I'm not really a betting man, but I'd still be willing to place a small wager that if I asked you to think of a Balkan country that boasts a Black Sea coastline, beautiful countryside, ski resorts, cheap properties, and steadily rising house prices your thoughts would turn to Bulgaria, writes David Fuller. Am I right? Thought so. However, look north and you'll discover that Romania can also claim to offer all of these attractions. So why is Bulgaria still the far more dominant of this Balkan duo in terms of interest from British property purchasers? After all, it's not like Romanian property has been without its hype. A study jointly complied by Price Waterhouse Coopers and Channel 4 last year named the Balkan country as being the top investment destination for the next ten years, citing potential return on investment of 414 per cent over this period. In fact, as far back as 2003 a Foreign Direct Investment study ranked the Romanian property sector as the 17th most attractive market for European investors, having previously not even been in the top 25.

Yet in currency exchange company Moneycorp's latest Foreign Focus Index, which looks at which countries have been the centre of the most recent enquiries, Bulgaria was the joint third most popular destination – along with the US – while Romania was nowhere to be seen. So why is Romanian property still being largely ignored by British purchasers, in spite of all it seems to have going for it? "Romania has a large indigenous population almost three times the size of Bulgaria's [the Romanian population is just under 23 million compared to Bulgaria's roughly 8 million residents] and the local market has been providing more than enough growth in recent years," explains Tahir Ali of Romania Revealed. "Very few agents have managed to convince Romanian property developers that they need to market to the UK in order to achieve more sales."

David Howe of Investment Romania elaborates on this point: "It's not so much that Romania has been in the shadows of Bulgaria in recent years, but in the dark," he says. "The main reason for this has been that investment funds and property developers have had a beneficial interest in [marketing] countries like Bulgaria and Turkey, and their advertising has meant that Romania hasn't had the attention that it has perhaps deserved from overseas property investors. That said, the Romanian property market has been consistently returning 35 per cent capital growth a year while remaining under the radar of the property speculator," Howe adds. Jenny Smith is one Brit who has already taken the plunge into the Romanian property market, buying not one but three Romanian properties in recent years. "I have property with land in County Brasov and Cluj, and an apartment in Cluj as well," explains Jenny, who first visited the country with her Romanian partner in 2001.

While she will be looking to sell at least two of these Romanian properties later this year – making a tidy profit when she does – since 2003 she has also spent the summer months living in Cluj, located 440 kilometres north-west of Bucharest in the Transylvania region. However, this has not proved to be as straightforward as it should be. "The hardest thing about staying in Romania for longer than three months at a time was obtaining a long-stay visa, even though I had property there, and a bank account, medical insurance, etcetera. Having investments, it seems, was not enough of a reason for the authorities to give me a longer visa."

Issues such as these have all played their part in restricting widespread interest in Romanian property. But with the country having assumed European Union membership on 1st January, could it be that overseas purchasers, and indeed property developers, will now begin to view the Romanian market as a more viable option? "[EU membership] has given people the confidence that they had previously lacked about entering the market," states Howe. Surely, then, making money from a Romanian property is just a mere formality to an overseas investor? Unfortunately not, it would seem. "We must not leave our brains at the airport," stresses Philipa Weitz of PWT in Romania. "Not all of Romania has a buoyant property market, or has the correct and democratic procedures which are free from corruption," she adds.

It is for this reason that much of the initial overseas interest in Romanian property has been focused on some of the country's larger cities, particularly the capital Bucharest.
A thriving city, known for its wide tree-lined boulevards and French-inspired architecture, Bucharest is heralded by many as being Eastern Europe's most attractive destination, earning it the nickname 'The Little Paris' – albeit with very different property prices to the real Paris. According to Ali average property prices in Bucharest are currently around just £50,000; in the French capital, however, the average property value is closer to £245,000.

Brasov, situated approximately 100 kilometres to the north of Bucharest, is another city proving to be fairly popular with property investors. Described by Howe as "a city of aesthetic beauty," Brasov is the most populous Romanian mountainous city, and is most famous for Bran Castle, one of the country's top tourist attractions due to it being the supposed home of Count Dracula – Bram Stoker allegedly used the castle as his inspiration for Dracula's lair.

Another Romanian city, which should prove to be a safe destination in which to invest in property, is Timisoara. Located in western Romania and known locally as 'Little Venice', Weitz says of the city: "The residents of Timisoara have spent many years cooped up in small flats built by Nicolae Ceausescu and are now building spacious houses in the suburb. Property prices have already doubled over the last two years from around 10 euros a square metre, to 30 euros a square metre. It could be closer to 75 euros by the end of this year," she adds.

Away from the cities, other Romanian areas may also appeal to British property seekers. The Prahova Valley, located between Bucharest and Brasov, is currently Romania's major ski and winter sports area, although it has to be said the infrastructure around the resort is far more basic than you would find at many other European ski resorts, including Bulgaria's. That said, Ali mentions a new ski village being developed near Brasov, Poiana Mica, as being a development  to keep an eye on. A new airport being built at Ghimbav, a 25-minute drive away, could also enhance the popularity of this resort – good news for property owners. Romania's stretch of Black Sea Coast, while cooler in the summer than Bulgaria's, is also expected to stir increasing levels of interest from overseas buyers, especially if the country can  capitalise on the tourist market in the same way its southern neighbour has. Mamaria is the most developed Romanian coastal resort, and its proximity to Constanta airport should ensure those who do choose to purchase property there can be hopeful of seeing a return on their investment. At present Ali says that property on the coast is experiencing capital appreciation of around 15–20 per cent per annum, a figure similar to that of Brasov, although some areas of Bucharest are easily exceeding this level – Howe estimates appreciation of around 35 per cent in the capital.

So while it's clear to see that Romania does indeed have a number of destinations which could appeal to an overseas investment buyer, will it ever rival Bulgaria in terms of property purchasing popularity? "Romania will eventually become as popular as Bulgaria in our opinion for the simple reason that it has all the ingredients that Bulgaria has – beautiful countryside, clean sandy beaches and a booming middle class in the cities, especially Bucharest," states Ali confidently.

Howe is even more convinced of Romania's potential. "It will surpass it [Bulgaria] for the informed property investor, as it is purely an investment market, not one driven by tourism," he says. Who knows, then, in a few years time, should I ask you the same question I did in the opening paragraph, I may be putting my hard-earned cash on the likelihood of you answering Romania rather than Bulgaria. For now, though, we'll just have to wait and see...

For further information about Romanian property:
Investment Romania 
Romania Revealed 
PWT in Romania

Romanian property buyer's guide
With Romania's new EU status, investors are significantly escalating their interest and investments in the country. This will inevitably lead to price rises, so if possible any purchases should be made sooner rather than later.
Choose a location carefully. Some places are becoming saturated and it will be difficult to guarantee year-round rental with so many other properties nearby also to rent. It is always best to visit a site before buying. Find out how easy it is to get to and from the site and what amenities are nearby.
If purchasers are buying anything other than an apartment they will need to establish a Romanian foundation or company via which the investor can own the land on which the property sits.
The purchaser should have an independent survey carried out for resale property.
In terms of the associated extra costs a Romanian property investor should budget for, they should allow for an extra 3–4 per cent of the original purchase price. Costs will include the lawyer and notary costs as well as state taxes. There is an annual property tax payable in Romania as well.
Look for hidden costs. Apartments will have an annual maintenance charge built in.
There is so much choice with regards to buying in Romania that it is always best to use a reputable agent to help you separate the chaff from the wheat. It is best to use an agent with local knowledge who can bridge the gap between foreign buyers and sellers, or developers who may not speak English.

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Article published on 17 May 2007