Romania’s real estate market has evolved beyond expectations in 2020 and the prospects for next years are optimistic, given the strong connections between this sector and the industries it serves.
The economy rebounded by 5.8% in Q3 and by 4.8% in Q4, after a 12.2% contraction in the second quarter of 2020. Private consumption, the main driver of last year’s growth, is expected to recover strongly as all pandemic restrictions were lifted and investment is set to remain strong over the next years, supported by the construction sector. In Q3 2021, the total number of real estate transactions in Romania soared 31% y-o-y to about 186,000 units, following a growth of 11.6% during the whole year of 2020, according to the National Agency for Cadastre and Land Registration (NACLR).
The economy rebounded by 5.8% in Q3 and by 4.8% in Q4, after a 12.2% contraction in the second quarter of 2020. Private consumption, the main driver of last year’s growth, is expected to recover strongly as all pandemic restrictions were lifted and investment is set to remain strong over the next years, supported by the construction sector. In Q3 2021, the total number of real estate transactions in Romania soared 31% y-o-y to about 186,000 units, following a growth of 11.6% during the whole year of 2020, according to the National Agency for Cadastre and Land Registration (NACLR).
Residential construction is also increasing. The fact that the local residential market managed to register 12 months of sustained increase in housing prices, despite the COVID-19 epidemic, proves that it capitalizes on the population's solid demand, according to the real estate intelligence platform Analize Imobiliare. In the first ten months of 2021, the total number of residential building permits in Romania rose strongly by 25.3% from a year earlier to 43,374, according to the National Institute of Statistics (INS) – after falling by 2.9% in 2020 and 0.4% in 2019. Likewise, the area of residential building permits issued increased 14.1% y-o-y to 10.09 million sq. m in Jan-Oct 2021.
Romania's house prices are rising rapidly again, amidst the country's strong economic rebound. In November 2021, the average selling price of apartments in Romania soared 14.8% y-o-y (7.56% inflation-adjusted) to €1,551 (US$ 1,764) per square metre (sq. m), a sharp acceleration from annual growth of 2.35% in November 2020
Roundtrip transaction costs, i.e. the total cost of buying and selling a property, are around 7.44% to 16.20% of property value. The greatest cost is the real estate agent’s commission of 6%, half paid by the seller and the other half by the buyer. Stamp duty can reach up to 3%.
Rent: Rents can be freely negotiated. Progressive annual increases can be stipulated in the lease contract.
Tenant Security: The agreement automatically terminates at the end of the contract and no further notice is necessary. The landlord can terminate the lease before the agreed term only if the tenant did not pay rent for three consecutive months and if the tenant did not comply with the contractual provisions.
Residential developers animated the transactional activity as well, both in Bucharest and in the regional cities. During the first part of the year, companies such as One United Properties and many other local or foreign developers secured sites located exclusively in the capital city, which represented 31% of the total area transacted for residential use, while in the second part of the year, investors concluded deals for more than double the area, including sites located outside Bucharest.
Data acquired from various sources and researches available online investmentreports.co; globalpropertyguide.com; anevar.ro; cbre.ro; tradingeconomics.com
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