A true revolution occurred on the markets of the ten European countries that joined the EU in 2004, with a fast growth of prices, major deals and a wave of new projects.
The same is expected to happen in Romania, but the effects of accession here will be a bit milder as they’re already “partially over” since the 2004 enlargement lured big investors to the whole region, an analysis by the Eurisko company says.
Major real estate companies have not waited for Romania and Bulgaria to join the European Union to come and invest in these countries. There already are important “colonies” of British citizens in Bulgaria, while the price per square meter in Romania is sometimes exceeding 3000 euro.
In 2003, when Poland, the Czech Republic and Hungary were preparing to join the EU, the Romanian real estate market was just starting to move. A series of analysts observed at the time that Romania was in the situation of Poland ten years before but were sure that the country would only need three years to fill the gap.
Yet, according to the report, Romania has not recovered the economic ground sufficiently for the past three years. Foreign and local investments were less impressive than in the rest of the region, influencing the living conditions of the population unfavourably.
Governmental policies were not always well directed to stimulate development in the private sector, blur regional differences and build up infrastructure.
But in terms of real estate development, there are considerable similarities between Bucharest and the pre-accession situation of Warsaw, Prague and Budapest.
When it comes to office space, the Bucharest stock of 2006 equals half of that of Warsaw in 2003 given that the number of registered companies here and the city surface are proportionally lower.
There is also a difference of 300,000-400,000 sm in favour of Budapest and Prague. But, according to analysts quoted in the report, some analysts considered in 2003 that there was an excess offer on the Hungarian office space market.
Modern industrial space in Bucharest is a third of what Warsaw used to have in 2003. But the difference is lower when compared to Budapest and Prague, of only 100,000-140,000 sm, considering that starting with 2004 there has been a boom of investments in this sector, with effects on Romania as well.
The interest of investors for industrial space was channelled to the outskirts of the capitals initially, with a late tendency to focus on other cities and important areas of the respective country. That is expected to happen in Romania as well.
In terms of commercial space, Bucharest is much less developed than the other three capitals considered. But considering the higher density of population in the Romanian capital a conclusion may be drawn that the retail segment offers the best prospects of development once the country joins the EU.