By Noreen Lucey, Property Investment Analyst, Property Secrets
Why would landscapes matter to serious Romania property investors? Read on...
For any one who has been to the Transylvania Mountains and found the scenery stunning, then they would most certainly be in awe of the Maramures.
An area of rolling hills, scenic villages and a step back in time, it is one of the most beautiful parts of Romania, situated in the north of the country and close to the Ukrainian border.
And anyone that has been to the Maramures will almost surely have visited the city of Baia Mare. The city is an interesting one in terms of its location, climate, demographics and economy.
Baia Mare is very similar to Brasov geographically.
The city lies on a plane surrounded by mountains with the nearest ski resorts only 20km from the city.
Baia Mare enjoys a very temperate climate due to its location in the mountains.
Romanians will tell you the proof of this is the chestnut trees that can be found growing in the region around the city. This is the northern most area you can find chestnut trees that usually need Mediterranean climate to grow.
With a population of 150,000 it is the main city in the Maramures region supporting a catchment area of 30,000 people.
The city is the administrative seat of Maramures however its economy was driven by the mining industry - generally for minerals such as copper and lead but mainly gold.
The mining industry has declined since 1989 however recently there has been a return to the old gold mines as new technology has made further extraction of the mineral possible. As with all mining regions the legacy of heavy duty mining is visible outside the city.
A mining accident in 2000 led to a cyanide leak into local rivers. International pressure led to stricter controls over the mining industry and more focus on environmental protection. Tourism in the region benefited as agri-tourism opened up in the Maramures region. Local farmers benefited from grants made available to promote the agri-tourism industry and non-intensive farming.
An odd phenomenon about the region around Baia Mare is the number of expensive looking villa type farmhouses which look out of place on the 2 hectare farms of the region. But this area is the source of some 10% of the estimated 2.5 million Romanians that have emigrated abroad.
And it is believed that the money repatriated from these emigrants amounts to €4.5bn a year. There are a lot of people in this region living from money sent home by family members working abroad. What is really important about this however is circa 250,000 emigrants that may in the next few years be looking to return home, buy a house and settle down.
Will the jobs be there to support the return of such a large number of emigrants?
Currently, the main employer in the city is Italsofa, the sofa manufacturer which employs around 3,500 people in Baia Mare. A number of small manufacturing companies have also located to the city.
A Romanian investment agency recently reported a labour shortage in Baia Mare.
This is good news for emigrants returning home but also for migrants locating to Romania. There is evidence that the city is becoming a gateway for Ukrainians entering the country looking for work.
The city is less than 200km from the Ukrainian border and an important city in the eyes of the EU to support the enlargement of the economic and commercial relations between EU countries and non-EU countries such as Ukraine.
Already the following infrastructure projects are at different stages of planning as part of the EU regional policy. This is part of the development of a high speed road network in north-western Romania as part of the EU eastern border road axis linking the Gdansk - Budapest - Odessa - Constantan - Verna corridor.
The following proposals have been made:
1. The development of a West-East road axis through Northern Romania: Vienna (Austria) - Budapest - Nyiregyhaza (Hungary) - Satu Mare - Baia Mare - Suceava (Romania) - Chisinau (Moldova) - Odessa (Ukraine). See map below:
2. The development of a North - South road axis connecting the Baltic Sea with the Black Sea through Gdansk - Lublin - Rzeszow - Mihajlovce - Kralovsky- Chlmek - Zahony - Satu Mare (fork to Baia Mare - Suceava - Chisinau - Odessa) - Cluj Napoca - Bucharest (fork to Constanta) - Sofia - Varna. See map below:
No dates have been announced yet as to when work will commence on these projects however it will certainly open up the city of Baia Mare to the EU and non EU members such as Moldova and Ukraine. The north Romanian corridor is clearly an important one in terms of linking up the EU with these markets and Baia Mare looks set to benefit hugely from its strategic location in this region.
What property investment in the city?
There were two big retails projects announced recently. Dawnay Day Carpathian PLC, the retail property investment company established to invest in Central and Eastern Europe, has acquired a multi-purpose development site for a value in excess of €6.5m in the city. Construction is expected to commence in September 2008 and the estimated gross development value of the project is expected to be €68m with completion due in 23 months.
Another big project announced was by Futureal Group and Immoeast to construct a €97 million shopping centre in Baia Mare.
Called Gold Plaza, the centre will make use of total usable space of 43,000 sqm.
Construction is scheduled to begin start of 2008 and completion at the end of next year.
Typically, the retail and commercial property sectors in emerging markets are always the first to take off and we believe these announcements signal that the residential property market in Baia Mare is only about to take off.
The first residential development in the city was only recently announced and for serious investors who realise the importance of getting in first to take advantage of the highest growth phase of these markets, this city is one to watch.
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