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About A1 Real Estate Romania

A1 Real Estate Budapest

A1 Real Estate is one of the premier real estate agencies in Hungary and we have just opened the first quality real estate agency geared at the small to midsize property investor in Romania. We also have a separate department that caters to the special needs of investment funds and investors interested in warehouses and large commercial properties. Our new office is located at:

A1 Real Estate Investment & Consulting  S.R.L.

Bucuresti, Sector 4, Bulevardul Unirii Nr. 45.,  

 

 

A1 Real Estate will setup a separate web site for our Romanian branch but until then we ask that you please register with us now so that you can be one of the first to benefit from this new burgeoning market. Click here to register.

Romania is looking to ascend into the European Union by 2007. Our experience is that the annual appreciation which is currently at around 20%-25% is going to continue as well as the very high rental yields currently attaining up to 12%.

The limitations of Bucharest’s hotel industry are going to help keep the rental yields high for years to come. Hotel room rates are some of the highest in Europe at around 300 euros per night and the only real alternative for international business men is to rent apartments or rooms. This is equally viable for both short and long term lets. Most investors purchase an apartment and let it out to a rental company who sublets it for 50 euros a day. This is one of the reasons rental yields are high.

The land registry in Bucharest has been revamped and A1 Real Estate is setting up the highly professional legal and property management infrastructure that our clients deserve and are used to when investing in Hungary.

Some of our clients when talking about property investments in Eastern Europe ask us "Have I missed the boat?” We can assuredly say that if you are looking to invest into Romania today the returns on your investment are going to be sky high.

Romania has made progress towards establishing a functioning market economy and it has taken measures that will allow the development of its future capacity. The Romanian market is trying to cope with the huge interest that it has attracted from foreign investors, both private and institutional. However, this year no significant sales transactions have been completed on the Romanian real estate market.

Nevertheless, the country is now officially on the map of most of the important real estate funds in the world, an awareness that translates into a large volume of money trying to identify opportunities on a market that is still scarce in investment grade products. This is a consequence the generous yields obtainable here, especially considering the relative level of risk. (July-August 2005).

Although still in its early stages, the Romanian real estate market shows great potential, as an increasing number of quality properties (especially residential and retail properties) are being developed and as the economy is turning to better results and optimistic forecasts.

Only two years before EU accession, real estate continues to be profitable beyond expectations. Prices increased during the last two years: land and housing prices in Bucharest and most other major cities in the country nearly doubled, setting price appreciation patterns that local realtors couldn't quite interpret, alone predict. Various explanations ranged from shifting currency (the Euro became the reference currency for both estate buyers and sellers, as opposed to a weakening dollar) to wider access to bank credit and mortgage plans, which major banks hurriedly offered to an increasing number of middle class consumers. Add to this a multitude of property speculations made by private and corporate investors, confidence in the country's sustained economic development and an influx of new business, and you get an image of the now-thriving - yet still-improving - Romanian real estate business. (December 2004).

Foreign citizens cannot obtain, by any means, property rights over land in Romania. Resident and non-resident companies are allowed to acquire and hold rights over movable assets in Romania, but only resident companies may hold property rights over immovable assets. The foreign companies can have only principal real rights derived from the right of the property over the Romanian land (e.g. superficies or usufruct right). On the other hand, Romanian companies, even if the company has 100% foreign shareholding , are entitled to own land.

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Internet sources: http://www.bucurestiwww.ro/tags.php?tag=realestate

 

www.pwcglobal.com/ro/eng/ins-sol/ issues/issues2002/realestate.html

Short Overview

The documents required for a physical person are:

· Criminal Record (original)

· Copy of Passport· Statement of Personal Data – (the lawyers will prepare a draft and send to you)

· Power of Attorney in case the individual will not come to Romania - (the lawyers will prepare a draft and send to you)· Authentification of signature (in front of lawyer or notary public)

· The desired name of the company to be formed (this should not include the names Romania, institute or national for which special approval is required)

Upon receipt of the documents the lawyers will perform all activities required to register the company which is about 12 days. The minimum Registered Capital is RON 200 (EUR 60) for a limited liability company (srl) and the costs of the registration of the company are 1,000 EUR, which include Registration Taxes at the Register of Commerce, translations, Notary Public fees and taxes and lawyers fees.

Any companies so formed can be established at the lawyer’s office for a maximum of 1 year. Thereafter they must either have their own address or they can all share one address provided that the number of companies do not exceed the number of rooms (so that one each company can have a separate room number in the same address) or that a shareholder is common to all companies (in which case any number of companies can be registered in the same address). 

The owner of the company can also be the Administrator and the only requirement is for an accountant to keep the statutory books. All money for setting up the company can be sent initially to the lawyer’s Client Account.

After registration of the company, a local bank account can be opened. This normally requires the physical presence of the person authorized to sign, so if the owner of the company will not travel to Romania, a further power of attorney will have to be issued to a person here who will be authorized to operate the account. This can be the lawyer.

Legal and practical considerations on real estate operations - Romanian market

 

Property & ownership protection

Private property is protected and granted in Romania by the means of the new Constitution and law system in accordance with EU rules. Romania has been a member of the European Council since 1993. During the proceedings ment to place the country among the EU members, Romania has also signed relevant treaties that protect the property rights.

Under constitutional provisions, EU and international treaties are applicable as part of the Romanian law system having priority in application to local laws and regulations. This rule is also applicable to the ownership principles.

The administration tried to renew and reconfigure the old bureaucratic system in order to provide a public service under normal parameters. Therefore, the Notary Public organizations have strict rules for profession and special rules for private property protection.

The Cadaster (Surety Registrar) was also modernised up to 70% intranet network, providing on-line statements about properties’ status. The professional standards for the involved experts and authorithies were renewed in order to provide high quality and on time services.

In some specific situations delays can occur in identifying the necessary data or documents, but the services are improving every year.

Land types

 

In Romania foreign citizens can become owners of land through appointment of a trustee or by establishing a single shareholder company.

Lands are zoned up to some basic criteria that influence use and taxation:

    • Urban – designated for buildings and any urbanistic use;
    • Agricultural – designated for agricultural operations and use only;
    • Intravilan – placed within administrative area of a city or town;
    • Extravilan – placed out of the nearby city/ town boundaries.
    • Buildings

Foreign citizens can be owners of any building type in Romania, enjoying full protection of property rights.

The importance of buildings for real estate operations is given by particularities of ownership: with or without land, way of appropriation, condominium and other legal or administrative issues.

Buying a Romanian property

 

There are some manadatory steps to be performed in order to manage a real estate transaction in a legal and professional way.

Checking a property

The property shall be verified from different points of view depending on the situation:

 

    • Sole or common ownership
    • Documentation and cadastral expertise
    • Cadaster burden excerpt
    • Claims and debts
    • Any unclear aspects

Contracts

 

The contractual provisions shall secure the transaction in order to insure the formal confort and property rights protection of the new owner. Usually, there is a legalised Pre-contractual Form with the objective of securing the transaction in order for any unclear issue of the deal to be finalised.

The local use of Pre-contractual Form shows the intention to buy/sell the property mentioned in the contract under certain conditions. The future buyer shall pay some money (10-30%) in advance at this moment in time, as this was prior agreed to.

The Pre Contractual Form legalised by Notary Public represents also a protection for the owner to be, as the document is legalised and can be used for execution of final contract if the other party changes or attempts to change his intentions.

The formal end of the transaction is the Final Contract signed in 3 or 5 days after Pre Contractual Form,which is followed by complete payment of the price . From this point on, the new owner has all the rights and obligations and his name will be registered to the Cadaster.

Seller’s Guarantee

 

The old Civil Code in force guarantees for eviction. This guarantee is applicable to the contract value and oblige seller to reimburse the buyer. In order to avoid application of such provision the property shall be well verified before the transaction is done. In daily practice, there are rare cases when application of this guarantee is needed.

Play roles

The Solicitor and Notary Public participate in a professional way in order to assist the transaction.

In a complete transaction, the Solicitor is constantly involved in organising the legal issues and property transfer. He shall ask and verify the documentation, parties identity and contractual forms.

The Notary Public has to issue the registered and legalised with seal contract forms and shall perform his own ascertainment of documentation and, then send it to the Cadaster for final registration.

Documentation and proceedings

 

    • Documentation

 

The buyer can perform all his specific proceedings based only on passport or ID card issued in his own country. The documents will be legalised in Romania and used for all formalities.

When the buyer uses a representative, then a set of documents will be required to be legalised in the state of the buyer including Power of Attorney for his trustee.

Other documentation shall be obtained in Romania from local authorities nearby property location for each real estate transaction:

 

  • Fiscal certificate – proving that the property owners have no debts to the state
  • Burden Excerpt certificate – it is that part of the Cadaster registration where there are filed mortgages, attachment, privileges, serfdorms and any rights of execution against property; this part of the certificate shall be free of any burden during the estate deal until the new owner name is filled in.

Ownership registration

After signing and legalising the Final Sale Contract the new owner’s name shall be registered in the Cadaster. Once listed the owner can use the property as a guarantee for own loan and the property rights are secured.

Taxes & Fees

All related taxes and fees are paid by the buyer except for special taxes for lands, which are legally in the seller’s charge.Taxes are paid to the state and fees are paid to service providers.

Service fees

Notary Public fee is a percentage calculated from property’s value based on table values as in the attached lists. The fee shall be applied to the property transfer contract. Usually there is a cumulative not separate fee for Precontract and Final Contract of Sale.

VI. Legal assistance

 

Sales assistance

 

Legal assistance fee for one standard sale procedure is of EUR 300-2000 depending on a lwa firm. English reports with legal background explanatory notes may or may not be included in the service fee mentioned above. It is provided on request for a fee of EUR 0-500.

 

 

Representation

 

Upon request, law offices can insure representation on Precontract or even Final Contract sale based on appropriate documentation and Power of Attorney issued in the state of origin.

Representation service is subject of additional EUR 300-500 per sale contract.

 

VII. Property management

Property management and maintainance services such as taxes and bills to be paid, periodically checking, rental management and administration is available upon request.

 

Tax fee for lands/ buildings sale table*

 

 

Public Notary fees table*

*The taxes may differ from areas to areas pending on each property status. Therefore the attached table shall be understood as guidelines.

 

Bucharest – offices

 

The Bucharest office space market became the target of major international and local real estate investors. The office space market in Bucharest is under an ongoing process of development, however the extent of class A office spaces is relatively low in comparison to neighboring countries’ capital cities.

The northern, central and east-central areas host the most important business centers – multinational companies, large Romanian companies, and representative offices.

The demand for acquisitions of office spaces mainly comes from Diplomatic missions, and retail businesses (multinational companies, local companies).The average price for renting high quality places (class A and B) in Bucharest is Euro 15/sqm monthly, the same as or close to Warsaw, Budapest and Prague. The selling price of class A office spaces in Bucharest is 1,550/sqm euro, a little lower than the selling price of such spaces in the above mentioned capital cities.

The supply of office spaces in Bucharest will record significant increases in 2005, when the stock of offices will increase by 50%. The northern part is the main target of investors who are interested in taking up large scale projects on this segment of the real estate market. The demand will also increase, yet not at the same pace with the supply.

 

Bucharest – residential for sale

 

The year 2004 was characterized by a large and increasing demand for new residential property resulting in many projects eing completed and others being developed, with a lot of construction work still in progress. The new residential space market is now growing more mature, at present a wide range of buildings of different qualities and sizes addressing both middle and high class markets begin available.

The level of the prices of new spaces located in residential compounds in 2004 vary between 600 – 2500 euro/built sqm depending on the area.

 

Bucharest – retail

 

At the end of 2003, a significant number of projects of shopping centers were announced to enter the market until the end of the 2006. For this reason the rental rate is not expected to lower over the next years.Due to the entrance of new retailers on the Romanian market (Zara, Mexx, Guess, Plus, Praktiker, Cora) and the expansion of the already existing retail chains (Carrefour), the investment value on the market doubled. In 2004, the supply is expected to boost, still it will be immediately absorbed due to the high demand.

On the main retail boulevards, prices range between 30 and 120 Euro/sqm/month according to surface, location and quality. The rental rates for retail spaces within shopping centers in Bucharest downtown locations vary between 30 and 150 Euro/sqm and between 30 and 120 Euro/sqm for on-street retail spaces. For the next year rental rates are not expected to grow, remaining stable due to the shortage of quality retail spaces.

 

Bucharest – land and investments

 The land market has been the subject of significant development during the last few years, with many investors interested in land for various development purposes.

The market for office buildings in Bucharest presents a significant and dynamic within the local real estate market therefore land for such developments is in great demand while the supply is decreasing.

The supply of land for construction of office buildings is found mainly in the central and northern areas of Bucharest, as well as in the western part of the city. In 2004, the supply of land in top central areas was very limited, and prices were high. The most requested areas were Unirii Square, Romana Square, Victoriei Square and Dacia Blvd.

In 2004, demand for land for the development of office buildings was derived mainly from companies that want to build their own buildings and from developers (local and foreign individuals and companies) who develop office spaces, both for sale and lease.Prices for plots of land that allow the development of office buildings varies depending on the area: between 200-600 Euro/sqm in South-East Area, between 300-700 Euro/sqm in North Area and between 500-1200 Euro/sqm Downtown.

The market of land for residential use was on continuous upward trend during the last few years, but was also unstable, due to the unjustified increase of prices. The supply of land for residential use is located mainly in the northern area and in the outskirts areas of Bucharest. The demand for land mainly comes from investors and developers.

Price of land for development of residential projects vary greatly depending on the area and the utilities available: 20-1500 Euro/sqm.

The supply of land for development of retail projects consists of locations with good visibility and heavy traffic in order to ensure a profitable exploitation of the business. The supply of land for the development of various retail projects is present in all the areas of Bucharest, and the surface vary in size, between 3.000 and 80.000 sqm. The demand for land in ucharest for the development of retail projects in 2004 was divided into 4 main types of developments, namely: show rooms, supermarkets, gas stations, and mixed residential and retail projects

The price of land for the development of retail projects varies depending on location, utilities available and surface within a range of Euro 50/sqm to Euro 250/sqm. The south eastern area is characterized by lower prices, between Euro 80-150/sqm, while the northern and central areas are the most expensive, topping even Euro 250/sqm.

 

Source: “The 2005 Report - Real Estate Market Overview”

 

map of romania
May 2005

Romania: The final pre-EU stretch

Romania has been given its tickets to the EU. It hopes to be able to join the Union in January 2007 as it has done with NATO becoming its members in 2004. With less luck the EU entry may be postponed until January 2008 but such unpleasant surprise isn't likely to happen. In a meantime the economy is booming far above the European average, attracting western funds and businesspersons. The real estate market above all in some urban and coastal areas are booming too, due to increased domestic and foreign demand. There are risks for those looking for uninterrupted property appreciations, but for those ready to look for long-term returns, it seems that Romania has finally got on the "European" train.

Romania

With residential properties sold for $1,200 per sq.meter and more in some areas of the capital city of Bucharest and prices jumping enormously since early 2000s, Romania looks much better than during the 1990s. The demographic hemorrhage isn't as acute as in its southern and eastern neighbors. The economy is doing remarkably well although the current GDP per capita level is still below 30% of the EU-15 average* or approximately 20% of the U.S. average. There are good chances that this figures may reach 40% of EU-15 in 5 years.

 

 

* - EU-15 stands for the European Union before 2004.

Romania profile:
  • Area: 237,500 sq km
  • Population: 22.3 million;
  • Population growth rate: -0.12%;
  • Life expectancy at birth: 71.35;
  • GDP per capita: purchasing power parity $7,700;
  • GDP real growth rate: 8.1%;
  • Population below poverty line: 28.9%;
  • Internet users: 4 million (2003);
  • Unemployment rate: 6,3%

(Source: CIA - The World Factbook 2005)

 

Full of Eastern promise: Romania to boom sooner rather than later
October 2004 Propertysecrets.net

It seems that hardly a week goes by without a flurry of excitement about another overseas destination ripe for property investment.And, without a doubt, the markets that are attracting the most attention for anyone looking for great capital growth are the countries of eastern and central Europe.

Smart investors have known for some time that there are great opportunities in what Property Secrets dubbed the Eastern Eight – those eastern European countries – all of them former communist states – which joined the EU in May this year.

But already the net has spread to include the next wave of EU entrants.

Two important factors

One of those countries, Romania, the Property Secrets team believes, holds enormously attractive prospects for the investor prepared to factor two elements into an investment.

Firstly, they will need to accept the prospect of raising capital outside the country – perhaps by remortgaging existing investment properties on their primary home - because finance is not yet available to foreigners.

This is likely to change rapidly after EU accession in January 2007, if not before. At that time the idea would then be to mortgage the investment unit in order to free up your capital.

Secondly, the real estate market – while expanding fast – is still in its infancy. This adds some complications when buying – to acquire land you need to form a Romanian registered company (buildings can be freely owned). But, again, these impediments are expected to reduce as EU accession gets nearer.

But we also have to bear in mind that Romania is a country unused as yet to doing business the western way. A transaction in Romania does not have to be a nightmare – but it's wise to bear in mind, for example, that corruption is part of everyday life there.

An expert to guide an investor is a must, in our view. Failing that, you should buy through an established company offering deals in the country. In short, going it all alone can be very dodgy. Buyer beware!

However, there are a great many points in Romania's favour that make the country a great opportunity.

Why Romania?

The most important factor is the rapidly growing domestic mortgage market – in effect an expanding middle class with aspirations to buy their own home – and this is a very attractive element, but this applies to just about every country you look at in the region. Except that Romania is starting from a very low base indeed.

In the medium term, though, perhaps top of my list for taking the view that Romania is going to be the next property hotspot is the fact that – along with Bulgaria – it has already convinced the European Commission that it is ready for EU entry in just over two years time.

But, don't delay your research because property prices will start to rise long before then – during the anticipatory phase.

Just a couple of weeks ago the European Commission made a key announcement.

It said that it would, "make every effort in order to meet the objective set by the European Council to successfully conclude negotiations with these two countries (Romania and Bulgaria) by the end of 2004”.

The aim is to sign the Accession Treaty with both countries as early as possible in 2005.

'Romania can be ready for membership by January 2007', the EU Commission concluded.

It added that the Romanian authorities had 'established a track record in implementing their commitments.'

Opinions vary on what signing the Accession Treaty will do to property prices.

In other countries, leaps of 40% have been recorded at this stage. But whatever happens in the immediate future, there is good reason to believe Romania will see a significant rise in real estate prices, especially in Bucharest.

The great attraction of Romania is that prices and the property market in general are in its infancy. As such, phenomenal growth can be anticipated.

Here's a fact that surprises a lot of people: Romania is the second largest country by population in Central and Eastern Europe, after Poland, with 23 million consumers.

One school of thought has it that prices can be expected to rise by at least 25% before the start of 2007 and accession. That's just over two years from now.

These are modest predictions, we believe. 15%-30% growth a year is more realistic. And this kind of growth will go on long beyond accession.

According to Romanian property market expert, Octavian Bota, there is an imbalance in the market at all levels, even at the luxury end.

There are several factors already driving up prices and these will increase in significance.

The most important is the impressive growth of the economy.

Inflation has fallen from astronomical levels and is continuing to fall –from 154% in 1997 to 14% last year with a rate of 9% expected this year.

GDP continues to motor – with 5.6% predicted for 2004, up from 4.9%in 2003.

That means wages will rise, and this in combination with the wider availability of mortgages will drive the domestic market. Once again, we are looking at the emerging middle classes as the place to aim your investment.

New regulations have opened up the mortgage market domestically and it is expanding rapidly. Interest rates are still high by western standards – some 7 to 9% above base, but when you consider inflation (including wage inflation) this does not look so high.

And, of course, higher inflation always makes borrowing money more attractive because the loan gets cheaper faster with time.

Generally, prices in Romania increased by some 30% in 2003.

And, just to prove our point about aiming an investment not at the luxury end of the market, but at far more modest units suitable for the aspirant middle classes, Octavian Bota points out that the biggest rise – more than 50% - was for block apartments built before 1989, which usually sell for below 30,000 euros.

Bota puts it like this: "Probably the most important segment of the market, which is still in an incipient stage, will be urban developments to be built for middle-income families, with the support of the government, under the provisions of the mortgage law.

"Almost all municipalities have drawn plans for such developments, and it is hoped foreign investors will compete for their construction."

What is going to drive the economic engine of Romania, along with property prices - as it will those of other new members of the EU - is a massive influx of foreign investment.

In this regard Romania, now it has improved its fiscal and judicial systems and resolved property restitution problems, and generally come up to EU standards, really stands out.

Why? Because huge infrastructure spending is in the pipeline - especially for telecoms - AND it has a motivated and educated labour pool that is still incredibly cheap. The average monthly salary in Romania is 150 euros; in Hungary, by comparison, it's 450 euros.

Romania, then, offers the kind of combination that is highly attractive to foreign business investors.

In the last seven years, the construction market alone has seen investments of around $20 billion.

In 2003, the country received $10,433 billion in FDI overall - a 59% increase on 2002. This kind of money in a country with such low labour costs is going to revolutionise the economy. And the property market will be pulled along in the wake.