Why is Romania lagging behind in institutional investments in residential real estate? Lack of legislation is not the main reason
Bucharest, August 28, 2025 – Investment volume in the European residential sector reached €13.3 billion in H1 2025, up 15% year-over-year, and accounting for 13% of the total real estate investments carried out in the first half of this year, according to Savills, one of the world’s leading property advisors.
“Romania is still at the bottom of the list of preferred destinations for institutional investors in the residential segment, but this could change in the medium and long term,” said Oana Popescu, Partner, Head of Residential at Crosspoint Real Estate, Savills International Associate in Romania and a company that in 2025 celebrates two decades of activity on the real estate market. “The lack of dedicated legislation designed to encourage investment funds to enter Romania is one of the reasons, but not the most important one. Romanians’ strong orientation towards being owners rather than tenants, the lack of a relevant stock of specific products and the current macroeconomic fundamentals are factors that are still holding this segment back,” added Oana Popescu.
At the European level, supply has become relatively limited compared to demand, with the number of transactions valued at over €100 million down by 11%. The decrease in investment opportunities in Western European countries such as Germany, the United Kingdom, France, Denmark, and Sweden – which dominate the market and where 40%-50% of inhabitants are tenants – has already led to the rise of other regions that in recent years have attracted a significant investment volume in this segment, including Italy and Spain in Southern Europe or the Czech Republic in Central and Eastern Europe.
What are Romania’s prospects?
Romania, the European country with the fewest tenants, with a homeownership rate of 94.3% at the end of last year – 26% higher than the European Union average – has not yet appeared on the radar of major investors in residential portfolios in the multifamily sector (built-to-rent projects, meaning collective housing built specifically for rental).
So far, the relatively low price of housing compared to other European markets and favorable lending conditions have made home ownership more advantageous than paying long-term rent. In addition, the rural-to-urban demographic ratio, with rural areas outweighing urban ones, has resulted in a residential stock consisting predominantly of single-family homes.
“The above-average increase in construction costs, up 42% in Q4 2024 compared to Q4 2021, versus an average increase of 23% across the European Union, has a direct impact on apartment prices, and we estimate that it will stimulate the residential rental market in Romania,” explained Oana Popescu, who already observes encouraging signs for this segment, even if for now the supply of built-to-rent projects is still reduced and fragmented. “From our perspective, this context creates a favorable opportunity for major investors to develop the built-to-rent segment. The increase in construction costs and VAT to 21%, the more difficult access to financing and the decrease in purchasing power can lead to an expansion of the rental market and to the maturing of this segment in Romania.”
The mindset of younger generations, greater professional mobility and increasingly difficult access to mortgage credit are building a solid foundation for market development. The first institutional projects dedicated to rental housing, with estimated yields of around 7%, could mark the beginning of market maturity and the inflow of international funds.
“Just as office buildings were the go-to product for investors seeking steady returns over the past two decades, we believe the next winning bet should be on built-to-rent residential properties”, Oana Popescu concluded.