15/02/2024

The Romanian real estate market - our vision of the future

Many sectors of the economy today are marked by uncertainty and volatility, and real estate is no different. You may be wondering if it's a good idea to bet on real estate these days and enter the Build21 ecosystem.

Most of our team at Build21 team consist of professionals in the field: engineers, architects, contractors and real estate project managers, each with 10-15 years of experience.

We decided to stay in the field and take on the mission of building 21 real estate projects for two reasons: we believe in the impact that well-built spaces have on people's lives and we have faith in the future of the real estate market in Romania and the region.

We have our own vision of this and a number of reasons that make us confident, which we share with you here:

Romanians need new, better buildings

With more than 95% home owners, Romania has the highest home ownership rate in Europe *1.

The vast majority of these homes were built during the communist period, are 40 years old or more and offer low living standards. According to Eurostat, Romania ranks 2nd in the EU in terms of the number of people living in overcrowded homes *2.

Old and depreciated buildings

According to Romanian law, the projected lifespan of residential buildings is 50 years.

Thus, most of the housing stock in urban areas in Romania, build by 1989, is rapidly exceeding its maximum lifespan. This will make financing the purchase of such a dwelling increasingly difficult and will create a significant new demand for housing eligible for housing loans.

Dynamics of dwellings built in Romania between 1951 and 1989
Data source: National Institute of Statistics, Statistical Yearbook of Romania 1981-1990.

Data source: National Institute of Statistics, Statistical Yearbook of Romania 2007-2011, for 2011 provisional data *3.

Growing local markets

Beyond Bucharest and regional hubs such as Cluj, Timisoara and Iasi, which have traditionally attracted investments, in recent years more and more small and medium-sized cities are developing.

Cities such as Brasov, Craiova, Oradea and Sibiu are growing: some are encouraging migration and hosting new communities, while others are strengthening their economies through investments.

Real estate projects in all segments are growing in number, size and investment value in dozens of cities.

 

Prices will continue to rise

EU house prices have been on a steady upward trend over the last 10 years: between 2015 and 2021 they have increased by 38% *4.

Today, Romania has the lowest prices per sqm for housing in the European Union, after Greece. From here, prices can only continue to rise. In fact, they rose by 12.8% in a single year, between 2021 and 2022.

In addition, housing in Romania is some of the most affordable in Europe - while Slovaks can buy a 70 sqm house in over 13 years, Romanians can do it in about 6 years *5.

That's how we see it. We believe that the changing lifestyle of Romanians, supported by the constant growth of incomes, generates a growing need for new, good quality buildings. This demand, coupled with low prices compared to other European markets, makes Romanian real estate a solid investment opportunity in the medium to long term.

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Data sources mentioned in this article:

1. Homeownership rates in selected European countries in 2022, by country, Statista
2. Living conditions in Europe - housing, Eurostat, 2023
3. Analysis of the current housing situation in Romania in the European context, Transylvanian Review of Administrative Sciences, No. 43 E/2014, pp. 5-24
4. The living sector in CEE - 6, Colliers, 2023
5. Deloitte Property Index 2023, Overview of European Residential Markets, 12th edition, August 2023

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