Despite rising tensions over corruption which have brought demonstrators en masse onto the streets, Romania’s economy is healthy. Low interest rates and an improving economy have caused Romania’s housing market to grow robustly over the past year. And there’s lots of construction.”If you want to develop residential, it is a safe bet. The good news is that banks are starting to finance such developments with good terms, so I might have quite a high return on my investment,” says Ilinca Paun, Managing Director of Colliers International.
The average selling price of apartments rose in 2016 by 8.40% (8.56% inflation-adjusted) to €1,080 per square metre (sqm.) during the year to December 2016, based on figures from imobiliare.ro.
All major cities in Romania experienced rising house prices during the year 2016:
- In Bucharest, the capital, the average selling price of apartments rose by 5.34% (5.49% inflation-adjusted) to €1,080 per sqm.
- In Cluj-Napoca, Romania’s second most populous city, apartment prices were up by 9.52% (9.68% inflation-adjusted) to €1,257 per sqm.
- In Timisoara, the average selling price of apartments surged by 10.73% (10.88% inflation-adjusted) to €1,039 per sqm.
- In Brasov, the average selling price of apartments increased by 6.85% (7% inflation-adjusted) to €920 per sqm.
- In Constanta, the country’s oldest city, apartment prices rose by 5.07% (5.22% inflation-adjusted) to €991 per sqm.
The Romanian economy grew by 3.8% in 2015, and a growth of 4.8% in 2016, which was the highest in the EU. In 2017, the economy is expected to still expand but at a slower pace of 3.8%, according to the IMF.
“Both residential supply and demand are gathering steam as a result of the favourable economic outlook and the newly introduced fiscal regulations,” say Knight Frank.
Romania’s new Fiscal Code has brought some changes for the better. Most notably, it reduces the standard VAT rate from 24% to 19%, but also simplifies the tax collection process, to boost investment and economic growth.
There are no restrictions on foreign nationals acquiring dwellings in Romania. Ownership of land is tricky, but companies incorporated in Romania as well as resident foreign nationals and non-resident EU citizens can acquire land.