Real Estate In Bucharest During “Crisis”

As my primary expertise is in real estate, I am of course interested in the local property market. How is the local real estate market handling the crisis? This is one of those questions where if you ask 100 people then you’ll get 100 different answers (and depending on the 100 people chosen you may possibly get more than 100 different answers). I will first start off by removing two issues in particular from this post, and that is the money due to be paid back (or not paid back) to the IMF and the upcoming elections. There are to many unknowns and variable at play here to give a clear picture of how any of this (in reality) could effect prices of RE.

A side note that is paramount in some real estate values; the PRE elections are playing a role here… especially in sector 2 near Decebel, Stefan, and Mihai Bravu. If you’ve driven around a bit you have to try really hard to miss the commie buildings draped in tarp and flush with scaffolding. You’ll see a total of 8 color schemes being used on these buildings, with some sealant foam, some pressure washing, and some slight rehabilitation, these buildings are getting a new lease on life. Could this possibly be politically motivated in some way?? Nooo of course not…. But none the less, curb appeal plays a very important role in the values of the units in that particular building as well as surrounding buildings.

Communist Style Building "Before" painting

When I was here a few years back, I feared I may have missed getting in at the beginning (or relatively close to the beginning) of the big wave of appreciation that came with the formal announcement of EU “acceptance”. I actually began looking in Cluj and elsewhere for different property opportunities (the Nokia establishment was a big draw, as was the “college town aspect”). It was then that a 1 or 2 bedroom flat in the best areas of Bucharest could be had for around 130,000 Euros. Tipping the scales were some ultra-luxurious smaller units in Dorobanti for 250,000, but for the big picture, I tossed out the ultra-highs, as well as the scummier areas of town. I basically stayed within sectors 1 & 2, with a small piece of sector 5 that was interesting to me value wise.

Communist Style Building "After" painting

Fast forward to today, and we see prices hovering around where they were prior to the “boom” that seems have been “reset” by the crisis; almost like killing a character on a video game after getting really far in the game, then pushing reset and starting from the mid-point of the board again.

So do we have another great wave to ride?

I hear so many people telling me I am crazy for wanting to buy as much well place, potential laden property that I can (including suburb land) but I really believe we are heading for a big one pretty soon. There is indeed a lot of money coming into Bucharest (from Romanians that have left and come back, to Arab influx, as well as many American and English expats).

Remember…. 80% of the crisis is in peoples minds… but it is these people that influence the purchasing habits of the whole.

Buy low, sell high. Yes we may have a bit more to fall, but the sure thing is we ARE lower now than we will be in the future. Get in now, continue to get in, until you start to reap the rewards of the climb. Then stop “getting in” and begin the transition back out. This is so simple people. Forget all the other “strange elements” and make the decision to at least move forward.

An interesting point however: the suburbs are growing. Becoming more westernized? There WILL be urban sprawl, which will leave the less desirably properties in the city in a bit of a pinch, but as always it will swing back and forth. Just position yourself properly and you’ll benefit from both Urban and Suburban property. I originally thought the high end market was toast, and would continue to feel the hit from both the crisis and the sprawl, but I have since revised my way of thinking. The wealthy is a growing class. Keep this in mind when purchasing. You may not believe it now, as we are surrounded by, and bombarded with the scarcity mindset of cashflow, but again, 80% mental.

I’ve skipped around a LOT on some of my thoughts on this post, I am spurring discussion for this topic. I would welcome anyones’ opinion as well on this matter, as it is one of those interesting but “argue til you’re blue in the face” topics.

We at the Bucharest Expat site are quietly making our moves. If you have an interest in working with us, joint venturing with us, or becoming a partner, please let me know so we can chat!

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Tags: apartments, boom, cashflow, crisis, Dorobanti, economic, elections, EU, Expat, flats, growth, houses, income, invest, investments, joint venture, money, partnership, property, real estate, rent, suburban, urban

This entry was posted on Sunday, November 8th, 2009 at 18:06 and is filed under Business & Economics, Misc., Politics. You can follow any responses to this entry through the RSS 2.0 feed.