’s large population of 23 million, the majority of its citizens reside in agricultural areas throughout the country. In the last 2 years there has been a considerable influx of population to urban areas such as
Bucharest , which despite a massive increase of population still stands at a comparatively low of 2 million people. According to a recent World Bank Study,
Bucharest is set to double its population in the next ten years exceeding 4 million inhabitants.
The future of residential development will be directed to creating housing units which meet the requirements and budgets of
’s emerging middle class. The market will grow dramatically with the implementation of mortgage programs at private banks in the coming years. Residential development schemes are also desperately needed in many major Romanian cities and suburb areas which have seen only limited private house building in recent years. Prices will continue to grow due to a general lack of infrastructure forcing builders to focus on limited development zones.
There is a need for approximately 100,000 new houses, according to Price Waterhouse Coopers yearly report, to balance the supply/demand inequity in the next year. Data provided by the Ministry of Statistics have confirmed that with the last 3 years of steady growth in population of Bucharest, the capital city presently at 2 million would reach by 2010 numbers exceeding three million inhabitants. The demand of future housing in
Bucharest is conservatively speaking, very optimistic.
Developing residential housing/villas with a market niche focusing mainly on the middle to upper class income families will reap the highest potential return of investment. A Middle Class population of Bucharest has emerged in recent years resulting in an increase of demand for residential developments primarily in the Northern suburban areas of
Bucharest. This new middle class with higher income disposal and an increased purchasing power is presently living in apartment blocks spread throughout the city with extremely limited space (average apartment size is 70 to 80 m²), esthetically poor surroundings but more importantly in aging and problematic buildings.
An important impetus in the new drive for housing developments has been the introduction in 2005 of easily available mortgage products and banking loans that have in the past been very difficult to attain. The retail banking in
Bucharest and throughout the country is now fully developed and provides structures for the average consumer that would provide the capital necessary to purchase a new home in the suburbs. A recent study by ABN Romania found that compared to many neighboring countries, Romania despite its impressive growth, still continues to have a good credit history and bad debts collections still remain low. The main source of financing for the average
Bucharest family is through the sale of their existing apartment provided to them by the communist State prior to 1989. The present value of a block apartment averages from EUR 35,000 to EUR 80,000, which in return provides the deposit necessary to receive a 20 to 30 year mortgage for a home in the suburbs. Vision Holdings will offer financing packages in coordination with Banc Post and Alpha Bank with similar deposits, and relatively inexpensive monthly mortgage payments ranging between EUR 300 to EUR 700.
Analyzing the potential of the average Romanian citizen, who has witnessed inflation rates dramatically reduced over the past few years, only fuels consumer spending as cost of equity and mortgages drop. The international ratings agency Fitch, recently published a report ranking Bucharest as the capital with the lowest cost of living in
Europe. Wages in
are increasing year by year and in parallel the cost of living, including real estate, office buildings, apartments and residential projects are also expected to grow in the coming years. The general growth potential in
is huge and should not be underestimated.
Kevin Heaney CEO of Vodafone, the largest telecommunications company in
mentioned in a recent interview, that the Romanian consumer spending and consumer confidence is incredibly high, far above most of the other countries in the region. This consumer confidence has substantially affected all aspects of business. This trend confirms the long term confidence Romanians have as a whole regarding the economy, the political environment and their rightful place within the European community. This environment provides a perfect background for the success of