Your Home in Bucharest
Why Invest in Romania?
Further Information For more specific information on Romania and the many good reasons for investing here we recommend you read How To Profit From The NEXT Biggest Property Boom In Eastern Europe, by Darren Goodson. This comprehensive and informative book is available for free at www.bucharestproperty.com You can find an extensive selection of online maps of all areas of Bucharest on the About Romania website at www.aboutromania.com 
Why Invest in Bucharest?
As many successful investors will agree, one of the key principles of successful property investment is to follow the money. While there are many places in Romania to invest, the vast majority of money is being invested in Bucharest. Bucharest, which likes to style itself ‘Paris of the East’, may not yet be one of Europe’s key capitals but it is the most affluent and developed city in the entire region. Romania’s economic boom means the city is currently undergoing a period of urban renewal. Many residential and commercial developments are underway, the historic centre is undergoing renovation and new roads and Metro lines are under construction. The city is also undergoing a consumer boom – very much like the 80’s consumer boom in the UK. Major foreign retailers, upmarket shops, restaurants, hotels and prestige car dealerships are expanding fast and conspicuous consumption is very much in vogue. In short, Bucharest is well on the way to becoming a smart, affluent European capital.
About The Location
Basarabia Boulevard is located in Sector III, central Bucharest. It is one of the most populated zones of the city and one that, so far, has seen limited new residential development. It is, however, benefiting from massive commercial investment – a sure sign of an up-and-coming district. Just 500m away is one of the city’s newest hypermarkets, offering prestigious international brands and retail concessions. Now that the area has the established commercial infrastructure to support it a massive regeneration of the residential real estate is underway. Basarabia Boulevard will deliver quality, modern living accommodation in what is currently a sought after but under-supplied market. About The Development
Basarabia Boulevard features seven buildings offering luxury living with a very high standard specification. Middle class Romanians – the fastest growing segment of the population – are very style conscious. And this development will meet their high standards perfectly. In order to create a desirable, village feel in the new development Basarabia Boulevard will incorporate shopping facilities, galleries and coffee shops on site. Fitness and crèche facilities give the finished project a unique selling point – attracting wealthy young Romanians and young families. Underground car parking is available and security will be provided by CCTV, electric gates and 24 hour on site security. The site is served by two tramlines offering a direct service into Bucharest’s main square. It also offers easy access to the new Bucharest ring road. Floor Plans
Apartment Types
Special Pre-Launch Price List - Not Yet Released To The General Public
Site Highlights
About The Developer
Trust is important when investing in any property project – and it is essential when investing in an emerging market like Romania. We are proud to be working with the RI Investment Group on this project. Their directors Gerard Cosgrave, Alan Torpey and Romanian Eduardo Doandes have many years of experience in property investment, plus on-the-ground experience in Romania. RI Investment Group have already worked on some of the largest investment project in Romania, and are partnered with internationally renowned architects, construction groups and lawyers. So peace of mind is guaranteed, allowing you to have a ‘hands off’ approach to Romanian property investment should you wish to do so. Pricing & Prospects For Capital Appreciation Prices for this development start at €1,400 per square metre (£87 per square foot). This is an extremely attractive entry level price for a major European capital city. It compares favourably with, for example, Warsaw at around €4,000 per m² or London at around €10,000 per m². Up to date information on the present state of the Bucharest residential market can be found from the independent estate agency, Colliers international – www.colliers.com/Markets/Bucharest/
Investor’s Tip : In Romania it is usual to include the balcony and then an equal share of the common areas in the internal size of an apartment. This is known as gross area and is the most common and accepted way of pricing a property. Usable Area: Represents the net area of the apartment, the sum of the usable interior area within the apartment (excluding terraces, exterior and interior walls). Built Area: Comprising the usable area to which is added the built area of terraces, the walls and other structural elements or shafts. Gross Area : The built area plus a share of the common areas and annex spaces. Basarabia Profit Projections: Potential Growth Capital growth in Bucharest was up to 30% in 2006. High capital growth is predicted to continue for another two years at least, as the market is driven by consumer demand and easier access to mortgage finance. Taking into account the value of the development per square metre in 2007, the following tables illustrate just how capital growth at various levels could affect the value of your investment: Pricing And Prospects For Capital Appreciation And Rental Potential Once your property is completed and handed over you may well wish to let it out, to earn a rental income. While it is impossible to predict future rents and yields we can offer some advice, based on recent experiences. The letting market in Bucharest is healthy. Hotels are frequently fully booked despite being expensive by western standards. One estimate claims that Bucharest lacks 1,000 executive-grade hotel rooms. Good quality, rented accommodation is sought after by Romanians moving to the capital, expatriates and the growing number of multinational companies relocating their personnel. Rents in Bucharest do not necessarily reflect the low capital values and some premium properties rent for similar prices to Paris or London. The central and northern districts tend to appeal to more affluent tenants, while the western districts are more budget locations. As with other cities, rental yields vary according to location, size, furnishing and style/quality of building. However, here are some sample monthly rents for modern apartments :
The general opinion of agents is that average yields are in the region of 5%-9%. They can reach 15% for the most desirable properties. Letting & Management BucharestProperty.com, in association with Goodson & Red, our real estate agency in Bucharest, can take care of the full management of your Basarabia Boulevard property through our Professional Property Management Department. However, you are perfectly free to choose your own letting agent if you wish. Investor’s Tip : To maximise rents and minimise voids ensure your property is furnished to a high standard. Make your property stand out from the others. Make it look and feel like a hotel: Choose modern, contemporary wooden furniture and neutral, earthy colours that will age well. Made to measure designer curtains and wall paper. Wooden floors. Contemporary lighting. The kitchen should be fully fitted to a high standard, and include fitted appliances. SPECIAL BONUS! BucharestProperty.com also include a fully-fitted kitchen with appliances plus a comprehensive ‘Ready-To-Go’ furniture package worth over £8,000 (see page 23 of the pdf brochure for details). Buying Off Plan: What You Need To Know Buying off plan has proved to be a shrewd and effective way of investing in the booming Bucharest market. In 2006, eleven developments were launched in Bucharest’s six sectors. This delivered only 8,800 units for a population of over two million inhabitants – many of whom are living in substandard communist era tower blocks. The desire amongst affluent Romanians to move to new, upmarket developments – like Basarabia Boulevard – is partly responsible for fuelling spectacular capital growth over the last couple of years. In 2006, 50% of all Bucharest developments were sold off plan, with two completely sold out a full 12 months before completion! The locals have demonstrated a strong appetite for buying in early, and we believe that foreign investors are well advised to consider doing likewise. Disadvantages Of Buying Older Propoerty
Advantages Of Buying Off Plan
Payment Structure
More Helpful Information For Investors The Romanian Mortgage Market: What You Need To Know
Mortgage finance has only become available to most Romanians in the last three years. In the past all purchases were in cash, which limited prices and capital appreciation. Today, access to easy, cheap finance is one of the factors that is really driving the market here. The mortgage industry in Romania is still quite immature. It represents only 2% of the country’s GDP, compared to around 50% in the UK. So there is considerable room for growth. There are currently now over 20 banks actively promoting mortgages here. Romanians may currently borrow 75% loan to contract, requiring a 25% deposit. However, as in other emerging markets we consider the mortgage market will quickly become more sophisticated and the range of mortgage products will increase – thus creating even better prospects for today’s investor. Your Exit Strategy: Some Suggestions With any investment it is, of course, sensible to have an exit strategy. In this section we will offer some suggestions for your consideration. Local demand among the emerging middle class is currently very high and a sale to local buyers could be an attractive exit route. Yet there is also a shortage of good rental accommodation in Bucharest so rental opportunities are good. There are three strategies for you to consider:
Flipping your investment might involve selling your contract to another investor or purchaser before you are called to complete on the project. The demand from locals is so high that they will provide you with an exit strategy at an early stage if you wish to flip. This is typically done six months before completion and allows you to release any potential profit you may have gained from buying off plan. It is a riskier strategy than ‘2’ or ‘3’ and you should ideally have a mortgage in place in case you decide not to flip. Completing your investment means signing the contract, and taking possession of your investment property on completion. Most people will use the mortgage finance that is available at 80% loan to value (LTV) and will then hand the letting and management of the property over to Goodson & Red, our local estate agents in Bucharest. Rental yields are high in Bucharest (typically 8-10%) due to the limited supply of modern accommodation for rent in all sectors. (Rents levels can be comparable with central London.) Completing and releasing equity gives you an opportunity to complete on your investment, hold it for the medium term and also release any potential capital appreciation that has occurred during the construction period. For example, if prices have risen at a modest 20% over two years it could mean an investor would be able to release €24,000 on completion. Once you have benefited from capital growth in the construction period release equity and investing it in the next up and coming development in Bucharest could be a very sensible exit strategy indeed. Example
Who Can I Resell To? The Romanian property market is growing rapidly, thanks to increasing local affluence and easier access to mortgage finance. There is a growing middle class who are keen to ascend the property ladder as quickly as possible. Colliers International have operated in Bucharest for over 10 years now, and are considered experts on the residential market here. They say that the ‘middle income residential segment (of the Bucharest market) is entering its long expected boom’. The main characteristics of a Romanian buyer are:
Buying Through A Company: What You Need To Know
At the moment, the constitution of Romania restricts ownership of real estate by foreign nationals. However, a Romanian company may own real estate in the country even if foreign owned. Another benefit of setting up a Romanian limited company is that it will save you 19% VAT. This is a cost that individual purchasers have to fund. Therefore, we suggest setting up a Romanian limited company through which to purchase your property. We have lawyers able to represent you and assist you in the formation of a company if required. Annual running costs of approx €900 are paid in two instalments. Your solicitor can also make your annual returns. Protecting Your Investment We understand the importance of protecting your investment. Therefore we have a strict checklist that must be satisfied before we proceed with a development:
These searches give you added security by fully protecting your investment. Risks & Returns: Some Points To Consider The Economy So far, every country that has joined the EU has benefited economically. There is, of course, a risk that Romania’s economy may falter as buyers look even further east to secure cheaper ‘non-EU’ prices for goods and services. In our opinion, this is a limited risk and will not negatively impact property prices. Indeed the largest real estate consultancy in the world – Jones Lang Lasalle – has forecast that Bucharest is expecting the highest output growth over the midterm ever registered in E-REGI history (European Regional Economic Growth Index). Price Risk Are you paying the right price? We believe the price for this development is excellent. Firstly, the specification and design of the building will actually enhance Sector III itself, while the village layout will create a unique selling point for this development. To be sure, we have engaged a respected independent Romanian real estate consultancy company to prepare a report for us, assessing the present value and the growth potential for this project over a two year time period. Inward Investment Corporations such as General Electric, IKEA & Renault are already in the Romanian commercial property market and are confident that commercial and residential real estate are the places to be for long term growth. We are convinced that not, only are their predictions based on extensive research and analysis, but they are most likely backed by risk averse decision makers – who would be wary of investing if the market was not strong. Future Growth Risk There are. of course, no guarantees in any market in terms of future growth. But everything about this development points towards there being substantial capital growth potential. From our experience other Eastern European markets, and looking historically at how price per square metre values appreciate in emerging markets, we anticipate these investments will increase considerably. Exit Risk There is a possibility that investors looking to sell their investments may not find a buyer. This is always a risk in any market, emerging or otherwise and cannot be understated. Given that this is to be one of the first luxury modern developments in Sector III, we consider this risk is limited, as the growing Romanian middle classes aspire to this style of development. Free ‘Ready-To-Go’ Furniture Package for ALL Basarabia Apartments (Worth Over £8,000)
Bedrooms
Reception
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Hallway
The Tax Implications When buying in Romania the tax rules are the same for locals and foreigners. As with all tax systems, the rules are complex and you are strongly advised to seek professional advice from a specialist. However, here is a handy guide: Property Transfer Tax The sale and purchase of real estate located in Romania are subject to stamp duty and notary fees. Stamp duty figure is 0.5% plus VAT. Value Added Tax The transfer of immovable property in Romania is subject to VAT charged at the standard 19%. However, special VAT simplification measures apply to land and buildings, provided both the seller and the buyer are VAT registered in Romania. In this case, the seller and the buyer account for both input and output VAT without any VAT cash flow. Capital Gains Tax Non-resident legal entities are taxable in Romania at the standard profits tax rate of 16% for the capital gains realised from selling ownership rights over a local company. Profits derived from the direct sale of real estate in Romania are also subject to the standard 16% tax. However you can decrease the capital gains tax liability by deducting all costs involved in the purchase, maintenance and sale of the property. Dividend Tax Dividends paid abroad by a local company from its profits are subject to a 16% withholding tax in Romania. However, this tax may be reduced (even to zero) under the provisions of some of the double tax treaties signed between Romania and other countries. Local Taxes Owners of buildings are required to pay an annual building tax to the local authorities. For companies, building tax is 1-2% of the book value of the building. There is a local tax liability of 1.5% on the cost of your apartment when owned by a company. This liability can be credited back against CGT when you sell. Why Buy Using BucharestProperty.com? BucharestProperty.com’s fee includes everything you need to make a successful property investment in Romania. We don’t just sell you a property. We offer a full consultancy service, do thorough due diligence on every project, and provide personal service to ensure everything runs smoothly: Finding the Deal
Services Our team help you through your entire investing process, including:
Our fee for a Basarabia Boulevard is just £1,995 plus 18% VAT payable for each individual reservation made.
Summary: Investor’s Checklist
For all enquiries or to reserve an apartment, email sales@bucharestproperty.com Download PDF price list
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