Apartment prices could go down by up to 20 percent in 2009, in case the situation on the lending market will stay unblocked, announced president of the Romanian Real Estate Association (ARAI) Ion Radu Zilisteanu in a seminar on the evolution of the real estate market.

"Since the start of this crisis, the price decline for housing units hovered around 25-30 percent on the residential segment, and I estimate that, if the situation on the lending market continues, we could assist in 2009 to declines of up to 20 percent", said Zilisteanu.  

Statistics recently released from the Romania Central Bank show an impressive increase of foreign investment in the country during 2008.According to the Bank's figures, foreign direct investment (FDI) totalled €9.02 billion in 2008 up from €7.25 billion in 2007, an increase of almost 25%.

Romania's strategic position in the midst of central Europe, its skilled workforce and low labour costs remain key attractions for foreigners planning to set up in the country. In addition, corporate tax, levied at the flat rate of 16% in Romania, is one of the lowest in Europe.

Real estate prices in Romania are expected to fall by up to 60% in 2009 as property investors fail to find finance.

According to analysts all sectors in the country's property markets are likely to suffer and sellers who manage to find buyers are likely to make no profit and even a loss.

Market conditions are likely to follow a similar pattern to 2008 and even luxury properties which have held their value could see prices drop by between 10 and 30%.

 'The sellers are on the market but more and more of them are squeezed by loans, while buyers don't tend to offer as much money as before,' said Ionut Ciocan, senior consultant at real estate firm DTZ Echinoz.

Romanian Vice-Premier Dan Nica said on Friday the priority of the local administrations should be to absorb the European funds. Nica, who attended the meeting of the Association of Romanian Cities at Vata de Jos, the western Hunedoara county, recommended the city mayors to submit the required projects for infrastructure works, in order to have access to non-repayable funding.
'Our top priority is to absorb the European funds. The projects should be submitted urgently', he stressed. 

The effects of international crisis on Romania will increase in 2009, and the pace of economic growth will temperate very much, as compared to that of 2008, around the level of 1%, correlated with an economic decrease slightly over 1% in the euro zone, the chief economist of BCR said Tuesday.

"After a 8.6% economic growth pace in the first 9 months of the previous year, the probability that 2008 should end with an increase in real terms of gross domestic product below 8% is higher and higher," said the chief economist of the Romanian Commercial Bank (BCR), Lucian Anghel, upon the presentation of the Country report for Romania made by BCR Cercetare.

Under these circumstances, BCR's recently revised scenario indicates "a slow-down of the Romanian economy around the level of 1% in 2009, correlated with an economic decline slightly above 1% in the euro area."

Voters in Switzerland came out in favor of extending a free movement of labor deal with the European Union to include the bloc's two newest members by an unexpectedly large margin. Swiss voters overwhelmingly supported a government-backed motion to extend cooperation with the European Union in a referendum held on Sunday, Feb. 8. Official results showed 59.6 percent supported expanding the existing deal with 25 European states and allowing free access to citizens of the two youngest EU members Romania and Bulgaria, according to initial voting returns from the 26 Swiss cantons.

Real estate developers that still have liquidities at their disposal are advised to acquire as many plots of land as possible from such companies in the field found in a much more difficult situation, with negotiations in such cases to result in price-cuts of up to 50%, reads a release of the Quantum Consulting & Management (QCM) agency.

According to specialists from Quantum Consulting & Management, in the context there are significant chances the value of the plots of land to go up again in the next interval, giving up building for now might be good investment.

The number of real estate transactions went down in September and October by some 15 % compared to the previous year, after having reported a rise of 3 percept over January-August, according to figures of the National Union of Notaries Public in Romania cited on Tuesday by economic daily Ziarul Financiar. 

The diminution has started in May after a rapid growth in transactions in the first four months of the year, however starting the autumn the modification has started to be steeper. Considering the access to financing has become more difficult, because of the harshening of the crediting conditions, for developers and buyers alike, the modification of prices has started to emerge.

Prices of apartments in Bucharest have drop by some 20,000 euro in November 2008, against January, according to a real estate study conducted by Ziarul financiar daily.

The analysis showed that in January this year the price for a 3-room apartment of 70 sq m stood at some 140,000 euro, while in November it came down to 118,000 euro.

The 3-room apartments in Bucharest have got cheaper by 15% since the beginning of the year, with the average price in the beginning of the year for one sq m of built surface of 1,980-1,990 euro having come down to 1,686 euro.

The National Institute of Statistics (INS) has started to gather data from the public notaries with a view to complete the first official real estate index, after it has recently signed with the National Bank of Romania (BNR) and the National Union of the Notaries Public of Romania (UNNPR) a cooperation protocol on this index, the daily Ziarul financiar reads. “In the past years, once with the facilities promoted by the commercial banks with a view to obtain a mortgage loan a bigger interest is seen to draft and develop an information system in the real estate field.

Thus, the INS is determined, by benefiting from the BNR support, to have by the end of 2008 all the information necessary to elaborate a statistical research at national level regarding the residential properties” prices evolution”, said the INS representatives on the occasion of the launching of the project.

By Polya Lesova

Romania's economy grew by 9.1% year-on-year in the third quarter of 2008, the country's National Institute of Statistics reported Wednesday.  

For the first nine months of the year, real gross domestic product expanded by 8.9%. "This performance definitely looks good considering the global crisis, but Romania had a horrible third quarter last year and also bad nine-month results in 2007, especially due to the drought that destroyed most crops," said Adrian Ciocoi, Bucharest-based head of research for Riedel Research Group.

Traian Basescu, Romania's president, has named Theodor Stolojan, a member of the Liberal Democrat party (PDL), as the country's new prime minister.

Stolojan, 65, was Romania's premier between 1991 and 1992, after which he worked as an economist at the World Bank.

The PDL, who are close to Basescu, won 166 seats in parliament in the country's November 30 general election, ahead of the Social Democrats (PSD), with 163.

Stolojan's nomination on Wednesday came just a day after the two parties, who were both previously in opposition, began talks on the formation of a new coalition government after neither won a majority in the election.

Romania and Bulgaria are currently the markets in Central and Eastern Europe with the most significant increase of the uninterruptible power segment (UPS), according to a study carried by the Frost&Sullivan consultancy company, MarketWatch says.

The integration in the European Union has brought Romania 3.078 billion euros in aids for the development of industry, transports, rural and environment infrastructure and the agricultural sector’s support.

Romania's economic growth might total 8%, Romania's Central Bank governor Mugur Isarescu declared, warning that the budgetary deficit might exceed 3% of GDP in 2009 if correction methods will not be taken, Romanian news agency NewsIn informs.

In the first nine months of the year, the GDP grew by 8.9%, Isarescu declared. However, he added that after the first 11 months of the year, the budgetary deficit was 3%. For 2009, Isarescu estimates a 2% budgetary deficit, considering the government's approved budget.

Isarescu added that the current account deficit remains one of the most important problems of the Romanian economy and is a consequence of the rapid development in the past years. Last year, Romania's current account deficit represented 14% of GDP.

(Courtesy : HotNews.ro)

German energy company RWE says it has no limit set for its investments in Romania, even in the context of the current financial crisis, also saying the local market is important for the Group’s future plans, the head of the RWE division for wind energy for the Balkans and Turkey Frank Falkenhof told Business Standard on November 24. 

“We own enough liquidities, as we have pursued a conservative policy. We weren’t affected as much as other companies were, which came to the situation not to have liquidities available for investments. We don’t need to revise our investments,” Falkenhof said.

Referring to the projects on the Romanian market, the RWE official said the German Group is currently discussing with six-seven developers of wind energy on the domestic market hoping to conclude a series of negotiations next year.

The Italian nationals living in Banat (western Romania) speak of real estate projects, new factories and turnovers in the neighbourhood of tens of millions of euros, instead of talking of redundancies, cost- or production cuts. The Italian Consulate’s economic affairs attaché Barbara Tarullo, based in the western Timisoara city, says the Italian businesspeople have no plans to leave, but adds some of them will have to redirect their businesses. 

“While so far there have been many investments in footwear production and textiles, which are exported, now the investments are turned to such areas like construction, infrastructure, farming and consultancy. Romania needs infrastructure, that is why I say the construction sector is one where one cannot fail. The big groups are coming now to Romania, serious groups, with substantial investments”, Tarullo says.

Crisis on the real estate market has brought the prices at last year level and this reduction process is expected to continue, according to a report of the real estate monitoring company anunturiparticulari.ro. Since this year-start, prices on the real estate market have dropped directly proportional with the 2006-2007 increases. Price drops is seen as a direct consequence of the economic crisis, their lack of stability being determined by a diminishing of demand, capable of meeting financial obligations, especially following harsher crediting conditions.

Although a dominant role in price variation is played by the building’s location, followed by utilities and afferent improvements. A one-room apartment with a good degree of comfort dropped to 60,000 euros in zones viewed as good in Bucharest. Significant price drops are recorded in the case of 2 room, 3-room or 4 room apartments. According to anunturiparticulari.ro monitoring, one cay buy a good 2-room apartment with 80,000 euros, a 3-room with 90,000 euros and 4-room apartments in districts such as Rahova and Berceni are evaluated at 110,000 euros.

Although most specialists see a 3.65 – 3.68lei/euro band for the end of this year, opinions differ, without excluding the possibility of a 4lei/euro level, especially for beginning of 2009. Specialists polled by Wall-Street made forecasts on the currency exchange rate for this yearend and beginning of 2009, and the aftereffects of possible fallout of national currency over the local economy.

The top 20 private equity funds in the region have some €2 billion prepared for investments in Romanian companies, amid increasingly difficult financing from banks, according to an analysis by MONEY EXPRESS magazine. According to the magazine, funds with the highest liquidity in the region are Mid Europa Partners, with €1.35 billion, and Marfin Investment Group and EQT, each with €1 billion.

Private equity funds have a total €5-6 billion to invest in Central and Eastern Europe, and Romania usually attracts one third of regional investments. The current global financial crisis boosted interest of private equity funds in emerging markets, in which they can effect acquisitions with their own funds, without requiring bank loans. In such countries, companies are worth dozens or hundreds of millions of euro, as opposed to Western European countries, where the market value of many companies amounts to billions of euro.

The international financial crisis is to affect also the labour market in Romania, with estimates pointing to a possible raise in the unemployment rate, and with the wages to stay unmoved for a while, which means the power purchase might drop, as soon as the crisis reached the real economy, representatives of the trade and employers’ unions say. Nevertheless, employers assure people that there is no such thing as massive restructuring taken into account yet.

The CNS Cartel Alfa head Bogdan Hossu said that it is quite hard at the moment to make an evaluation of the international crisis on the labour market in Romania, due to the rapid day-to-day evolution.

Despite all these, he thinks employees will not be affected otherwise than in the case large companies, that is the multinationals, decided to shrink their activity.

Romania’s Gross Domestic Product (GDP) could increase by 4-6% in 2009, according to financial analysts who met Prime Minister Calin Popescu Tariceanu to discuss the country’s economic situation and ways to limit the impact of the financial crisis. However, such growth is only possible if the salaries of civil servants rise at a sustainable level. The Prime Minister and the analysts discussed the risk of a rapid drop in the economic growth as of 2009. “Some have said that Romania’s economy will have a growing pace of 6% and the pessimists see it at 4%.

The average between optimists and pessimists would be 5%, which, in the context of a world economic crisis, is a very good performance,” the PM said. Tariceanu on October 20 met economic analysts to discuss the measures to be adopted with a view to limiting the effects of the financial crisis. Also discussed at the meeting was the risk of an abrupt slowdown of the economic growth, as of 2009.

In brief

Reconsidering the old communist projects, such as the airport and the Bucharest-Danube canal and, more recently, the future ring road, were reasons for owners of land in the area to raise prices in towns in the localities from the south of the Capital, say EuroMetropola real estate consultants. According to them, the south is the least exploited in terms of real estate, the land here being among the cheapest.

"Popeşti Leordeni, Bragadiru, Mihăileşti, Adunaţii Copăceni - these were the areas where the construction of a new airport has been prefigured over the last two years, the latter being announced in February of this year.

Although some projects are just at the statement, investors are already thinking about the growth potential of the land bought at the top of the year with a few cents", says real estate consultants have EuroMetropola.

Mirel Bran reports from Romania   

After Romania joined the European Union in 2007, 3 million Romanians travelled to Western Europe, walking right into a financial crisis. When those expat workers returned to their native land, they prospered.  Ion Preda is not much of a talker. At the building site where he works, every minute is accounted for. He and his fellow workers are under strict deadlines. “We have six months to finish a ten-storey building,” he says. “And we have to hurry because other projects await us. We are booked with contracts for two years solid and have had to turn down other offers.”

Financial crisis will trigger major effects locally as well, and next year, we will probably talk about a recession in Romania, and the impact will be forceful, by the decline of consumption, said OTP Bank Romania’s CEO, Laszlo Diosi, in an interview for Wall-Street. “Current economic crisis is likely to turn into a social crisis”

“A recession in European Union will have effects locally as well. After a long period marked by high growth of economy, the recession will sweep off Romania, whereas if the future leaders will have a responsible response, the situation will recover. In the business climate, small and medium sized companies will be the most affected while the multinational companies will always find a loophole,” Laszlo Diosi stated.