Earlier this year Property Secrets became aware of the immense industrial park being developed at Jucu on the outskirts of Cluj Napoca. A hidden message behind this project was that Romania was moving into a new stage of property development. One of the concerns about residential and commercial development in Cluj over recent years has been it’s ad hoc nature with small investors and developers pretty much doing their own thing leading to what I shall call planning blight. The reason for this was that no individual – physical person or company – had enough money to build on a large scale. The most recent example of this is what has happened at Floresti. Floresti started two years ago with individuals buying small plots especially on the Tauti side to build their dream homes…houses. Moving to the Gilau side of Floresti there is good flat land. Last year a company completed a nice development of duplexes close to the E 60. Since that time on both sides of Floresti local constructors have moved in and on plots of approximately 9000 square metres have started putting up blocks which are cheap; built quickly; and often with materials of dubious quality to semi-finished standard. However these apartments are selling because with a salary of 400 Euro a month individuals can afford the necessary mortgage which is much cheaper than renting in this expensive city. The central area of Cluj, like Bucharest, is crowded and there are not too many plots of land left on which to build. So development has to move outwards into green areas. This started in 2005 when a new neighbourhood, Buna Ziua (which translates into good morning), started to develop as did Europa on the other side of the E60 as it leaves the city towards Brasov and Bucharest. Buna Ziua borders on Muresanu, the posh, traditional and very expensive neighbourhood in the city. Greed led to ad hoc development once again with blocks being built and sold on the basis of a promise that buyers would have a wonderful view overlooking the city. That view would last for 12 months only to be taken away by a new block being built in front or to the side of a completed development. Times are now changing as Cluj has to cope with rapid commercial and industrial expansion. Just as the industrial park at Jucu is on a mega scale so too are some proposed and current projects which offer a blend of residential, commercial and office property and a move towards state of the art quality. As readers know I am a strong advocate for Cluj but do not give away secrets lightly but I can at least give some hints as to what is happening in my city. On Buna Ziua some investors sat on their land and let it accumulate. Recently on the market there is a mixed project on 60,000 square metres with first phase apartments being marketed at 1200 Euro psm + VAT; extra for the balcony and 10,000 Euro for a parking space. Compared to City Lights in Bucharest this is expensive but these are the Cluj prices. A development nearby that was completed last year is now re-selling at 1600 and, so I have been told 1850 Euro psm. Another interesting trend is the evolution of public/private partnerships. Two such projects will involve the development of 5,500 and 5,800 housing units respectively…that’s a 530 million Euro investment. One project involves 267 hectares with it having been suggested that this will be a bigger development than what is going on at Baneasa north of Bucharest. The government is also a partner in the development of Cluj. An example of this is spending 500 million Euro on the 40 kilometer highway connecting Jucu to the Transylvania Highway. There are many examples of large scale private investment pouring into Cluj. For example Dawney Day, a British investment fund company, recently announced a commitment of 900 million Euro to develop Atrium Shopping Malls across the country. Cluj will get 85 million of this money for a project which will include 31,000 sm shopping area, 10,000 sms of office space and a 150 room 4 star hotel. This is planned to be completed by early 2009. There are other projects in the pipeline which I could talk about but if you want to know more just come to Cluj and find out. For me the strongest selling points for this city are it’s history, culture, architecture and of course the people themselves. Young, professional, intelligent and highly motivated, the people of Cluj want a better future and are prepared to work for it.

Charles, Well, Property Secrets is lucky to have its own correspondent in Cluj. [you're not employed by the town's tourist authority are you? :)] The way price per square metre is calculated in Romania is still doing my head in. In City Lights, for example, the total meterage includes the internal space plus the walls (=total built area) plus the balcony plus a portion of the common area, which, apparently, refers to that part of the stairs and corridor that belong to me! (Does this mean I can tick off my neighbour for standing on 'my' stairs?!) In order to make comparisons valid, it's important to know, as one recent post pointed out, how the meterage in calculated. Do your figures for the developments in Cluj you quote, for example, include comon areas, built total finish and balcony? By the way, I'd love to return to Cluj. I spent a fascinating and quite intense week there in July 1990, a different era! I arrived in town and got talking to a scruffy Hungarian-Romanian, who was distributing democracy leaflets on the square and who invited me back to stay in his flat with his family. They gave me a bed and I hung out with them all week, going swimming with the kids, etc. Very poor, couldn't afford the vegetables in the market, every single window in the flat (panelak) had no glass. Their policital activities took them on a large demonstration against the securitate/miners, and I went too. Quite an edge to the air as (unfounded) rumours of the army attacking spread through the crowd. Amazing. They asked for nothing but at the end of the week, I gave them 40$ and we went off together and they bought an old black and white TV from some house, installed it in the bedroom and all sat down with huge grins on their faces to watch the evening's programme, a recording of Beethoven's 5th! For the interrail ticket, 400 quid. That experience - priceless. All very different from the Cluj (and Romania) that is apparently developing now. But I wonder where that guy and his son who had no shoes are...

Dear Richard It's good to have a respondent who has some understanding of what ordinary Romanians have gone through and experienced genuine Cluj hospitality which is given graciously and without expectation. 1990 if I remember correctly was the year of the miners strike when they marched on Bucharest with the intention of bringing down the government? The price I suggested for the 60,000 sm development are for the internal constructed area of an apartment. Apartments are finished to a very high standard. You have to add onto that 600 psm for the balcony and the 10000 Euro for the parking and then the VAT if you have to pay it and of course notary fees and the 2% to the estate agent. The common area is free. PS will probably want to comment on this but I suspect many developments are planned as being sold semi-finished whilst you guys want them to turnkey standard so all this has to be negotiated with the developer which no doubt is complex. What is important from my point of view is the move towards quality finishes which is what people want. The trick out here is to get into a development early or even in advance of it being marketed. I've checked out what I consider to be the best development in Floresti. It's built to high standards and finished completely; it has more parking than apartments; it has 37% green space and 28% constructed area (rather than the usual 35%); it's 250 metres from the E60 and the bus stop (very important for first time local buyers who are used to living very close to the job)and it's not buried in a field of mushroom blocks. At it's launch in August one room apts. were priced at 17000 Euro and 2 room apts. at 29,000 Euro. Incredible! All of the 29 sm one room apts are sold with only 8 39 sm one room apts. left now available at 45,000 Euro. The 2 room apts are now on the market at 60,000 Euro...double the August price. At the beginning payment terms were extremely favourable but the developer changes price and payment terms each month in the knowledge that he can squeeze more profit. This particular developer is an integrated company (design, build and sell) so another bonus is that those lucky buyers avoided estate agent fees. So this example indicates some of the factors you should consider when investing in Romania - get in early; be aware of promotional strategies; having a finish to a high standard is a big avoidance of hassle; deal with a developer/integrated company; and pick the right location when apparently spoilt for choice. My final observation is that you have stayed away from Cluj for far too long. I remember it from those many years ago since which time I have watched it develop and grow especially since 2004. Today's update on Cluj would include news that the mayor of the Chinteni commune has put in a bid to host a cargo airport by making 300 hectares of land available in exchange for upgrading the commune's sewerage system. Of course whilst on the subject of air transport there is real cause for celebration given that shortly Wizz will be flying Cluj - Bucharest for 49 Euro inclusive (at the promotional stage)as opposed to the TAROM price of about 150 Euro which we have all had to suffer and pay for far too many years. The TAROM monopoly on internal air travel between Bucharest and Cluj is broken at last! Come to Cluj and get around the country at an affordable price. Charles

Hi Charles, As far as I recall, the miners were drafted in my the government to brutally crush the student anti-government protests! One placard read: As a wolf to its prey, so miners to students! Anyway, back to capitalism.... It seems from your figures, then, that to compare them with the current City Lights project is not comparing like with like. City lights is on offer for 1,130E per square metre. But that money is paying for a) total built area b) balcony c) common areas (in an average case, 9m). For example, a 57m2 flat (internal) has a total meterage of 86m2! If you only count the internal meterage, as you appear to have done, then the 86m2 flat I mention (no 12 on the list) is not on offer for 1,130E/m2 but rather 1,676E/m2, viz: 322,000RON (not inc VAT) / 57.15m = 5,643 RON / 3.36 (Ron>Euro rate) = 1,676E/m2. So, it depends what we're comparing here. I don't have a problem per se with 1,676E/m2 - it sounds pretty similar to Prague prices (ie 1,200GBP or 44,000CZK per square metre) but in my mind it's not 'really' 1,130E.

Hi Thanks for the4 reply. Maths was never my strong point so I will leave the calculations to you and to others but however the figures work out there is one criteria that stands out above all others. I was speaking with some friends today about my research on the best deal out at Floresti - a first time buyers market if ever there was one. They were somewhat surprised that I had done such homework. They agreed with my reasoning once I had explained it to them and explained to me that they had recently seen a TV program where there was an interview with one of theose multi million Euro Romanian barons with business interests and political position who had rather late in the day moved his money from a football club and stock market into land. Apparently he explained that he had learnt the rules from some serious British investors who had taught him the three Ls. The three Ls he continued to explian were LOCATION;LOCATION; and LOCATION again. Investors need to factor that into their calculations. In Romania you have to understand that being close to public transport is really important for those that do not have a car - first time buyers on a tight budget; Romanians are becoming increasingly frustrated with buying a property with a view that next year becomes yet another block; those with money and good incomes are quite happy to pay for quality and safety and security. This last point is important. Now Romania has a very low crime rate but that was not always the case and crime remains a problem in certain neighbourhoods and cities where there are still pockets of poverty and desperation. Part of my history is buried in criminal justice so I know about this and you as property investors should know something about urban sociology and the development of cities and patterns of immigration because that is what is happening in the cities of Romania. factor this into your calculations - fear of crime - there's no point in investing in a state of the art block in Unirii in Bucharest to walk out in the morning to find a trail of heroin needles on the street. I experienced this some years ago when you could buy in Unirii for $20,000. I chose Bucur Obor where I and my partner bought for $10,000 and which is now worth maybe 80,000 Euro. I dont live there; I dont go there (driving is virtually impossible) but it has buses and Metro 300 metres away with two stops to Universitate and Gara de Nord close the other way.If I wanted to go to the airport (and on to Brasov and my wonderful Cluj) or to Pitesti or north to Iasi getting out of the city is not so complicated. So what I am saying is that price comparisions is a complex process and goes well beyond price psm. You need to know about build costs; quality of materials; future development plans; infrastructure; logistics; community safety; bla bla bla as Romanians would say. I agree that location is everything but to be a successful investor you have to have a Vee (that's V for Veronica my partner). L is good but married to V it's even better and V stands for VISION. Now in another life I used to trade under the name of VisionQuest. I was inspired by this sort of stuff http: / /en .wikipedia .org /wiki /Vision _quest . I found my VisionQuest in Baha Califoria...rattle snakes on the land and sharks in the sea. That can aptly be transferred to the property market here in Romania. To buy successfully know your local patch and your customers. Factor in LOCATION and apply VISION and then you have the right equation. Some say that Bucharest is over-sold and its a fact that international investment is flowing beyond the capital (but not the capital of TRANSYLVANIA) into secondary and tertiary cities. Which cities can support the furhter development of shopping malls - about foru - poor cities such as Galati and Braila which have yet to experience serious economic development. Cluj is a special situation for a myriad of reasons. It's beautiful and being restored; Tetarom 3 and massive foreign investment; a centre of excellence when it comes to education; infrastructure investment and close to the west; public / private partnerships are happening; and some beautiful and hard working people. So my advice is to think like this. The profit has been taken from Bucharest but it will expand so buy agricultural land outside of it cos it will continue to expand. The status of the land will change to intravalian. The hotspot for sure is Cluj...those apts. at 1200 euro psm will be 2000 next year but there are better investmentsbthan that in the neighbourhood. Given the impact of the Transylvanian Highway think about the junctions at Huedin and Turda especially. Iasi and Suceava in the north east are starting to go and are very beautiful and historical Iasi having a highly educated population with well established universites and low wages. Watch what investment flows into Galati and Braila - both very poor cities. Braila I know and 200 years ago it must have been very beautiful. Give it foreign investment and jobs and cultural restoration it could be a long term bet. So to finish location and vision are more important than psm. Know your location and believe in what is going to happen. Meet a developer and identify previous projects. Talk directly to buyers to ascertain their experience ( that means knocking on doors). Know what and wher you are buyin into. Charles

Hi, The general feeling I get from Romania is that you get LESS for MORE in many respects. And that was what I learnt when i travelled there in August too. You have to pay for absolutely everything! This internal and external square metre business is a bit farcical. One thing sure is that if you want a flat totally finished in Romania then you´ll probably pay through the NOSE for that! With low rental yields in places like cluj, the figures don´t really stack up at times. you´d probably be better off buying the shell of the flat and not bother renting it, cos the extra cost of finishing and furnishing the flat doesn´t make sense. I hope capital growth will be strong cos unless flat is well situated, rental yield will be minimal. Regards, Liam

Hi Liam For sure in Romania developers (and especially estate agents) squeeze profit for absolutely any thing and everything which means you have to be very selective on what you buy. However rental yields are another issue. Floresti is selling well typically to the first time buyer or those moving out of Manastur precisely because the mortgage is cheaper than the rent.... but because Cluj's low skilled worker population is reapidly expanding the rental market at this level remains boyant shall we say. At the other end of the market companies relocating to Cluj keep the rental market incredibly high. These companies at the initial stages of relocating to Cluj bring in external management on a short term basis (2 - 3 years I suspect)and as part of their packages assist with accommodation. I suspect that readers will be familiar with this process in other CEE locations where economic expansion has preceeded current developments in Cluj. Just to finish on my favourite subject the Wizz flight from Cluj - Luton arrived 25 minutes early yesterday. For me it was a real social occasion: as some know I used to recruit Romanian professionals to work in the UK. I met four people I hadnt seen for three years; one person who I hadnt seen for two years; and two elderly Romanian parents of one of my social workers who were flying to see their grandchild for the first time here in the UK...so I was responsibly for maybe 5% of those passengers! Cheers Charles