Brit property buyers’ Romanian romance

As Romania’s economy continues to stabilise, with the promise of EU accession on the horizon and GDP rising steadily year on year, British overseas property buyers are increasingly looking to the south-eastern European country for investment opportunities. These factors have combined to fire Romania into Currencies Direct’s Global Emerging Markets Index for the first time ever.

The Index, released today by the UK’s number one commercial foreign exchange provider, is based on the number of foreign exchange transfers undertaken by Currencies Direct to emerging market regions for property purchases in any given month.

House prices in Romania have risen significantly over recent years, while interest rates have dropped from an astronomical level of 154 per cent in 1997, to an altogether more sensible 8.9 per cent in 2005.
Although Romania is not hugely profitable from a rental income perspective, with a short summer season of only four months, it still enters the Emerging Markets top ten as a popular investment location, largely because of its recent economic performance, infrastructure improvements, and generally low property prices, despite recent rises.

Mark O’Sullivan, head of trading at Currencies Direct, said, “If you’re looking for safety in numbers with plenty of other British investors, smooth estate agents and a well developed economy, then Romania may not be the option for you. Indeed there are more than a handful of pros and cons when it comes to buying in Romania. On the plus side forthcoming EU membership, slated for 2007/8, almost always guarantees an economic boom in the years that follow, while the economy is demonstrating the early signs of recovery and growth. However one major stumbling block is the fact that foreign investors are currently unable to get a mortgage to buy property in Romania.

"Anybody looking to buy will need to have cash to invest upfront or find alternative methods of financing their investment. But to the daring this current lack of available finance only serves to highlight the fact that few foreigners are currently buying there and prices are therefore still at rock bottom.”