Romanian real estate market in between speculation and normality

The real estate market, the “superstar” of the Romanian business environment, passed in the last years through many stages of transformation, affecting many times its public image. Few years ago, this important section of the economy was virtually unknown. The fabulous earnings obtained following the initial boom, put the real estate market in the fore-ground. Fame brought along the trouble.

Both the unsettled legal frame and the indifference of the authorities, led to a chaotic development of the market. Thus, in 2007, only in Bucharest were registered approximately 2000 real estate agencies and countless “real estate agents” . Even though these so called brokers can be spotted a mile away because of their non-affiliation with any serious company, issue that can be easily verified, the legal entities that ascribe themselves as “real estate companies” or following the latest “trend”, “real estate brokerage” are very dangerous to investors and do a lot of harm to the true real estate companies that are compelled to share the same title.

The term “real estate bubble” defines a quick and speculative increase of prices on a local or global real estate market. This situation is commonly met nowadays in many countries such as United States, Great Britain, Australia, New Zealand, Spain, Poland, South Africa, Israel, Norway, India, South Korea and unfortunately, Romania.

The big companies, and here we include transnational real estate companies, focused on big investors, both local and foreign, neglecting in many cases the retail clients. Following this strategy, they might just have lost an important share of the market, given the fact that an important percent of the total real estate transactions is represented by the retail clients.

Trying to identify real estate bubbles before they burst, the real estate experts successfully developed several indicators based on the valuation component and on the debt component.

Time passing, the Romanian real estate market started to grow up and get organized. The peculiar interest of foreign investors and the poor balance between demand and supply, are strong premises for an encouraging evolution in the next years. The cluttering of some suburbs of Bucharest, extends the interest for new areas with similar infrastructure, some of them closer to the city. A simple summarizing of the news in the last months, reveals the continuous interest of foreign players for real estate investments in our country. Some of these press articles or reports can be reasonably suspected of unlawful influence towards artificial growth of prices in certain areas following powerful private interests.

This is a common situation in Romania in the last years but beyond that, some exaggerations cannot diminish the extent that the real estate took recently and it is undeniable that Romania is on the right path.

The recovery of the real estate market depends decisively on the professional skill of its players, on the attention towards the customer and most of all on the transparency much needed in this market where large sums of money are turned over.

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