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What future for Romanian real estate market after entering EU?

de     HotNews.ro
Luni, 8 mai 2006, 0:00


The current prices on the Romanian real state market are too high, and there will come a moment when they will follow a descending curve, says Adrian Vasilescu, counselor of the Romanian National Bank governor. However, Romania remains the most profitable location for real estate investments, with a hike of 414 percent according to some surveys.

Adrian Vasilescu quoted Alan Greenspan, former chairman of the US Federal Reserve, who recently warned against the high prices of the real estates assets and forecasted a drop in the following years.

Commercial centers to continue development

Although a great number of commercial centers has developed in Romanian capital, Budapest has a double number of malls, although the population is less than in Bucharest.

The malls, hypermarkets and supermarkets flourished in Bucharest, in busiest residential areas and severely affected traffic in these zones. This boom on commercial centers market justifies on statistics, which very often, are not realistic. Official statistics fail to cover huge money amounts, presenting but small minimum and average salary.

Once a mall was built and brought good profit, it encouraged competition to follow suit. Hence the large number of commercial centers in a short time period.

Good investment

Romania is the most profitable destination for investors in real estate market, followed by Poland, France, and Spain.

The trend on the Romanian market shows that old apartments’ prices will drop, while new residences, land and office buildings will bring good profits.

There is still an organizational issue regarding the hectic development of residences office buildings, which does not provide the required facilities such as underground parking. Traffic has become a serious problem for the urban areas.

Interest

Vasilescu foresees that the interest for the real estate loans will not drop very soon after Romania becomes an EU member state. If inflation will fall to approx. 2 percent, which is a necessity in a European economy, it does not entail the drop of loans’ interest.

If the interest rate is more appealing in other European states, a Romanian citizen might apply for a loan, theoretically, says Vasilescu. Practically, such loan needs to be backed up by bank accounts in those respective banks that grant the loans. This account, aka as collateral cash, is accessible only to persons and companies that have lots of money.

Real estate loan

Adrian Vasilescu considers that the real estate loan will develop after foreign investors will start building residences in Romania. The real estate loan has developed recently, since 2000, but it is burdening as it compels beneficiaries to pay back on a long time period.

Following the EU adhesion, Romania banks will become more flexible in loans granting.

Extracts from TV show "Objectiv Europe", on Antena 3, conducted in partnership by EurActiv.ro and "Le Monde Diplomatique.
























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