In a recent contribution I volunteered to monitor investment etc specific to Cluj. I’m not keeping this up for ever but on a page that follows this (for some reason PS consider some words offensive but as yet cant tell me which ones) you will find some links which will give you some idea of what’s been going on in this city over the last few weeks.

Since the middle of last year I have promoted the case for Cluj to be considered as the centre of the Universe….but PS plead that they cant find the right deal for you, their investors, to get a piece of the action. It seems that I am not just a resident of this city but I am actually right.

Monocle is a recently commenced publication covering international affairs, business, culture and design. In it’s December edition (http: / /www .monocle .com /sections /affairs /Magazine -Articles /Five -alive - -New -regions/) Monocle focused on the five best places to invest for 2008. Cluj Napoca was identified as being the best place in the world to put your money. So my message to PS is not to worry about the right deal…any deal (due diligence accepted) will be good with 30% p.a. appreciation almost for sure.

On the property front plans continue to be approved for mega-developments within the city. Infrastructure plans have been announced – ring roads, underground parking, the development of Metropolitan Cluj. Land prices continue to creep upwards despite it being the winter when usually no growth happens until the spring. Yesterday I visited a large site within the city where, rumour has it, that a wealthy investor has a project which will replicate the Twin Towers. Nearby there is a small 4 storey new build office development which last week was available for 1.5 million Euro….the owner told me on saturday it was no longer available it having been bought for 2 million!

From an economic point of view Cluj and Nokia have attracted the attention of the international media. Nokia recently announced that it was was closing its plant in Bochum, Germany and moving production to several locations including Cluj. The German leader of the socialist group in the European Parliament was in uproar accusing Nokia of abusing European infrastructure funding.

I’m no expert in European funding but common sense suggests that it is made available to new accession countries to assist harmonising infrastructure and economic development with those standards already attained by well established European countries.

Since then German politicians have accused Nokia of compromising German funding that was part of the package that brought Nokia to Bochum many years ago. The German media started a campaign to boycott Nokia phones, a campaign that has been backed by leading politicians including Ministers.

Why such a furore over 2300 redundancies made purely for business reasons? Clearly the Germans are worried that Nokia will not be the only international company to relocate operations to what is the Hi Tech city of Europe with a mega industrial park development. In fact Cluj owes a debt of gratitude to the Germans because the German behaviour is an excellent advertisement for relocating to this city.

The Germans cannot compete with Romanian labour costs or IT skills. Yet it’s OK for Germans to get fat on low cost labour. McDonalds (Germany) have come to Cluj recently to recruit employees for twenty or so outlets in the Munich area. It’s OK for German, Austrian, Italian, Spanish and British employers to recruit Romanians to take up employment in hotels, clubs, agriculture, construction, care work etc for very low wages. Such employers are playing on the desperation that exists within a low wage economy. That is not OK!!

It’s OK for German companies to flood this country with imports and make a big profit which is not good for Romania’s balance of payments situation.

But the biggest irony of this German scandal has not been reported in the Press or acknowledged by German politicians. The contract for the construction of the Nokia plant in Cluj was actually awarded to a German company, Goldbeck. I’m sure Nokia made a purely business decision in so doing!

What the Germans fail to understand is that mobility of labour within the EU has two aspects. First, citizens of member countries have the right to take up employment in any other member state…a right that has been seriously compromised in the case of Romanians and Bulgarians by countries such as the UK and Germany who are able to restrict the mobility of labour but for no longer than seven years after accession. Second, exercising a fundamental principle of EU membership enables companies to move jobs to those locations they consider to be most cost effective. This is exactly what Nokia are doing.

It seems that what is good for the goose is not good for the gander. The Germans want to have their cake and eat it. The behaviour of their media and politicians is both petulant and very un-European, a view shared by the former EU Accession negotiator for Romania. The Germans have got the wind up…they realise that Nokia is only the first to move operations to the best place in the world to invest for 2008!

So who next for Cluj and Jucu? We know that the chief of Tetarom expects to make another big announcement in the near future. A number of years ago Coca Cola wanted to set up in Cluj but this was not supported by the Mayor at the time so they opened a small production unit in Oradea. Let me make another speculative guess. We know that where Nokia go others follow. There are over 1500 breweries in Germany. Wouldn’t it be ironic if a German brewery started production in Cluj? Would the Germans boycott drinking Pilsener?

Cluj in the News!

Apologies for not getting this post up sooner but PS's system found a possible offensive word in the text of the links. The IT section could not identify it but after an extensive cut and paste job from the end to the beginning of what is below I've found what was deemed offensive. To get the Romanian link immediately below substitute X with u. Most links are in Romanian but a number lead to English text.

There is much in here about German hysteria viz a viz Nokia. However you will also note a certain amount of foreign investment in Cluj from GERMAN companies. Of particular significance is Lufthansa's confirmation that they will be flying Cluj - Munich as from the end of March. I cant imagine that Lufthansa are gambling on the German tourist market now do I think they are targeting Romanian workers coming home exhausted after long shifts for low pay in McDonalds Munich outlets. Could it just be that Lufthansa have identified the German business traveller as a lucrative market or will they withdraw the service and let the politicians re-publish Mein Kampf?[/italic]

9.1.08 It’s official and not just me, Cluj: the top place in the world to invest for 2008.
: http: / /www .clujeanul .ro /cluj /cXm -a -ajuns -clujul -lider -mondial -pentru -presa -britanica -2328339
and if you want British confirmation: http: / /www .monocle .com /sections /affairs /Magazine -Articles /Five -alive - -New -regions/


10.1.08
18,000 job vacancies in Cluj county
http: / /www .ziuadecj .ro /action /article?ID=7052

Siemens absorbs Frosys, Cluj electrical/automotive company http: / /www .zf .ro /articol _155925 /siemens _ _va _fuziona _prin _absorbtie _cu _firma _de _echipamente _electrice _frosys _cluj .html

Bucharest apt. and villa prices 10000 euro psm in 5/6 years http: / /www .zf .ro /articol _156064 /radu _lucianu _ _eurisko _ _ _quot _putem _spune _ca _in _5 _6 _ani _vom _avea _proprietati _la _10 _000 _de _euro _pe _metrul _patrat _quot _ .html

Tower Park, Cluj - 18 floors selling to foreign investors and fast! http: / /www .zf .ro /articol _155989 /strainii _cumpara _apartamente _in _primul _zgarie _nori _al _clujului _ .html


Cluj double Bucharest in terms of commercial retail space per head of population in 2008 http: / /www .zf .ro /articol _156140 /cluj _va _avea _in _2008 _un _stoc _de _centre _comerciale _dublu _fata _de _bucuresti .html
And especially http: / /www .ziuadecj .ro /action /article?ID=7088


Cluj company PharmaFarm wants to raise 20 million euro http: / /www .zf .ro /articol _156093 /pharmafarm _vrea _sa _contracteze _credite _de _20 _mil _ _euro _de _la _banci _si _actionarul _majoritar _ .html


11.1.08

First steps of expanding metropolitan Cluj….note my original development description of following arteries and veins. http: / /www .ziuadecj .ro /action /article?ID=7086

Nokia will make five mobiles per second and pay production workers 220 Euro + bonus per month
http: / /www .zf .ro /articol _156166 /nokia _face _5 _mobile _pe _secunda _la _cluj .html


12.1.08

More news here on priority sections of the Transilvania Highway
http: / /www .ziuadecj .ro /action /article?ID=7150
http: / /www .autostradatransilvania .ro /www /index .html /maps? &setLanguage=EN

14.1.08

7.2 hectare, 40 million Euro project for Buna Ziua neighbourhood including 167 room hotel, Italian investment.
http: / /www .ziuadecj .ro /action /article?ID=7198


Romania’s largest tourism company spends 17 million Euro on two sites on the edge of Cluj and land and existing hotels and restaurants at Lake Fantanele/Belis.
http: / /www .ziuadecj .ro /action /article?ID=6834


German company Hunnebeck buying Cluj local dealer, Baviera. Hunneback operates in over 50 countries and in 2006 had sales of 177 million Euro.
http: / /www .ziuadecj .ro /action /article?ID=7242


Inauguration of first Nokia factory scheduled for early February -
Nokia to double 2008 recruitment target
http: / /www .ziuadecj .ro /action /article?ID=7229
http: / /www .ziuadecj .ro /action /article?ID=7228
http: / /www .bloombiz .ro /article - -Business -Companii -Nokia _angajeaza _de _doua _ori _mai _multi _oameni _si _deschide _in _februarie _fabrica _de _la _Jucu - -1326872 .html


Saudi money going into Zapp mobile
http: / /www .zf .ro /articol _156362 /zapp _anunta _investitii _masive _dupa _preluarea _integrala _de _catre _grupul _arab _saudi _oger .html
http: / /www .nineoclock .ro /index .php?page=detalii &categorie=business &id=20080113 -511619


British plumbers coming to Cluj to modernise water and waste water infrastructure
http: / /www .newsroom .uktradeinvest .gov .uk /index .asp?PageID=3 &PressReleaseID=923

15.1.08

Parking spaces cost up to 12000 Euro in Cluj…a better investment than bricks and mortar?
http: / /www .ziuadecj .ro /action /article?ID=7247

Decisions need to be made about proposed hospital in Floresti
http: / /www .ziuadecj .ro /action /article?ID=7271

Genpact Cluj to provide business process outsourcing/IT services for American multi-national, Hercules
http: / /www .zf .ro /articol _156508 /genpact _cluj _va _lucra _pentru _concernul _american _hercules .html

Romanian work force crisis
http: / /www .hotnews .ro /english /business /articol _2196478 /map _romanian _work _force _crisis .htm


16.1.08

Nokia to close down operation in Germany and move production to Cluj.
http: / /www .nineoclock .ro /index .php?page=detalii &categorie=business &id=20080115 -511639
and also in English:
http: / /www .hotnews .ro /english /business /articol _2201236 /nokia _produces _its _first _made _romania _phone _shuts _down _german _factory _overnight .htm

…and the Germans don’t like it!
http: / /www .hotnews .ro /english /top _news /articol _2202241 /quarrels _over _nokia _facility _romania .htm In English.


More plans for infrastructure (Turda = Cluj)
http: / /www .nineoclock .ro /index .php?page=detalii &categorie=business &id=20080115 -511642

Lufthansa flying Cluj – Munich as from the end of March.
http: / /www .ziuadecj .ro /action /article?ID=7336

Expo Transilvania…25 million Euro
http: / /www .ziuadecj .ro /action /article?ID=7335

17.1.08

More on German fears about Romanian competition – Nokia again!
www.nineoclock.ro/index.php?page=detalii&categorie=business&id=20080116-511646

McDonalds (Germany) recruiting workers from Cluj for 20 outlets in Munich area. Will this cause scandal in the European Parliament? Cluj needs its workers who are being bought with junk food Euro!
http: / /www .informatiacluj .ro /index .php?id=12 &tx _ttnews[tt _news]=4158 &tx _ttnews[backPid]=7 &cHash=01568e4cd1

For the third consecutive month Romania continues to lead the European Union in new build construction.
http: / /www .rompres .ro /full _news .php?c=7,8,9,10

Cluj gets a mention in an overview of the new European labour market in the FT.
http: / /www .ft .com /cms /s /0 /d4b10674 -c466 -11dc -a474 -0000779fd2ac .html

18.1.08

One third of Romanians in Italy want to return home.
http: / /www .nineoclock .ro /index .php?page=detalii &categorie=homenews &id=20080118 -8088

Credit Fair Credit Expo to tour six Romanian cities including Cluj
http: / /www .nineoclock .ro /index .php?page=detalii &categorie=business &id=20080118 -511665


Ambitious plans (subject to agreement of Air Traffic Authority) announced for two 35 floor buildings in Cluj (Zorilor) involving potential investment value of 144 million Euro
http: / /www .ziuadecj .ro /action /article?ID=7451
http: / /www .zf .ro /articol _157073 /cluj _ _comisia _de _urbanism _a _avizat _proiecte _imobiliare _in _valoare _de _1 _5 _mld _ _euro _ .html


Note reference at the end of first link to 24 and 30 floor developments in nearby Buna Ziua.

And the Mayor seems to be backing this: http: / /www .ziuadecj .ro /action /article?ID=7452


For more on the principal shareholder of the international consortium behind this see http: / /www .ftr .ro /index .php?cmd=d &id=1727 Note his interest in Cluj CFR football club!

15 floor proposed investment in downtown Cluj, Piata Mihai Viteazu, given green light in principle
http: / /www .ziuadecj .ro /action /article?ID=7461< /strong>< /strong>

Cluj salaries to increase by 20% in retail, construction and IT sectors; Cluj salaries 10% above the country average; breakdown by education/qualification…analysis in this publication:
http: / /www .informatiacluj .ro/
and elsewhere
http: / /www .clujeanul .ro /cluj /cluj -2007 -crestere -cu -20 -a -salariilor -in -domeniile -it -retail -si -constructii -2337551

Nokia denies it is producing phones…just testing assembly equipment. Quite ironic that Nokia factory is being constructed by German company GOLDBERG
http: / /www .zf .ro /articol _157149 /final _preparations _to _launch _nokia _phone _production _in _cluj .html


More links on Nokia and German reaction to loosing jobs in favour of Romania

http: / /www .euronews .net /index .php?page=eco &article=465453 &lng=1 (including video)

German media, Ministers and politicians advocate boycott of Nokia phones!
http: / /tech .monstersandcritics .com /news /article _1387533 .php /German _minister _in _boycott _of _Nokia _mobiles
http: / /www .iol .co .za /index .php?set _id=1 &click _id=24 &art _id=nw20080118124422199C306559
http: / /www .businessweek .com /globalbiz /content /jan2008 /gb20080117 _788133 .htm?chan=top+news _top+news+index _global+business

22.1.09

EU funding not involved in Jucu/Tetarom 3 Industrial Park
http: / /www .nineoclock .ro /index .php?page=detalii &categorie=business &id=20080120 -511668


Romanian MEP: The Nokia case http: / /www .zf .ro /articol _157390 /daniel _daianu _ _the _nokia _case .html

Former EU Accession Negotiator takes German politicians to task:

"Beyond proving primitive protectionism and the elusion of free competition principles and mechanisms on the European Union Internal Market, these christian democrat leaders also use emotional arguments, including a smear campaign against the skills of Romanian workers and the market conditions in Romania,”
http: / /www .mediafax .ro /engleza /romania -s -eu -accession -negotiator -snaps -at -germans -on -nokia -issue .html?6966;2341179


Top Story: Business Week
http: / /www .businessweek .com /magazine /content /08 _04 /b4068040079155 .htm?chan=globalbiz _europe+index+page _top+stories

Land in Jucu: Astronomic rise in value
http: / /www .zf .ro /articol _157407 /terenul _in _jucu _ _de _la _300 _de _euro _la _500 _000 _de _euro _hectarul .html

Cluj Airport traffic increases by 60%
http: / /www .zf .ro /articol _157301 /traficul _pe _aeroportul _din _cluj _napoca _a _crescut _anul _trecut _cu _60 _ .html

City Council Plans and Budget for Street Modernisation, 2008.
http: / /www .ziuadecj .ro /action /article?ID=7591

Charles Bell, 8.00 a.m. 21.1.08

This seems to place in context Nokia's closure in Germany:

From The Sunday TimesJanuary 27, 2008

Emerging markets help Nokia to win race for mobile supremacy
Cheap user-friendly devices are leaving rivals gasping at sales that resemble telephone numbersJames Ashton
THE BUZZ around mobile-phone maker Nokia is unmistakable, like a ringtone breaking the quiet of a church service or a cinema screening.

While rivals, notably Motorola, are foundering, the Finnish giant’s market share passed 40% at the end of 2007 and could already be closer to 42%, say analysts. Either way, chief executive Olli-Pekka Kallasvuo is hungry for more.

Nokia sold 437m phones last year, 26% more than in 2006 and almost as many as its four nearest rivals - Samsung, Motorola, Sony Ericsson and LG - combined. Stripping out handsets lost to sock drawers and rubbish bins over the years, there are now one billion Nokia phones in use around the world – one in every three. And Nokia’s lean logistics system means it swallows up 70% of the profit from phones sold by the big five.

Exciting stuff. In fact, perhaps the most boring thing about Nokia is its phones. After forays into wacky designs and flip-open phones, it is still best known for its trademark easy-to-use block handset that can be mass-produced cheaply and shipped in giant volumes into new markets such as China and India. No wonder it can make a profit from phones that sell for only £20 in those markets.

Related Links
Nokia profits soar by 44 per cent
Nokia to shed 2,300 staff in Germany
To increase its domination, Nokia need only hold its share in countries such as China, where 7m new customers are signing up every month.

After years of resisting the idea of tailoring its phones to meet American operators’ specifications, Kallasvuo has also made concessions to AT&T and Verizon to reverse its one global weakness, America.

Charles Dunstone, chief executive of Carphone Warehouse, said: “They [Nokia] make good-value, well-specified phones. The last half of last year they had a really good, reinvigorated range.”

It is a far cry from early 2004, when Nokia’s market share tumbled to 29% because of the soaring popularity of Motorola’s slimline Razr.

Now, Motorola is in strife. It ran out of sexy designs and shed half its market share in the first six months of 2007. Chief executive Ed Zander was dumped, too.

As one rival has faded, another is burning bright. But for all the fanfare around Apple’s iPhone launch, it seems destined to be a niche product against Nokia’s volume game. Apple sold 3.4m phones in the first six months since release, a drop in the ocean compared with the traditional handset makers. But it did take an instant 20% share of America’s market for “smartphones”, the high-end, internet-enabled mobile computers like the Blackberry and Nokia N-series.

Apple’s European boss, Pascal Cagni, concedes it may struggle to take such a large slice here. But its market entry shows the industry will be about more than just box shifting in years to come. It has to be. Growth in the total volume of mobile phones being shipped is finally slowing, to some 10% this year – 1.25 billion units – compared with 17% growth in 2007.

For Nokia, keeping margins up is also a battle. The average selling price of a handset fell 10% to £64 last year, due to its sales to emerging markets.

All this explains Nokia’s latest push into software and internet services. It may claim to sell more computers, portable music players and cameras than anyone else, but securing a steady income stream from them is another matter. Nokia sold 200m camera phones and 146m music phones last year, against some 52m iPods sold by Apple.

The Finns paid $8.1 billion (£4.1 billion) last autumn for Navteq, which creates digital maps. Nokia is conscious it should make more of the fact that location services – such as finding the nearest pub – should be easy on a device that consumers carry all the time.

Music is also a feature. Nokia Music Store lets users download any of 2m songs via a pay-per-song system. Beyond that, Comes With Music offers a year of unlimited downloads from Universal’s catalogue free.

The company has launched Ovi as its online platform and hopes to persuade operators to sign up to it. A similar attempt, called Club Nokia, bombed several years ago. This time, though, operators are more willing to share income streams rather than lose them altogether.

“We don’t believe the revenues from services will be huge,” said Richard Windsor, a Nomura analyst. “We think that if services are successful, most of that success or value will be felt through higher device prices.”

That would suit Kallasvuo nicely.



And another interesting article on migration flow within Europe which I suggest implies less workers goingout of CEE but not necessarily coming back from Euro countries to CEE:

From The Sunday Times
January 27, 2008
Will migrants avoid downturn Britain?
Economic Outlook
David Smith
THE stock market, which has given us so much excitement, is very important and has implications for interest rates, as I report on page 4. But so is the job market. How will it fare in what Mervyn King, governor of the Bank of England, described last week as the most testing set of economic circumstances in 10 years of Bank independence?
One fear is that economic weakness will lead to further problems for the banks. Another is that it will push up unemployment.
So much depends on the job market. If it cracks, the downturn in consumer spending will be even greater. The housing market, having lost one supporting pillar with sharply reduced mortgage availability, would lose its biggest remaining source of support if employment were to tumble.
There is another important test for the job market. Gordon Brown has promised “British jobs for British workers”. Official figures suggest that as many as four-fifths of the jobs created since 1997 have gone to foreign-born workers.
The question is whether migration will be a flexible friend for the economy. As it slows and job opportunities dwindle, will the flow of workers to Britain fade? Or will the migrants continue to arrive, adding to unemployment?
The first thing to say is that, if a cold front is on the way for jobs, it has yet to arrive. True, there have been some gloomy surveys and forecasts for 2008 and there have been one or two announcements from firms about job losses.
The employment numbers, however, remain strong. The latest figures cover the three months to November, when some of the effects of the credit crisis will have begun to be felt, and show a surge in employment of 175,000 to a new record of 29.4m. Employment over the year was up by 263,000.
The number of jobs in the economy, a bigger total than the employment figure because some people have more than one, stood at 31.6m, up 287,000 on a year earlier. Pretty well all measures, in fact, pointed to job-market strength. Vacancies in the final quarter of 2007 rose by 12,200 to 681,100, the highest for six years. The economic inactivity rate slipped.
The claimant count - those claiming jobseeker’s allowance – dropped by 131,400 in the 12 months to December and is now at its lowest rate since June 1975. Unemployment on the broader Labour Force Survey measure also fell. Hours worked, a good indicator of the underlying strength of the job market, rose.
There may be trouble ahead but so far employment has not skipped a beat. That should change, though not as dramatically as some fear. The consensus among economists is that this year will show below-trend growth, probably matching the 1.8% of 2005, a weak year.
Even that will not mean job growth comes to an end, however. Economists expect, on average, a rise in employment of about 0.4% – equivalent to some 120,000 new jobs. They also expect a modest rise in unemployment, but certainly not carnage.
Exactly how uncomfortable it feels will depend on another factor – the flow of migrant workers coming to Britain. There is anecdotal evidence that this flow has started to fade and that, for some groups of workers, it has even begun to go into reverse.
The economic outlook may be dull in Britain, but Poland, the Baltic states and many of the other new EU members are booming. Poland is set for at least 5% growth this year. True, these economies remain a long way back in terms of income levels but the gap is closing. The weakness of sterling against the euro has also reduced Britain’s attractiveness to eastern Europeans, many of their currencies being linked to the euro.
There is also an issue on the demand side. It may be that the bits of the economy that are weakest are those that provided the draw for migrant workers.
The weakness of the housing market means there are fewer direct employment opportunities for Polish plumbers and building workers from other accession states. The weakness of the financial markets means there is less demand for bankers and brokers in the City and Canary Wharf from other parts of the EU. The retail and catering trades are also struggling.
An even bigger impact may come from the fact that other European countries are in the process of liberalising their rules to allow in workers from the newer member countries. Germany relaxed its restrictions for skilled workers in November and over the next two years will complete the process of full liberalisation. Remember that part of the reason Britain attracted so many workers from eastern Europe was that most other EU countries restricted entry.
Is there any hard evidence on this? Given the strength of the job market, it would be unrealistic to expect too much yet. The latest official figures run only to the third quarter of last year. They show the number of “A8” migrant workers (those from eastern European countries that joined the EU in May 2004) applying to work in the UK under the worker-registration scheme dropped to 54,000 from 63,000 a year earlier, a fall of 14%. There was also a drop between the second and third quarters in migrant workers registering from the newest EU members, Romania and Bulgaria.
This is a big issue. Whether the migrant flows continue will determine whether the pendulum starts to swing back so that there are indeed more “British jobs for British workers”.
It may also mean, for firms, that more challenging times are on the way. Though few say it explicitly, migrants have provided a quick fix for their recruitment problems.
What if the flow of migrant workers into Britain turns out to be more cyclical than had been thought, and not a permanent shift? Official population projections have been hugely influenced by recent migration experience. The latest 2006-based projections assume net migration of 190,000 a year. For comparison, the 1996-based projections assumed only 65,000 of net migration annually.
The cumulative difference over time between these assumptions is enormous, particularly when differential birth rates between the foreign-born and indigenous population are taken into account. A lot rests on government assumptions about migration, which drive a projected rise in population to 65m by 2016 and 71m by 2031. This year we may find out whether those assumptions are realistic for the bad times as well as the good.
PS: Just as every generation thinks it has discovered sex, so we tend to believe we are the first to have hit on the idea of globalisation. In fact, as a magisterial new book by Ronald Findlay and Kevin O’Rourke points out, globalisation goes back a very long way. Power and Plenty: Trade, War and the World Economy in the Second Millennium, makes a case for pinpointing the dawn of globalisation in the 13th century, when Europeans ventured east from Venice and west from Genoa.
But there is also an argument, as the authors point out, for saying that globalisation came even earlier, about the year 1000, when there was extensive trade and commerce involving western Europe, eastern Europe, central, south, southeast and east Asia, sub-Saharan Africa and the Islamic world which, as well as the Middle East and North Africa, took in Muslim Spain.
In the “Islamic golden age”, in fact, it was only the Islamic world that had direct trade contact with all the other discovered regions. If that was the globalised world of the time, Islam was at the centre of it.
When we think about the shifting global economy these days, the emphasis has been on the rise of China and India and their return to the past dominance of the global economy. But largely thanks to oil, parts of the modern Islamic world are also enjoying something of a return to former glories. Nowadays, of course, power is often exerted through multi-billion-dollar sovereign wealth funds

Hi Charles,

Thanks for you contributions.

Just a quick question about Cluj...

What would you consider to be the best investment at this point in Cluj:

- Off plan residential property
- Central secondary market property
- Land

Hi

That's a complex question put in a simple way!

I thought of replying by saying that the answer is a secret that I wouldn't give away because I do not want to undermine or appear to conflict with the PS investment strategy. However I also believe in transparency and I believe this topic to be worthy of discussion amonst any readers who are interested in the subject. So what follows is my personal opinion and it doesnt add anything that I have not mentioned previously.

Whilst I believe Cluj to have a micro economic climate of its own it is not totally protected from what is happening nationally.

There may be massive foreign investment in certain areas of the country (Cluj as much as anywhere) but the Romanian currency was overvalued so it has gone down and interest rates gone up...affecting mortgages and loans...people's ability to pay...as you will know this hits first time buyers hardest.

Romania's thirst for conspicuous consumption means lots of imports which have to be paid for in Euro....German/ French/Italian car manufacturers, supermarket chains and their goods, designer clothing, jewelry, cosmetics, electrical goods, alcohol, cigarrettes ....the list goes on. These are all imports.

I also worry about exactly how many Romanians, remembering my demographic analysis of the country's population and distribution, are actually in a position to strive to join the property owning middle class. If you are employed by an international company or its subsiduary or are in manangement in a publicly quoted company then you stand a chance as you do if you are a highly skilled worker or work in a profession where there is a short supply. I was discussing this in Baia Mare today and posed the question about the capacity of the local market to buy new build apartments. From the comments I received I summarised by saying that Baia Mare was not yet able to develop a middle class. I received a strong retort ' No, this is not just Baia Mare, it is a national problem!'

So to your question:

Off plan residential market.
There's lots available but I dont like cheap cos its first time buyers who get hit worst by interest rate rises. Invest in class but avoid deals that are over-hyped and accept that these properties sell locally so dont expect 15:85 payment terms. Its always keeping an eye open for initial promotional deals which are sometimes available to kick start sales. Note the promotion often gets extended in the ads but when you get to talk to an agent the price has suddenly changed. You also have to be aware that two of the very large projects coming on line for Cluj over the next few years are public/private partnerships with significant social housing provision.

I was speaking with a propery lawyer the other day and he shared some caveats about apartments. His reading of the future Cluj market was houses. He felt too many apts were available and what middle class Romanians really want is affordable houses. I concur entirely...the apartment boom is a mistake repeating that of Ceascescu and driven by greed and profit. If you get into a conversation with construction professionals most privately agree!

Central secondary market property. I assume you mean re-sale in the centre but I will comment more generally. First, what is central? Tower Park on the western bondary of the city and in Manastur is being marketed as central. Its actually 300 metres from the city boundary and Floresti...but being sold to international investors they just dont know. I prefer to think of central meaning just that, semi-central and future central. Future Central for me incorporates areas such as Marasti, Georgheni, Muresanu, Zorilor, Buna Ziua, Europa, Grigorescu and Manastur...areas now considered semi-central. Within two years the outer neighbourhoods of the city will be Jucu, Apahida, Someseni, Feleacu, Floresti, Gilau, Dambul Rotund, Lomb and probably more. Buying in Future Central's central area is as risk free as you can get whether new build or re-sales because Romanians just love to live downtown. With the outer neighbourhoods you need to be a little more selective and know about development plans etc. This is purely speculative and demands further analysis but Cluj probably has as great a proportion of the population who can aspire to become middle class as anywhere in the country.

One area I havnt mentioned as yet is Faget (find it on the internet). Its a beautiful forested area on the southern hills of the city. The city wants to protect it (because its beautiful and because if you cut down the trees land tends to slide) so currently you can only build on 10% of land you buy. If you are a millionaire and are content to live a semi-rural life in a tranquil and secure environment then Faget is th place to be. Its 10 minutes drive to the centre (traffic permiting) with the most beautiful views over the city and the Gilau mountains. Faget is a different market but it has its attractions because Romania is always going to have its filthy rich!

Land.

As you know I share the vision of Metropolitan Cluj. Land can still be bought very cheaply and it can be bought strategically. You cant build on extravalian land but it doesnt cost a lot to get its staus changed to intravalian. Buy strips of land with frontage of little use on their own but get a surveyor and a lawyer to re-draw the boundaries of two or three strips and the value goes up very nicely. Apply for and get construction certificates and the price becomes inflated again. Go one step further and bring utilities onto the land and your investment will have a bonus dividend. All this can be done in 12-18 months. get out at that point by selling a project or go to the bank and borrow the money to build yourself. That will take a further year but again the Euros grow.

The price of land will continue to grow. There's not much left in Muresanu and it will cost 700 Euro psm but that extremely good compared to what you pay for central one kilometer away. If you want to buy cheap check out the veins and arteries of Metropolitan Cluj....buy near future road intersections or in or on the edge of villages that will become part of the Cluj Metropollis. Two years ago land in that horrible place, Floresti, was 20 - 30 Euro psm.....with the fertilizer applied as outlined above that very same land is now as much as 200 Euro psm. Apahida, Jucu and Lomb is on the road to the same crop with harvesting expected in the spring or late summer if left in the ground.

I'm not the first to quote this but it's true...in my opinion though substitute 'real estate' with 'land'.

"Real estate cannot be lost or stolen,
nor can it be carried away. Purchased
with common sense and managed with
reasonable care, it is about the safest
investment in the world."
~Franklin Delano Roosevelt, American President, 1933 - 1945

Kind regards and hope my personal opinion is helpful,

Charles Bell

Many thanks Charles. Very interesting.

Hi Charles and Co.

Thanks for the info, I´d have to agree that you´re right in a lot of what u say
about Cluj, you are the master of that universe Charles! You know the market inside-out and backwards.

I think Cluj is a tricky one now cos it is very expensive in the central areas as we know, but as you have shown, it has all the potential and anything could happen there, we could see more strong capital growth and probably will. The money is pouring in. IT IS A GENUINE MARKET AND PROBABLY NOT AS INVESTMENT DRIVEN AS BUCHAREST.

The way i see it is, if u have enough money for land then go for it, maybe some bargains could be picked up further outside the city too but as u say you need to know the areas. My god was it freezing when I met u there in December!

Also, even though you´re not a big fan of Floresti and you rest your case on that issue, i still believe that Floresti is the only affordable place left in cluj for your run-of-the-mill young romanian.

Take apahida for example, its a shoddy and grotty industria area just leaving city to the East, I´d much prefer Floresti than there!

Even Jucu will take time to develop, its far from cluj and we really have to see what will unfold in next year or two cos the whole city is changing at breakneck speed. There were sheep grazing in Floresti in August and next thing i return back in December and there are hundreds of apartment blocks everywhere!!

The other semi-centralna areas are expensive cos land is dear. Some parts of floresti are suffering from planning blight but I also know that some parts of floresti could end up being nice and residential, even classy areas in the future.

Some areas are fenced off with lovely houses and flats. you´re dead right about Cluj side of floresti though, we need to see what happens when the whole area is finished, which will take time cos now its just a big development site with thousands of apartments like a big leggoland, I have never seen anything like it!

But having said that, 40,000-50,000€ isn´t a whole lot of money for an apartment, lets be realistic here.

So therefore I hope Floresti will end up integrating itself successfully into cluj. Nothing looks pretty in cluj in winter due to bad weather and dirt and mud where lots of developeing is happening. But i do feel Cluj is the way to go, it will be improving all the time and HAS FANTASTIC CULTURE, SCENERY NEARBY, LAKES,FORESTS, NIGHTLIFE, SHOPPING CENTRES, IN A NUTSHELL A COOL PLACE!!

Cheers

Liam

Hi Liam and others

Thank you for your comments but I must reiterate that I wouldnt sell Floresti to an Englishman...or an Irish for that matter. The money that was made in Floresti was from land.

I've just had some info in on Baia Mare. I happen to know a social worker who now works in the UK having started 6 months ago. She has an interesting history. She is from BM and her first career was as a Civil Engineer. She then switched to social work where she had a lead managment role with the European Children's Trust and was in the middle of social policy issues after the environmental disaster that occured with the cyanide spill from the gold mine.

She has consulted former colleagues in Baia Mare and tells me that there are lots of new private building projects in the city. Included in this are 5 new buildings comprising 150 apartments which have recently received construction approval and a big ANL social housing project (ANL is an international charitable organisation that develops social housing for the poor. Its Romanian website in English is at http: / /www .anl .ro /en/ . I happen to know the Director, Ionut Raita, and would be happy to intruduce PS or any of you to him...he's a very promising fast bowler and plays in my cricket team).

Annual sales of properties in BM ( I assume both old and new) are currently at around 500 per year with 80% of transactions involving a mortgage. The rent level is 100-150 Euro for a studio/one bedroom flat and 150-300 Euro- for a two/three bedrooms flat, depending on the area and number of bedrooms. Official unemployment data sugests it stands at about 5% registered as unemployed.

For those interested in the Autumn Residence I have some further reassuring info. An estate agent which has offices in BM and in Cluj has exclusive sale rights. Whilst there may be no local sales yet the agency is marketing it at 1100 psm but completely finished with a discount to be agreed for semi-finished apartments. Finishing to a very high standard will cost absolutely no more than 200 psm (unless you want gold plated taps which might be cheaper given that its in the ground) I am right and Simon has negotiated a very favourable price.

Just to update you on Cluj this city functions 24 hours a day and seven days a week. Tetarom 3 is growing and so are the number of companies coming to it...possibly IBM and Mercedes...but remember in this country that 'nothing is certain until it happens'. I've read a 54 page report tonight on the development of Metropolitan Cluj and the City Council have thought of a monorail across the city albeit only from Manastur to Marasti. But tomorrow night I will go to the meeting of the Council that will consider the urban plan for Lomb and the 259 hectare public/private project ( see www.dealul-lomb.ro )and I will suggest that the monorail is a wonderful idea but should run from Floresti to Jucu. Lomb is the place to be for 2008 - less than 10 minutes drive from the centre, beautiful views, sun all day and above the cloud that sometimes hides the city...and a clean sheet of paper with the chance to avoid planning chaos! I got my geologist up there today to give his opinion on some land I'm interested in. 'Fantastic' he said, 'You can build blocks on this'. So Lomb and not Jucu or Floresti is my punt for 2008.

So Liam hope to see you in the summer when I promise to take you up to Lomb where you can bask in the sun; listen to rock and roll and be fed cherries and plums by those who will be your guide around this beautiful city.

As you will see below Cluj continues to demonstrate a micro economy of potential and growth which has to be set against a national background where international organisations are suggesting that issues need to be addressed. Judge it as you feel fit but make informed decisions.

Kind regards

Charles

23.1.08
Romania enters World Top 10 for beer consumption. German beer factory for Cluj might not be so far off the ‘mark’.
http: / /www .zf .ro /articol _157722 /romania _enters _global _top _10 _for _beer _consumption .html


Anti-European Germans on the march +Romanian Press wakes up to the fact that Nokia plant is being constructed by a German company
http: / /www .nineoclock .ro /index .php?page=detalii &categorie=business &id=20080122 -511691

Cluj anticipates 4000 workers from Moldova, Ukraine, Turkey and China
(Visit the German built Nokia site and you will already find workers from such countries and others providing {low}cost effective labour! CB)
http: / /www .clujeanul .ro /editoriale /efectul -nokia -sau -moldovenizarea -clujului -2341760


American concern D4 Investments to pump 100 million Euro into residential projects in Cluj and Timisoara
http: / /www .informatiacluj .ro /index .php?id=12 &tx _ttnews[tt _news]=4368 &tx _ttnews[backPid]=7 &cHash=79a2594887


New French owners of Banca Transilvania Insurance inject a further 16 million Euros
http: / /www .zf .ro /articol _157726 /groupama _injects _16m _euros _into _bt _asigurari .html

Deloitte TR planning to establish offices in Cluj
http: / /www .ziuadecj .ro /action /article?ID=7731


The potential for Cluj to become a major banking/finance centre bringing up to 10,000 jobs
http: / /www .clujeanul .ro /cluj /marile -banci -si -fonduri -de -investitii -din