There is something unique yet indefinable about Brasov. And that makes it a hard city to write about!

On the one hand Brasov is a clear tourist destination;
- spectacular Saxon (ie German-like) walled city that dates from the 14th Century
- nestled under Romanians tallest mountains it offers wonderful views up to the mountains from all locations in the walled city, old town and across the city and the plains (including light industrial development) and beyond
- the base for exploring Transylvania and Bran (Dracula’s) castle
- the base for the most developed (and still developing) ski resort in Romania

However, there is one dimension that makes Brasov almost unique. And that is its relationship with the booming monster (as locals call it) of Bucharest.

Continuing my car spotting rule of thumb, our Volvo (driven here from Spain) looked ordinary next to the cars parked on the streets of Brasov’s old town.

Aston Martins nestled with Porche’s and BMW and Audi’s looked oridinary.

How come?

Two reasons – firstly ‘there is money in them hills’ – ie Brasov is a wealthy and prosperous city on its own account.

But also – and crucially – it is the play ground for the wealthy Bucharest barons seeking to escape the horrid summer heat on the Romanian plain.

Bucharest reached 50 Celsius in late July (thankfully it has cooled and even rained at the beginning of August) but the heat and traffic and noise and pollution and density of this most intense capital city leads to a mass exodus to Brasov every weekend of anyone who can afford a car and the petrol.

In fact, the road north of Bucharest running past Otopeni International Airport – already busy and in the middle of major road improvements – becomes a parking lot on Friday evenings for those exiting to Brasov and again the same pattern is repeated on Sunday night for those returning from their ‘house in the mountains’.

And this is the aspect that I am struggling to find equal comparison with anywhere in Europe.

The wealthy in Bucharest (and there are more and more of them every day) talk about their ‘house in the mountains’. By which they mean a flat in Brasov – either in the walled city, old town, the hills around or a new development nearby.

It is worth noting that for most Bucharest entrepreneurs, Saturday is a work day – only it is more fun when it involves lunch in Brasov or a game of golf (on the much promised golf course).

This means that Brasov is less of a tourist resort – although this potential remains largely untapped – and more of a weekend business conference centre for the Bucharest barons.

This is, of course, to ignore Brasov’s natural trading position as the first city inside the German/Hungarian influenced Transylvanian mountains. And its substantial industrial past and the new future built on high levels of technological investment in sophisticated light industry and assembly.

For instance, Brasov is the world centre for manufacturing of car seat belts and pistons for opening the hatch of your hatch back. In addition, the city has a huge tractor factory – currently standing semi-idle – which is likely to benefit from a massive upgrade to a high tech assembly line.

Add to this the 3,500 high tech industrial jobs from the world’s largest ball bearing manufacturer and you have a pretty good idea of the industrial landscape and links to the car industry.

Brasov enjoys (or equally, suffers because of it) a good road link with Bucharest (except the appalling road exiting Bucharest – which is currently in the middle of major upgrade road works).

However, Brasov does not yet have an airport. And this will restrict its appeal to those able to arrive by car (and therefore the influence of the Bucharest Barons will remain the dominant feature for the next 3 years before the airport is built).

Nevertheless, for the super wealthy, Brasov does have a helipad and helicopter sales in Romania are rocketing as the roads clogs with internationally bound lorries and too many Audi Q7s.

So, what is Brasov?

Is Brasov an Oxford, which is comparable due to the historic centre and industrial history (and future) linked to the car? Or is it more of Grenoble, France – nestled under the Alpine mountains?

Well, neither of these comparisons captures the fact that it is the centre of the counties present (and future) tourism. So, looking around the world – perhaps it is like Simla – the summer capital of India in the days of the British Raj when the government used to exit Dehli in search of a cooler location.

Or like Segovia – north of Madrid (and its baking summer heat) and in the mountains too.

However, Brasov is a city in its own right. It is not just a retreat – it is also a natural trading centre and of course, a significant location for the car and related industries.

This makes comparisons exceptionally difficult, but nevertheless rewarding, because I am tempted to say the Brasov is unique.

Brasov benefits from an exceptional location and huge natural resources – I’m thinking of green trees, fresh air and mountains, the tourism of the Saxon towns of Transylvania and the nearby (15 mins drive) ski resort.

Now, the city is re-modelling itself. It is creating a modern CBD (Central Business District) and whilst is doesn’t yet contain acres of A class office space, there is, nevertheless, a CBD developing in the space between the walled town and the railway station.

I can’t help feeling that an airport will accelerate this development and the lack of the airport is given as the key reason that Nokia chose Cluj-Napoca over Brasov.

However, the late arrival of the airport will give Brasov a different opportunity. So, instead of the headlong charge for growth which we will see in Cluj-Napoca, Brasov will be a rapid but steadily developing location.

The lack of an airport (so reliance on roads and helicopters) will mean that Brasov can develop over a slightly longer time frame and at a slightly reduce pace.

This, please note, is not a criticism – it is as much an opportunity as a threat.

It means that the city has time to remodel itself to preserve its character. It means that it can retain and focus on its luxury appeal that will preserve its unique flavour in the years to come.

Please note, this doesn’t mean development will be slow – it will be exceptionally fast – it will just be a little slower than its comparable cities such as Cluj-Napoca.

So, my best guess is that Brasov’s position in Romania is not as the second biggest city outside Bucharest. That will go to Cluj-Napoca – but Brasov will be Romanian’s favourite city (along with its Saxon sister Sibiu) .

It will be the capital of lifestyle – not political influence nor industrial might.

And this will create a unique fusion.

I don’t believe that Brasov will become Romania’s creative centre – that will remain in Bucharest – where the underground grunginess of the city offers artists the same kind of environment as Berlin (only with the economic growth and massive expansion of the city that is normally a prerequisite for avant-garde artistic creation – think of New York in the 50’s as a better comparison than half empty Berlin).

However, many service companies will choose Brasov as their head office location. Business in this city will be easier – staff more loyal than the ranging free market self interest of the political and economic capital.

And, international firms too, will choose this location – in the heart of the country – but run more on German business principles than the more Balkan-like/ Turkish way of business in the Bucharest.

In some way, business will be easier in Brasov. Staff, and especially senior key staff, will want to live there.

And so, don’t expect Brasov to announce the next ‘Nokia’ factory – although it will have industrial successes. Don’t expect big FDI stories of large scale investment.

Instead, expect many many little investments – small enough to fall benefit the FDI reporting radar – but significant enough to make a huge impact on the city.

Brasov is the lifestyle city of Romania. It is also probably the safest city in which foreign service companies can invest and this will appeal to the small and medium sized enterprises that want to set up shop in booming Romanian but don’t have the financial or political muscle to make it in Bucharest.

Nevertheless, despite the lack of headlines, Brasov will quietly build on its unique position – both the geographic heart of Romania and its position as the lifestyle capital.

What does this mean for property investors?

Well, clearly, this is a recommendation!

It means that luxury top end/ unique properties will do exceptionally well, as will more normal / everyday new build property.

And yes, I see Brasov inside the 200% club that I’ve been writing about in this blog.

However, it won’t be the second biggest city of Romania – that will go to Cluj-Napoca based on current evidence (although I am yet to visit Constanta and haven’t considered Timisoara).

Yet, Brasov will be Romania’s Lifestyle capital – and this will matter in Romania – it will matter a huge amount – because it is living next to an booming monster (Bucharest) and the Bucharesti will want (and need) lifestyle.

Bear in mind, lifestyle is in short supply in Romania. And, given the intensifying growth and development of Bucharest, it is in demand. Huge demand.

Brasov is, therefore, unique – it is Romania’s Lifestyle capital and that will drive property values – of all sorts – but also the luxury developments further and faster than other cities.

It could well become Romania’s most expensive city too.

Watch this space!

Cheers
Neil

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'