By Brett Tudor

The arrival of Nokia and General Motors will bring 30,000 new jobs and €33 million of government investment in infrastructure.

"If you create 30,000 jobs in any country, you will bring in huge new revenue through increasing affluence. A Chinese company supplying Nokia will create another 5000 jobs and then we will see a new General Motors plant adding a further 7000."
Property Secrets Investment broker, Simon Blakebrough

Fifteen hundred miles separates Cluj-Napoca in the Transylvanian region of Romania from Shannon on the west coast of Ireland.

Yet many of the same conditions that sparked a boom in the Irish housing market can be found in a city with a property market that is primed and ready to take off in a matter of months.

Property Secrets deal broker Steve Desmond who has just returned from a trip to Cluj-Napoca believes that there are extraordinary parallels with conditions in Shannon a decade ago.

"The arrival of the Intel plants in Kildare led to the redevelopment of all the towns and regions within a 50 mile radius following the creation of other spin off industries. Dell and other companies brought high tech work to the area and unprecedented levels of wealth to Ireland.

The young educated workforce in Cluj-Napoca will have an immediate effect on property prices and inward migration"

The key driver for Cluj-Napoca, as it was in Shannon, will be FDI following the arrival of some of the biggest names in global technology.

For Ireland in the 1990s, it was the arrival of companies like Dell, encouraged to set up their European business in Ireland by government tax incentives. Other similar industries soon followed from the US, boosting the economy and launching unprecedented house price growth.

Universities were forced to adapt to the changing economic climate, restructuring their courses to provide more highly trained graduates. These graduates gained employment in the highly paid IT sector and this increased the desire for affluence.

This situation was compounded by the lack of modern housing stock. Growth in demand led to a construction boom exerting upward pressure on the price of land. National house prices went up by 270% in the ten year period between 1996 and 2006, rising at an average of 14.9 % a year.

Increased FDI in the high technology sectors, a young, well educated workforce with 50% of its population under 30 and an economy catching up with the rest of Europe - fast forward to 2007...

And these are exactly the conditions you will find in Romania's Cluj-Napoca. This time Nokia is the company blazing a trail into one of the most important economic centres in Romania, bringing with it €60 million of investment.

Famous for its breweries, the expanding city of Cluj-Napoca is rapidly becoming an important centre of Romania's IT industry with over 100 software companies and two universities providing a young well-educated workforce. The city is also well served by its international airport located just 9km to the east of the city centre.

According to the latest census 40% of the population in Cluj is aged between 15 and 35, so you have a young population, supplying relatively cheap labour by Western standards with an appetite for affluence. These people want modern Western style homes to live in.

All this adds up to demand set to take off in a BIG way.

The construction boom aimed at satisfying the explosion in demand for housing has resulted in twice as many new residential units appearing on the market in 2006 as there were in 2005 when the construction rate reached more than 1000 units.

This figure in itself represents a 400% growth compared to 2001 and as in Ireland in the 1990s the rate of construction shows little sign of slowing. The premium on land is again applying upward pressure further fuelling price growth.

The situation according to Property Secrets member Liam Deasy is one of rapid change.

"I have visited many Eastern European cities before they boomed, but this has all the ingredients of an explosive market. Cluj-Napoca is certainly one of the best places to buy property in Romania. Properties here are still very cheap, at the moment you can still buy a nice three bedroom apartment for around €90,000, but in the last two months I have seen prices rising fast. I predict that in the next six months or so many of the cheaper deals will be gone."

Demand from the domestic market is strong with affordability buoyed by the higher salaries on offer in the high tech industries. The average salary of an IT programmer, for example, has risen to within 50% of Western European levels and continues to rise by as much as 20% a year according to The Economist. There is also a large student population of 100,000 and a growing trend among middle class parents buying apartments in the city to house them in more suitable accommodation.

'The population of Cluj and the greater metropolitan area taking in neighbouring villages on the edge of the city will boost the current population by 500,000. Inward migration is set to boost the overall population by a staggering 1 million according to the latest projections.

The average price per sqm has already risen from between €800 - 900 euros in 2005 to between €1000 - 1,400 in 2007. Compare this to Bucharest at an average €1742 sqm rising from an average €1604 in 2006 and not only does this city represent good value, it also reveals a similar rate of growth in property prices. It is anticipated that prices in Cluj will rise between 10 - 15% this year following the 25-30% increases seen in 2006.

Romania's economy has consistently recorded GDP growth in excess of 4% - well in excess of the EU average. This combined with record levels of FDI coming into the city and Romania as a whole means that it is a virtual certainty that we will see a similar pattern emerge to that in Ireland a decade ago.