By Anna Grybel, Property Analyst

No Property Secrets investments in Romania have yet reached completion and so are not yet advertised on the secondary market or rented.

We have decided that we will publish prices per sqm for all the deals. The average price per sqm is white finish, excluding VAT and calculated on the total property area, which is the most common practice of quoting price per sqm in Romania and the method used by local developers.

All the figures are supplied by our local partner - Tavi Bota, and meant to be used as a guide.

Bucharest - the property market is booming and the capital growth is very high

Quadra Place has been delivered to market, and this investment has been sold out by the developer.

Demand has been so high that some of units have been flipped before completion or after handover and the re-sale prices vary from €1300 - €1450 per sqm (excl. VAT). That translates into between a 37% and 52% increase in prices and 24-36% annualised growth.

As Quadra place is in the ready-to be-rented stage, we're looking forward to see how the development will perform on the rental market and will report this as soon as we have any data.

Another PS investment in Bucharest is West Park - the second phase of this development is currently selling for €1300 per sqm.

That means that this investment increased in value in the last 16 months by 66% if compared to the PS purchase price and by 53% versus the list price.

The annualised growth for West Park is 49% - well above our forecast of 30%.

In Park View all units are sold out and re-sale is anticipated to be around €1950 per sqm - an increase of 80% in 14 months versus the PS purchase price and annualised growth of 68%.

Such an excellent performance could be partially accounted for by the good location of the development and the fact that it was one of the first middle-class multifamily buildings in Bucharest.

Park View is close to the city centre and overlooks one of the largest parks in the city, which make it a highly desirable place to live.

Similar results were achieved by Platinum Towers - 79% growth in 14 months, if compared to PS discounted purchase price, and annualised growth of 68%. The current price in this development is averaging to €1450 per sqm.

This investment is also located in a good, middle-class residential area - in Vitan district, with walking distance to one of the city's centres Local demand for such housing is very strong in Bucharest.

My Dream is currently selling for €1700 per sqm on average. That translates into 74% growth versus PS purchase price and 66% increase versus list price.

The development's location in the north of Bucharest, i.e. in a well established residential zone dominated by high-end developments, close to two business districts (Baneasa and Pipera) has had a great impact on the price growth in My Dream.

The lowest, but still excellent capital growth among our Bucharest's deals has been Pallady Residence, which is now selling for €1300 per sqm on average. That's a 30% increase in ten months and 36% annualised growth.

The lower growth is still better than the market average of 30%. Pallady Residence is a long term investment. As we have said in the investment report, the location of the development (eastern edge of Bucharest) is likely to become a well established residential zone in the next five years.

Currently, the location is emerging as a middle-class residential area, so higher growth is expected in the future.

Brasov - excelent capital growth

Property Secrets deals in Brasov have been also performed very well, but the capital growth is lower than in Bucharest, which remains the most active market in Romania. ...so far.

In Bellevue Residence, the developer has recently launched stage 2 of phase 1 with the average price of €1950 per sqm. PS clients purchased their units nine months ago with prices 44% lower than the current average and with an excellent discount of 9.1%. Annualised growth for this investment equates to 59%.

Such an excellent performance, well below the market average of 25%, is mainly a result of the unique location of the development. Bellevue Residence lies on the hill and overlooks Brasov.

In Tampa Gardens buildings A and B have been completely sold out. The developer launched the sale of building C in November 2007 and 80% has been already sold to Romanians with the average price of €1000 per sqm.

If we compare that with the PS purchase price, we can see a 22% increase in nine months and 29% annualised growth.

Constanta - solid performance

Similar to Brasov, Constanta has been growing at 20 - 25% per year on average.

Our deal in the city - Residenz Constanta confirms the trend. In a year the average price per sqm in this investment grew by 25% versus PS purchase price. Currently, the apartments are selling for €1050 per sqm.

Constanta's property market is still behind Brasov in terms of the market's development. As a port that tranships 60% of foreign trade in and out of Romania, we should expect solid capital growth in the next few years.

Summary

PS deal performance figures in Romania show excellent capital growth. It is worth remembering that every PS deal in Romania was purchased with a discount of between 2% and 9.1%.

The highest increase in prices are noted in Bucharest (30% - 80%), followed by Brasov (22% - 44%) and Constanta (25%).

The capital city has been the most active and attractive market in Romania. The local demand for middle-class apartments is still exceptionally strong, which combined with the improving mortgage products and equity locked in old buildings, should result in another two to three years of extremely strong capital growth.

In Brasov, the real estate activities are strong, with demand comes not only from the city's residents, but also from the wealthy Romanians living in other parts of the country, especially in Bucharest.

Constanta has great potential for future very strong growth, mainly due to its solid economic fundamentals. Property prices here are highly likely to experience higher growth rates, once the motorway linking Constanta with Bucharest would be completed.

We forecast that the next phase of growth in the Romanian property market will be a price growth ripple effect from Bucharest, which will create even stronger accelerated growth in locations outside the capital.