The Following is an Interesting Article From an older New York Times Posting. An interesting look at the “what money could have bought” concept.

In Bucharest, a Flourishing Housing Market

By JON GORVETT

BUCHAREST-

The streets may sometimes be chaotic and the sidewalks crowded, but to some of the New Yorkers who live in Romania’s capital, it can also be one of the most rewarding cities in Europe.

Leslie Hawke, mother of Ethan Hawke, the actor, is one such resident. She moved here seven years ago and now lives in a rooftop apartment on the city’s main street, Calea Victoria.

“It’s Bucharest’s Fifth Avenue,” she said, looking down from her 45-square-meter (485-square-foot) terrace, which curves around her apartment. “It has all the major department stores and museums, palaces and squares.”

Spreading out below her apartment is the eclectic jumble of downtown. And across the rooftops are the onion domes of a Russian church rising above 19th-century French-style apartment buildings. This is Europe’s sixth-largest city, with a population of 1.9 million.

Ms. Hawke’s 1930s-era apartment has 95 square meters (over 1,000 square feet) of living space, with a large living room, kitchen, two bedrooms and a bathroom, and is just a few minutes’ walk from her office. She works for Ovidiu Rom, a nongovernmental organization that uses education programs to support families and children, a job that spun out of the Peace Corps volunteer work she did when she first arrived in the country.

“One of the really great things about Bucharest is the sense of proximity,” she said. “Here, everything is still going on in the city center. I almost never have to go to a social or work event by car.”

That suits Anthony Raftopol, too. “As someone who grew up in the Big Apple,” he said, “I am absolutely fine with the metro and the buses.”

Mr. Raftopol works for Salans, a law firm. He moved here when it opened a local office in the 1990s. He bought a two-bedroom, one-bath apartment in the city center near Cismigiu Park, where he and his partner, Shawn Hargon, now take their 13-month-old daughter, Zoe.

Mr. Raftopol’s parents were Romanians who fled the Communist regime in 1968. Although the family ended up in New York, he was born in a refugee camp in Austria — where, he said, an exiled Hungarian countess used to help take care of him.

As both a buyer and a real estate lawyer, he has seen the market evolve. “Prices have exploded here,” he said. “The economy has been growing fast, yet the supply of apartments just hasn’t kept up with demand. We estimate they need about 300,000 new units at the moment, and so far this year there are plans to build just 30,000. At that rate, the boom in prices should continue for a decade.”

Because of the shortage, prices are comparable with those in Vienna and Berlin.

“Residential property in new developments in the suburbs goes for around 1,500 euros a square meter these days,” or $198 a square foot, said another real estate specialist, Brian Jardine, an American who works here for Wolf Theiss, an Austrian law firm. He said that 100- to 150-square-meter (1,100- to 1,500-square-foot) apartments downtown sell for around 300,000 euros ($426,000). “That’s five or six times what it was five years ago,” he said.

With high potential yields, Bucharest has become an increasingly popular place for foreigners to invest, and now that Romania is a member of the European Union, the number of those investments is likely to grow.

“Many individuals from places such as Germany, the U.K. and Austria are already here,” Mr. Raftopol said. “The U.S. resident community is pretty small but tends to be made up of people who have quite a commitment to the place.”

Ms. Hawke added: “Buying here is quite different from back home too. One great thing is, you can do it all via a notary, without all the lawyers you need back in the States.”

There are no restrictions on Americans’ buying houses or apartments. Land purchases, however, must be done through a company registered in Romania, although foreigners are allowed to own such companies. “Setting one up is a no-brainer,” Mr. Raftopol said. “It’s very quick and at about 300 euros ($426), pretty cheap.”

Transactions can be complex. When Ms. Hawke bought her apartment, she explained, she was asked for 113,000 euros ($160,460) in cash. “I didn’t feel so great carrying that around town in a bag, though,” she said, “so eventually I persuaded them that we could all just go to the bank and watch the wire transfer go through.”

Finding a place also can require unconventional methods.

“Word of mouth is the best way,” Ms. Hawke said. “I bought a little place out in the countryside recently and, to get that, I first asked a guy in a local shop, who took me to the local priest, who took me to the mayor, and while I was there a guy came by wanting to buy some wine off the mayor and said he had a place for sale. It’s not quite that extreme in Bucharest, but it always helps to network.”

Another issue to be aware of is restitution, Mr. Raftopol said. He explained that in 1946, private owners were stripped of their property by the Communists’ nationalization process, and that after 1989, those owners were shut out when current residents were allowed to buy their homes. Problems sometimes cropped up later, when the original owners were allowed to claim restitution.

“It’s a good idea to hire a local lawyer to do a full title search to find out if there are any restitution issues on the place you want to buy,” Mr. Raftopol said. “They should also look to see if the property is earthquake proof.” Bucharest is in an earthquake zone, and buildings are graded according to their ability to withstand tremors.

Restoring a property also can be a challenge, as Romanian workers have been heading to other European Union countries in search of higher wages, creating a shortage of skilled workers. Yet “all the big home-improvement stores are here,” Mr. Raftopol said. “The materials cost what they would in the U.S., but the labor is much less.” The restoration of his apartment cost 20 to 25 percent less than what it would have in America, he said.

Bucharest has appeal but it is definitely for someone who likes a challenge. “It is a city still figuring out what it wants to be,” Mr. Raftopol said. “It’s not the sort of place you come because everything is already fixed up and done; you come here because it’s not like that. Instead, the potential is still there for it to become something else — something really different.”

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Is Romania following in the footsteps of Greece? While most of the “news” in Romania consists of headlines that serve as nothing more than “content filler”, some stories deserve discussion. Today it was announced that salaries will be cut by 25% across the board on government related employees (excluding those who would be considered protected, or rich… the elite and the politicians… think US-ish thoughts here). As well as a salary cut, the government will also be cutting pension payout by 15% in an [erroneous] attempt to curtail economic overhead. Wow…

Consider the minimum wage here of 600 ron; when the minimum wage in Greece and Italy, as another example, is much higher than this and people actually take to the streets and riot as a result of such announcements… what could the outcome be?

Attached is a snippet of an article that you can continue reading on their website, however you will have to translate it. I apologize for the rough “Google Translation”, however the point is clear:

From June 1 employees’ wages fall by 25% and 15% pension. Unemployment is reduced by 15%.

President Basescu said on Thursday that it will increase the VAT and the flat, but that from June 1 will reduce payroll by 25% from central and local government, being predictable and reduce pensions by 15%, but Taira aggressively subsidized.

Also unemployment benefits will be reduced by 15%.

Basescu said that one possibility under discussion was’ version of distrust “that cover the VAT increase from 19 to 24% and flat at 16-20%, while reducing the budget sector wages by 20%, so Romania to fall into a deficit of 6, 7 or even 8%. The second variant, called the president “legitimate option, is that the Government continued its program of” massive restructuring “expenses.Basescu said that the memorandum will be signed with the IMF at the end of the negotiations will go on this last resort.

He expressed hope that the new letter of intent with the IMF Government to be adopted Wednesday by the Government.

UPDATE: The state is like a fat man perched behind one weak, which is the real economy

“State looks like an obese man of 200 kg which was perched behind one very slight and slim, of 50 kg, which is the real economy, and huge expenditures of click here to read more…

For Another Great Article Click Here

We would Love to have discussion on the topic of Romanian Salaries here…

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Let me start off by saying that I have lived quite a few places around the World, and Bucharest, although perceived at first as one of the more expensive cities, actually is not. Now a few things have changed since the US screwed the planet and the “crisis” hit, but this is going to be a “snapshot” of how Bucharest is (in my opinion) at exactly this moment in time.

First off is the apartment/lodging/hospitality category of expenses. Bucharest has it’s share of pricey hotels, no doubt. I would say that one would expect a “good deal” or reasonable price on a room for a night would be sub-100 euros with taxes included. Well, if you kick out the Radisson, Marriot, Howard Johnson, Intercontinental, and some other uber-nice hotels here, you can actually find many “boutique” hotels that offer excellent amenities around the 70-90 euro a night rate. They will probably have wi fi in the lobby only, furnishings won’t be to die for, but you should get a decent nights sleep in a quiet clean environment. I will look around for my recommendations on “budget” lodging shortly. Hotels are an inherently expensive way to travel anyway, so with that being said, even the more expensive hotels are still on par with the international average.

Apartments (both long term and short term rentals) actual rival what I’ve found in some of the “cheapest” places around. An example is Buenos Aires, Argentina. BA, notable for its low cost of living, is actually quite high compared to Bucharest, like other cities, because of what I’ll call the “hidden costs”. Buenos Aires typically requires upfront payment of all your rent for the term, 2 months commission and 3 months deposit (anyone who argues this about BA, you have yet to learn). In Bucharest, if done properly, is not this way. Expect a long term rental in a decent area to average 450-500 euros per month for a one bedroom, 650-800 per month for a two bedroom, and so on. The absolute nicest areas in Sect 1 and city center should be more. With the short term “turn key” rentals you’ll be on par with the rest of the large European cities at weekly prices starting at that. An interesting point to follow is the point of diminishing returns for investors on larger units. When I first moved here I was in a rooftop penthouse that was extremely large with a huge terrace. It was located in the center in Unirii. I was paying 1,200 euros per month. As an investor, you’ll reach a ceiling on the rental amount you can receive on your unit, so your buying solely for appreciation as opposed to ROI at that point. This works out great for us renters if we need a lot of space or are okay with roommates! Something to keep in the back of your mind. Apartment purchases should be around the 80,000.00 Euro price starting out. This is decent areas, but small size. I will create a separate post on purchasing. Let’s move on, I would love comments and discussion and opinions on all of this so far…

Food here can be had very inexpensively if you know where to go. The highly trafficed tourist areas will jack the prices up a bit, but here’s the average:

A large pizza – 8 Euros (35 Ron)

Coca Cola – 1-2 Euros (5-8 Ron)

Great Sandwich for Lunch with Chips – 5 Euros (22 Ron)

Nice Dinner at decent restaurant (per plate) – 8 Euros (34 Ron)

Cappuccino or Double Espresso – 1.5 Euros (8 Ron)

Tipping here is typically ten percent, and is dependent on quality of service. I found the most expensive place I’ve been to eat was Madrid or Paris, with prices easily 50 % higher than this, during the crisis. Buenos Aires still wins on the food prices, but all in all, for both lodging and dining, I would compare Bucharest to cities such as Atlanta, Seattle, Barcelona, basically the “almost biggest” cities in any given region. The New Yorks, Madrids, Londons, Tokyos, Paris’ and Moscows, still stand in a league of their own as “really expensive”.

Keep an eye out for my “off the beaten path” sections that will be coming up on here next week… you’ll get a kick out of the cheaper trendy places around here as well.

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