Real estate market has potential, but investors are yet to come

Greater attractiveness, competitiveness, these are two of the most used words in connection to Romania when it comes to investments nowadays. However, they don’t have much relevance since the foreign direct investments, the segment where these indicators could possibly materialize, suffered a significant decline this year. So, if it would be to look for the best word describing Romania from this point of view, it will probably be potential.

That was the point towards which were directed the conclusions at the RICS Romania Real Estate Conference -  Valuation and Investment - held yesterday in Bucharest. While the first session of the event focused on valuation issues and afferent challenges, the second one brought to the fore Romania’s real estate market as a possible investment destination.

A delicate discussion and quite difficult to anticipate an improvement direction at this point when the residential sector continues to struggle and the other major component, the office real estate faces ups and downs.

Starting by questioning the possibility to make money in this sector in Romania, the debate approached several of the major issues and challenges the investors face here at different levels. Hence, although there’s still a will to invest in Romania, the tight financing, little transparency, the well-known corruption and bureaucracy are the major barriers to investors. Investors that based on these aspects, regularly choose other destination for their investments instead of Romania.

The most appropriate example is Poland, the largest Central European country that has a similar economy to Romania, yet more developed. Thereby, given Poland has a more permissive environment with respect to the ease of doing business, if it comes to make a choice, commonly, the investors choose Poland despite being more expensive.

Nevertheless, Romania has potential - potential to attract investors, to grow and potential to possibly put down those barriers. Once those barriers will start to fall, the business environment will be friendlier, stimulating investors interested to make business in Romania materialize these investments.