years. Given that the projects are built in phases, only 4,000-4,500 units are being released each year.

The commercial and business centre of Bucharest has migrated north of the city to Baneasa-Pipera, where sufficient land for development is available. Offices, commerical lettings and residences are built primarily on greenfield land, in areas previously synonymous with the villas of the upper class. Apartment buildings in these areas are highly sought after, not least because they comprise low rise buildings, integrated car park, leisure facilities, children’s playground, proximity to amenities and work.

While the decisive factor for Romanian buyers is location, followed closely by price, the buying criteria for investors is generally the option to buy property off-plan and the developer’s guarantee. In developments with the most extensive features and facilities, especially with access to schools, play grounds and other child-related facilities, it is the one and two bedroom apartments that sell first. In other developments it is generally studio apartments that investors opt for, due to the lower purchase price.

Demand will continue to grow and should reach ~10,000 units per year by 2010, due to the following factors:

• The wages are expected to double by 2010
• Recent EU accession and the increased foreign investment
• Competitive mortgage market
• Rapid growth of the Romanian middle class
• The world’s top companies relocating to Romania

Finally, the demand for luxury units is growing not only in Bucharest but in the mountain and the Black Sea Coast resorts. More and more Romanians are attracted to the idea of owning a holiday home in one of the closely-accessible tourist resorts.