Good evening, Neil Lewis´s max growth blogs about Cluj and Romania in general have been excellent, in my opinion. Well written and based on sound economic fundamentals, which is one thing I like about PS research. However, experienced investors like Charles Bell and Alan Richards have already pointed out in previous posts that Bucharest, Brasov, and Cluj have already been fairly ´done´ at this stage. Neil Lewis could be right that Cluj is a 200% candidate in next 4 years but I´d say 100% of that 200% may already be gone I´m afraid.. I´ll tell you one thing, studios that were selling for 40,000€ in Vitan Mall area of Bucharest 1 year ago and which may now be worth 75,000€ don´t give me much incentive to buy, especially when a lot of these studios have only 20-34 metres squared. I´d also go along with fact that some areas are ´done´ for me to a large extent judging from my investment instinct and experience in Romania. I was all set to buy in Floresti in September when there was a big supply of off-plan stuff on the market for between 20,000 and 35,000€. As Charles has pointed out, some of this stuff has almost doubled in value in just a few months, which I was pretty sure was going to happen when i first saw those developments advertised in Cluj. If you buy cheap you can´t go wrong, especially in an up and coming area like Floresti. But I´m not intersted in buying cheap crap like 20 metre studios in 50 year old buildings for 40,000€. Funny cos I thought I was going to be spoilt for choice by the time I got back to Cluj but now it looks like i have to consider Plan B cos the bank have screw** me over by delaying 3 months to draw down a new mortgage in Spain. So the golden question now is: where is the next big growth second or third tier city in Romania? We all know Cluj, Brasov, and Bucharest are great bets for the next 2-3 years but its a real shame that this is no longer basement level entry prices by any means. Judging by the square metre price, nicely dressed up and disguised by many developers, the square metre is expensive now. i´m also aware that Romania is one step up the rung of the property ladder cosidering that everyone was given a flat equity-free under communism. So, i would love someone else besides me and charles to start giving some useful tips about romania on this forum. Where is the next best 3rd tier location: Will it be: 1. Iasi 2. Craiova 3. Targu Mures 4. Oradea 5. Suceava 6. Bistrita 7. Bacau 8. Ploiesti 9. Targoviste 10.Baia mare etc Yes, its time to wake up and smell the coffee one more time!! And Please note that Arad, Timisoara, Cluj, Brasov, Constantza, and Bucharest are already frightfully expensive and if you want something for 35,000€ - 50,000€ it´s probably going to be tiny, old and in a bad area. Liam

Personally, I with others have been active in Bistrita. Third tier City (100,000 pop), very cosmopolitan, solid growth (circa 25%), stable politically and forward thinking mayor, industry coming into the town, Banc Transliviana are very easy to deal with etc. Howver I would still not rule out Cluj despite the increases to date. We have purchased property in Bistrita, constructed houses,sold and bought more land.Average purchase price of land to date in Bistrita is €45/msq. I think with the EU giving some tourism grants for certain property tourism developments in ceretain areas (Colibita) of 50% is also helpful to the economy. The US army are establishing some very large bases in parts of the country (positive/negative?). For any long term punt I believe know your area, keep in touch all the time, read papers, PS, talk to locals, visit, visit, visit,. Every area is good as long as you really understand it.Prices, construction costs tax etc are all relative. It is about understanding same and looking for potential all the time.

Hi Aiden, Thanks for your point of view. What do you think of northern region of Romania in general, say from Oradea all the way over to Iasi in east. Maramures is the poorest area of country along with moldovia. Are there any buildings going up within a 50 kilometre distance of places like Bistrita or Cluj or Iasi? I´m more looking to future now cos i have vision and see how cities spread with time. When places like Cluj are too expensive, the city will just spread way out to new villages, and people will be commuting when roads improve. Another idea may be to buy something near future Transylvanian motorway. But land prices are probably going up fast and maybe there is no offer of new builds in such areas. I´m just a small investor compared to others like you. You seem to be doing quite well. If I buy, I´ll just be buying a plot to build on in future, or a flat of 50-60metres squared if thats still possible. I´d even gamble on agricultural land but not sure. It ain´t easy really. Sourcing flats is my strong point so i´ll probably stick to that. I can only spend 30,000€ - 40,000€ ideally and am not sure yet what best thing to do is. I´ll be a cash buyer probably, won´t be getting mortgages cos I´ve remortgaged. Are there many off-plan properties in bistrita at reasonable prices? whats rental market like there? Would you recommend secondary market? Regards Liam Deasy

Hi Liam, Just like to point out that Brasov has not "been done" and I have never suggested this. I have however suggested that I believe there is more growth left in Brasov than there is in Cluj, but both are moving targets at present due to the rapid development, and both still represent excellent investment opportunities. As with all investment locations you have to be there to sniff out the deals rather than rely on some of the ill informed speculations from one time visitors. Not sure if I would invest in Bistrita, its pretty small place and there are other cities which have better potential......anywhere along the super highway would be a good starting point. Also have you considered Pitesti? only 1.5 hours from Bucharest along an established highway.

A recent study conducted by Uncredit Group revealed that 11% of Romanians intend to buy a home during the following three years, well above the 6% average in the Central and Eastern Europe states. Over a ten year period the figure for aspiring Romanian home owners rises to 15%. The report notes that the number of owned homes is higher in south eastern Europe as opposed to central Europe despite the mortgage market being less well developed. That suggests to me that there is a strong sense amongst Romanians who aspire to becoming middle class. A survey conducted by market research company, GfK, noted that in the first half of 2007 expenditure on what it calls large consumption commodities increased by 12% - more than any other country in the region. Underpinning this is the expansion of hypermarkets and discount stores. The survey also notes that on average such commodities are 40% more expensive in Romania when compared to Bulgaria. Romania has a population of 22 million or thereabouts all of whom are consumers. The working age population is about 8 million half of whom work in subsistence agriculture where production equates with consumption but shows very little profit. The trend away from the land to the cities especially by the educated and the young is well documented. So apart from those in agriculture the employed population in Romania amounts to let’s say 4.5 million. Some of those are still employed in factories and industries that have not been modernised and continue to produce in an economically inefficient way which will lead to their ultimate demise. Some of you will recall what happened in the UK after the closure of our traditional industries in the 1960s and 1970s. In Romania new plant and new skills are needed that compliment and build on those that already exist IT being the most obvious example. So in asking yourselves ‘Where next in Romania?’ you are actually trying to identify where will you find the 15% who are aspiring home owners who can affford to pay high prices for commodities and who provide that small part of Romania’s labour force that is highly skilled and relatively well paid? It’s the middle class that underpins the evolution of a successful property market…not tourism and holiday homes. The answer is to follow the pattern of foreign investment because these companies rarely get it wrong and to identify where the aspiring middle class are located. Bucharest is expanding outwards and will continue to do so because there is no space in the city for industrial development but it will continue to be popular for service industries and of course it is the capital. Some predict that the Cluj population will swell to 2 million and we know for sure that much of this will be because of an industrial workforce which will have management, technicians and will require to be supported by the evolution of service and retail industries. The infrastructure is on its way with expansion of the airport and probable development of a second one; the roads which will mean that those who live and work at Jucu will have a 15 minute drive to the centre of the city; the 12 lane highway that will connect Nokia etc to the E60 and the Transilvania Highway. I’ve attached some pics of the Highway taken on a Sunday. Note that people are working on a Sunday which was also a European election and a referendum. I would steer clear of other locations unless there is a very clear indication of foreign investment and an educated local population…one reason why eventually Iasi will happen big time. Sure prices in Cluj are high but that’s because that is what people can afford to pay. Bargains do exist but that’s about being in the right place at the right time and ahead of the game. Romanians are moving here from the north and the south and others are coming back from abroad with their Masters and PHDs. They obviously agree with me that Cluj is the place to be and if that’s what Romanians think then I am unlikely to be wrong. The Highway is very important in so many respects. Close to here there will be junctions at Huedin and Turda (the second Cluj airport may be close to Turda) and then there’s Turgu Mures. TM is beginning to develop and was on the Nokia shortlist. It is not so far from Sovata with tourist potential and it’s not too far a drive to historical Sighisoara. The runway at TM airport is long and the terminal building, although small, has been modernised. Right next to the airport is a large industrial park still largely waiting for tenants. Try to book a hotel room in TM and I am advised that I had better plan four weeks ahead. Sibiu is stunningly beautiful and probably has the best street café life in Romania but does it have the infrastructure (logistics and education) for comprehensive industrial development? The Highway will also bring tourism but although Romania is very beautiful I really must discount this as a relevant factor. There is so much competition globally in the tourist property market; forget Romania for a retirement hotspot cos prices are high and unless you know the country well it’s a difficult country in which to relocate. History is as good an indicator as any of future potential. Cluj Napoca (or Napuca as it was called then) was founded in the second century by the Romans. In the tenth century the Hungarians conquered the region and called this city Kolosvar. In 1541 Cluj became Klausenburg as the German Saxon population became the majority and then for several hundred years Cluj was bounced between the Hungarian and Austrian empires. After World War 1 Cluj went to the kingdom of Romania only to be ceded to Hungary in 1940 and then returned to Romania after the Soviet invasion and the Treaty of Paris in 1947. Under the Ceascescu regime large swathes of workers were relocated to a neighbourhood in Cluj called Manstur – an extremely large concrete jungle – which continues to house a significant proportion of Cluj’s working class population. So Cluj has been considered to be strategic and desirable place to be over the course of history and that continues to be the case. So coupled with the economic and demographic factors outlined at the beginning of this contribution Cluj continues to have added value whilst the current armies fighting over this historical and beautiful city are not those of the Saxons or the Hungarians but the multinational forces such as Nokia and General Motors, Siemens and maybe Airbus as well as many others….and Isreali money is in the air and they don’t invest for any reason other than making money. My money stays here..but in the land. Cheap is cheap for a reason. Value is the market price. If Property Secrets gives you below market value and the security of continuing foreign investment then you are in good hands. Charles Bell

Hi Alan and Charles, Thanks for your posts, what I meant by ´been done´ is that a lot of major profits have already been taken from Brasov and Cluj, but I agree that there should be healthy growth in future. Of course there will be! I suppose the question of Where Next? isn´t too relevant at present cos it´s probably just better to focus on the 3 key cities we´ve been talking about all along. However, this also depends on investor´s profile and how much money you´re willing to spend, and what entry price level you can afford or if you can get mortgages etc. For example, I can´t get anymore mortgages so I´ll be a cash buyer which stresses the importance of me getting in at bottom end of market. If I´m not mistaken, there´s a lot more to Romania than just Cluj, Brasov, and Bucharest. Thousands of people will be returning home to smaller cities and villages so prices should increase nationwide as has happened all over Ireland, Spain, Poland and UK in last few years. Therefore I´d say there will be good opportunities for long-term in many cities in Romania as country as a whole develops, and the ripple affect kicks in. Hasta luego!, Liam

I recall a very successful Irish developer/entrepreneur on the Northside of Dublin when asked was he bidding for a trophy site on the Southside (Ballsbridge) located abouted 2 miles from his main operations as the crow flies. His response was "No, I dont know the area!" was to me very telling. I with my collagoues who are very conservative, 25% will do us very nicely.There is a little left over for the next guy. These markets in Romania are very risky.The right site locator, developer, right political contacts , right site location,etc all through a language few western Europeans understand leaves you very open for exploitation. Hence our reluctance to leave an area that probably will give us 25% net (after CGT at 20%,flights, tax, fees etc )for a couple of years to come,it sounds all right to us. Just a point Liam, we started the company with an average of €40k each and have now doubled that in three and a half years in a third tier city.Our next development we intend to hold onto a property, yields of 8% are very attractive! If I had 30k cash now I would consider buying Irish bank stock within a few months (yield 6%), selling in say 2 years and buying Irish property then.Just an opinion!

Just to prove my point that you dont have to go any further than Cluj World pharmaceuticals manufacturer Sanofi-Avensis is planning to open a plant in the future Tetarom 3 industrial park in Jucu – according to the pro-rector in charge of scientific research at the Babes-Bolyai University in Cluj. It is planned that the company will hire 500 people, mainly chemical engineers. This was reported in a local paper and is sourced from the rector. Let's wait confirmation on the Sanofi-Avensis website but if it's true I guess one factor that has attracted them is the fact that Babes Bolyai University is a centre of excellence when it comes to pharmacy and chemical engineering. Charles Bell

Hi Liam I'm just getting around to Romania, having let some of my other investments in E Europe complete and get rented. Personally I'd be very happy with 100% in the next 4 years! If Cluj or Brasov would offer that I'd be inclined to go for it. 200% is very ambitious, particularly in the current climate! Huw

As I understand it we are likely to see a overall reduction in the population of eastern european nations. At the same time we will see an increase in the population of their major cities. This is a result of migration from the country to the cities (as well as a migration from east to west, and low birth rates). As a result, I would much prefer to focus on 1st and 2nd tier cities.