By Andrea Harper with Brian Davies, Chairman of the British-Romanian Chamber of Commerce

Since EU accession, Romania has proved a magnet for British companies such as Glaxco, Vodafone and Orange, who are leading a new wave of development in Romania's business economy.

We are now seeing the traditional manufacturing base of textiles expand and develop into new areas such as injection mouldings and plastics.

That investment is now believed to be around €1 billion from UK companies alone.

The link between this investment and its effects on jobs, salaries and, in turn, demand for housing, is obvious.

Further investment is flooding into the country from EU Structural Funds - a massive €30 billion from 2007 to 2013 - the largest allocation currently made in Europe. This money is to be used on major projects such as new, transport links.

Already Bucharest is undergoing a major transformation as developers quickly move in to buy sites outside the heavily congested city centre.

An example of this is in Pipera, in the city's Northern district, which is set to become the heart of Bucharest's business community.

Already 500,000 sqm of new office space is now under construction in state-of-the-art office blocks.

€1.4 billion business park

New business parks are springing up, such as the Baneasa Commercial Area, a €1.4 billion project, which includes the Baneasa Business and Technology Park.

Commercial development is being pushed out of the densely built-up city centre into more outlying and less developed areas where large sites are available for building.

But the direct impact of this on the property market is an immediate lack of accommodation for workers.

When Property Secrets deal broker Simon Blakeborough visited Bucharest he was told by a senior executive from a blue chip company that there were problems securing long term rental accommodation.

There was very little accommodation close to the new business parks and rents were high.

This was because landlords were giving short term three month rental contracts and then hyperinflating rental rates at renewal because there was a chronic shortgage of supply.

The Brits are coming!

The British Chamber of Commerce in Romania recently reported that British business is currently investing €1 billion in the country, the figure based on official government stats. Much of this is heading to the capital.

Brian Davies, chairman of the British Romanian Chamber of Commerce, has seen the changes in the Romanian economy first hand.

"British investors are attracted by the fact that Romania is a very good export base, due to its geographical position in Central and Eastern Europe, and that it also has low manufacturing costs.

"It has a well-educated workforce, which is practically in full employment. Middle management sources are not only present in Bucharest, but also in the provinces and many Romanians speak English."

Phases of growth

"In Romania, we have seen a first wave of development where some of the multi-nationals have come in and set up operations.

"They act as the anchors for the business economy to build on. They are initially attracted by the large market for their products and services. Once these are established, they give the green light to smaller ones, signalling them to come in.

"The second phase is the small to medium sized companies who come into the supply chain, in areas such as logistics.

"Bucharest is currently in this second phase where the market is growing and developing with these small to medium sized companies. This is not just restricted to overseas companies as we are now witnessing organic growth from local companies.

"Very slowly, we are just starting to see Bucharest emerge into the third stage where the bigger industries, who tend to be more conservative, are now looking to come into Bucharest.

"They can now see how it is part of the European community, how its laws are based in Brussels and the way it conducts business and commerce.

"The way forward for the country is to now grow its productivity by increasing mechanisation and automation as there is almost full employment."

Already developers are now buying up swathes of land in Bucharest, not only for industrial and commercial development, but also for new build residential projects.

Brian added: "Historically, when Romania was industrialised, people were brought in from the country into the city to work so everyone was forced to live in apartments.

"Young people in Bucharest are no different than those in the UK - after living in a flat they aspire to live in a house.

"People are also far more mobile now then they were ten years ago when I first came to Romania and, from my experience, people are prepared to travel to work.

"Rentals have definitely gone up in the last two years.

"This is because when Romania joined the European Union there was a requirement to raise the minimum wage which started from a very low base. Therefore, as wage levels rise, this directly impacts on the cost of living which also goes up and is why we are seeing rents now climbing.

"It is difficult to say how far exactly Bucharest is behind the UK market, but it is at least 15 years.

"I am very optomistic about Romania as it has great natural resources, such as oil, and its people are very well educated which, went combined with western organisation skills, will help the country to develop further."