Our partner in Romania is Tavi Bota. Tavi, a Romanian entrepreneur with British residency, has studied the Romanian property market for many years and is widely recognised as the country's best-informed independent property market analyst.

Tavi was instrumental in the production of the Property Secrets Romanian Market Forecast report two years ago, which correctly predicted a number of property investment opportunities in Romania.

Tavi explains why the East of Bucharest is the capital's next investment hotspot...

To anyone who's followed the Romanian deals you've sourced, the obvious thing about Pallady Residence is that the units are significantly cheaper?

Yes, this is the kind of deal in Bucharest that I know a lot of Property Secrets members have been waiting for. And the time is now right for it.

There are a number of factors that make this development an excellent investment - classic factors, if you like, that you could apply to any city that is in a stage of rapid growth and development.

I'll come to these; but I do believe it's always best to strip down any property investment proposal to its basics. And, in this case, with this deal, what we have is the opportunity to plug into a new phase of development in the Bucharest market.

This is the exciting new opportunity.

What do you mean by a new phase of development - new opportunity?

Well, to put it simply, Pallady Residence targets a brand new domestic buyer within the Romanian property market. That's why such a development and such a location are so exciting. What we are seeing is the widening of the appeal of new builds in Bucharest.

Up to now, we have selected what I believe are excellent developments that offer reasonable rental potential and excellent capital growth potential - but they have all been at the higher end of the market. Not the luxury end, but certainly the middle to upper middle classes. The money is there in this market to support this sector.

But, as with all developing markets, the real bulge in demand and in investor opportunity will come at a slightly lower level of the market - what we might call the lower middle classes.

So, we're back to a phenomenon we've seen so many times before in CEE markets - the aspirational workers that are already becoming the new wannabe home owners.

And here we have a development that is affordable to that level of the market - the lower middle classes.

And, believe me, this is where we are going to see amazing capital growth.

As the mortgage laws relax and as Romanians in Bucharest start to grasp the off-plan idea - the fact that in a market that is developing as quickly as this one, you are wise to by before completion - that's when we'll start to see the queues around the block for relatively modest units.

Anyone buying into Pallady Residence will be buying into this phase of growth in the Bucharest property market - and not just this phase, but also this sector of the market.

OK, so what about the location? Why are we looking at this particular area to the east of the city?

This is a terrific area. Why? Because the development of Bucharest, to a large degree, is going to be about development of brownfield sites, of which here there are lots. Old industrial areas that are rapidly closing, but which, of course, already have the necessary utilities connected and available.

The other key factor as development pushes out from the increasingly expensive centre is transport - both into the centre and away from it.

The best connections, to my mind, right now are in the east of Bucharest, where Pallady Residence is located.

The factories built in the communist era are obsolete - they were built in areas where people were supposed to live as well as work, so they could all walk to work. Of course, now we live in an EU era, this is unacceptable and having such huge industrial sites within residential areas is not allowed.

This is why these brownfield sites are so exciting from a residential development viewpoint.

And East is best?

Right now, if you look at a map of Bucharest, you can clearly see that the east is the area where development is pushing closest to the ring road.

This is THE big development area - the most populated area of the city - some 800,000 people live in the east.

What is happening here also is that we are seeing a logistics hub develop because this area is so well connected - 5 kilometres from this development is the highway to Constanta, Romania's main port and one that is doubling its cargo handling volume every year.

The logical place for that cargo to come through is the east of the city. And we are seeing logistics centres springing up already. On top of this, of course, land is much cheaper here.

But the key is that this will all create jobs - directly and indirectly. So this eastern sector is becoming a new and vibrant part of the city.

This will not become an especially smart area, I don't think, but a modern, service-oriented commercial new hub of the city.

So, you're saying this development is one of the first aimed at its sector of the market?

Yes, one of the first, but not the very first. It's important not to be the pioneer!
This is why I say the time is now right for investors to move into this sector of the market.

But, yes, it's true to say that this development does represent the start of a new phenomenon - modern living for the lower middle classes - and the demand is huge!

The price growth in more central areas is phenomenal. Recently, I looked at a 70 sqm apartment in the centre of Bucharest which would have cost €800 to rent - this is a lot!

Perhaps half of this rate is what a normal, lower middle class family would expect to pay in rent - and that's the kind of market this development is aimed at - these units will rent at around €400 a month.

So, if the centre of town is pricing ordinary people out, other areas will be opened up and this is the key to understanding why the east is such an intelligent place to invest in.

And the development itself?

Well, apart from being pitched at this new and developing sector of the market, the central attraction of Pallady Residence is all about its connections.

Specifically, it is right on the metro line - the line already exists and a metro station will open this year to completely transform the immediate area. What this means is that the centre of Bucharest will be accessible within five stops - around 15 minutes.

Also, some 200 metres away from Pallady is an arterial route into town - the main boulevard, a six lane highway - and five kilometres along there and you connect with the main highway to Constanta, as a I mentioned. So, this development could simply not have a better location than this.

So, sum it up, Tavi - who should buy into this deal and where does it fit in a portfolio?

Ok, the prices of this development are the key to unlocking the answers to these questions. We're talking, what, €1,000 psm. This is what it's all about.

We've offered more expensive developments previously, basically aimed at the increasing number of pretty well-off Romanians, who can pay, say, 50% more, and they want to spend this kind of money to live in a certain kind of apartment. These developments will do exceptionally well.

Now what we have is a second phase of the market in Bucharest - an opening up of the market to a stream of buyers below this level. Creating affordability for what we might call ordinary residents of Bucharest.

This is the phenomenon we have seen in other markets - the luxury end of the market is developed first, followed by a level below, which is definitely not luxury, but still fairly expensive. Then the developers turn their attention to the biggest area - the emerging middle and lower middle classes. This is what is happening here.
Of course, this sector of the market requires a rapidly developing mortgage market - and, again, that is what we are seeing in Romania.

So, who should invest?

Well, anyone who wants to balance their exposure to the Romania market and anyone who wants to plug into the phenomenal growth we're going to see in this sector - just as we have in other markets. The big advantage for many, of course, is that it's a lot cheaper to buy into this sector.

And capital growth?

Always a difficult call. Perhaps the safest forecast is to say we'll see growth in line with the general market trend over the next few years - 20 to 25% a year.