Sibiu - in the heart of Saxon (Transylvania) Romania - is also a heaven for Coffee drinkers.

The heart of this surprisingly germanic looking town (imagine the village in Disney's Beauty and the Beast - and you'll be pretty close to Sibiu) is a pedestrian area lined with hotels, coffee shops, bars and resturants.

And I paid about 1.7 Euros for a coffee in the town centre – which again suggests that there is money in this town.

I am not for a moment denying that many people in Romania aren’t living either in poverty (ie the poor in cities) or a subsistence living (as per those villages in the Saxon Villages which are selling up homes for 10,000 Euros) or the Roma population living on the road.

However, the key point is that the emerging middle class in Romania (and perhaps a kind of previously ‘underground’ middle class) is paying ‘normal prices’ for normal things. Like Cappuccionos.

In fact, a large number of items – clothes and white goods – are more expensive in Romania that aboard (Italy, Germany or UK).

Why?

Simple – volume!

This was exactly the same as in Valencia 5 years ago – before Valencia launched a 200% growth in property prices.

And, I think this will play a key part in key Romanian cities development!

Just as in Valencia 5 years ago – lots of wealthy people were shopping abroad. Of course, as soon as the same products were delivered to their doorsteps in large shopping malls (downtown and out of town) they bought at home.

Previously, the level of demand had been too low to justfiy large warehouses of electronic goods or new shopping malls - but, finally, once the town reaches a tipping point the demand for this kind of shopping - locally - becomes unstopable.

This explains why new supermarkets in Romania are swamped with shoppers on opening days and the days that follow.

But, back to Sibiu – the city – 170,000 odd – clearly has a lot of money. Some of that money has been brought from abroad by a Saxon (ie German) mayor. Sibiu’s previous name was Hermannstat – and the link with Germany is very close – and very important.

The small city is also linked with Valencia, Spain and Luxemburg. And it was the link with Luxemburg that brought the European City of Culture award and a lot of support and advice to rennovate the city centre – and keep the building structures in tact.

In addition, the town has benefited from the work of the GTZ a German/ Romanian partnership.

Prince Charles has even been buying up houses in nearby local Saxon villages – after all Prince Albert (husband of Queen Victoria) was previously Duke of Saxony in Germany .

The truly surprising thing is – just how Germanic (ie ordered and comfortable and prosperous) this part of Romania is.

And the German influence goes into business too.

The airport is being extended and expanded – it currently includes flights to Austria, Italy and Germany. See more information about Sibiu international airport. Lindner – a German company – is part of the consortium upgrading and expanding the airport.

Siemens has a large factory on the outside of the town – and has just bought a building near the old town (perhaps for future offices?).

Either way, the city is awash with Germany companies and German entrepreneurs who appear to find the location (and the high level of German speaking people) much easier to do business in – than the more extreme Bucharest and of course, much more exciting (business wise) than Germany. And this is drawing other west European companies to Sibiu too - who are looking for a less complex entry into the huge potential of the Romania market.

Sibiu – is truly a jewel in the Transylvanian Kingdom. It retains deep connections with Germany – and therefore, draws an unusually large number of Germany’s companies who want to be in Romania for the opportunity but find business life hard in Bucharest.

There clearly is money in the city. And that has to translate into property price growth.

With a almost perfectly retained old city centre – albeit in need of renovation around the edges – the city has not really been destroyed by the years of communism.

However, its layout – mainly town houses – and traditional Saxon houses (the equivalent of London’s Victorian terraces) mean that the housing density is low.

The thing that surprised the local Romanian developer that we spoke to was that the majority of people placing deposits for his development had ordinary jobs – bank tellers, semi-skilled workers etc… And, on his previous development, 80% of people had used a mortgage to finalise the purchase.

These were not the cash buyers of which the property market had consisted until now.

This is a first sign that ordinary people were able to earn and raise sufficient money to finance a new property – and that they really wanted it! 75% of the property sold (all to locals) within 2 months – and with no promotion and the half hearted efforts of a local estate agent.

Sibiu is not, therefore, just a beautiful relic - a tourist centre - but, it is also a centre of entreprise and investment.

From a UK perspective, it is a combination of a Bath or a York - but with the growth potential of a Bristol or Leeds.

Such is the market and opportunity in Sibiu. And as such, it has to be a key candidate for the 200% club.

Cheers
Neil

ps. Next - I'm off to Brasov, Romania - and coming up soon - 'why isn't Romanian property cheap - and what this means to property investors'