Hi

I am British and I lived in Romania for 2 years and have been visiting for over 10, and I invested in Targu (or Tirgu) Mures. I renovated a nuimber of city centre apartments and have had great capital growth in the last two years and I'm happy with the rental returns.

So what has Mures (as the locals call it) got to offer?

Well it is not the gold rush country of Brasov and Bucharest, that's true, but it does have the following:


1.Relatively undervalued city centre property. The difference in price between city centre property and near-city-centre is still relatively small and doesn’t reflect the difference in current, and more importantly, future value.

2.Undifferentiated housing stock. The large suburbs of relatively uniform apartments that surround Tirgu Mures are likely to suffer from a problem of lower prices due to the concurrent availability of almost identical apartments at any given time. The small stock of city centre apartments are therefore likely to benefit from this by the very fact that they are differentiated by location, diversity of construction, and small block size relative to those of the suburbs.

3.Stability of the market. The residential property market in Tirgu Mures is likely show more stability than those of some other Romanian cities, even if potential growth may be slightly lower. Lack of speculative pricing (particularly on EU entry such as in Bucharest or Brasov), and foreign capital (which can be withdrawn easily) means that the market is largely home grown, and as such reflects a truer value of the property than in some other major cities. It is likely to see an increase in speculative investment, but this is likely to be from Romanians and for resale to the Romanian market. One of the key factors in choosing Tirgu Mures as a location was to reduce the investment risk, and to try to avoid the more volatile and unpredictable end of the market. This has been borne out by recent prices drops in Bucharest, whilst Mures is still growing slightly.

4.Nascent nature of the market. The property market in Tirgu Mures lacks many of the aspects that one might associate with a mature property market, and as such offers the opportunity to “get it at the ground floor”. The still comparitively small buy-to-let market, and the lack of renovated apartments on the market both suggest that the population has yet to wake up to the full potential of the market.

5.A good supply of suitable apartments. There remains a reasonably large stock of un-renovated, city centre apartments, that are steadily coming to the market. At the moment the market seems to be favouring the buyer, as good supply keeps prices down.

As far as the city itself goes, read on....

Tirgu Mures – City Profile

Background:

A city of approximately 150,000 people (approx 9th largest in Romania) with a rich history, an attractive main square and a quiet prosperity to it; Tirgu Mures is a city that has successfully emerged from the troubled times of the 1990’s to become the Romanian equivalent of “Middle England”. There are none of the glaring divides in wealth, or the frontier feel that still permeate Bucharest and Brasov, and it suffers from few of the social ills of the larger Romanian cities. Whilst it is fair to say that it is not the powerhouse of the Romanian economy, it is however the capital of Mures county which covers some of the most prosperous areas of Transilvania, itself the most prosperous region of Romania overall. If one were looking for a comparable city in the UK, Bristol or York would be suitable examples.

Ethnic make-up:

Tirgu Mures also has an ethnic mix of roughly 50/50 Romanians and ethnic Hungarians, which have fostered strong and rapidly growing economic and social links with Hungary. The ethnic Hungarians tend to give a more central European and professional outlook to the cities where they are a significant minority, and also naturally have strong links with Hungary itself.

During the early 1990s ethnic tensions between the ethnic Hungarians and Romanians boiled over into violence that was fuelled by rabble rousing politicians, poverty and fear of the changes sweeping the country in the post-communist world. History and national identity have always been contentious issues in Transilvania, but it is inconceivable that a return to violence could be seen in Tirgu Mures, or anywhere else in Transilvania. Staggering economic advances and rises in living standards since the dark days of ‘89/’90 (the monthly food ration in 1989 was 1 kilo or flour, 1 of sugar and 6 eggs per person per month) have diffused tensions, and Romanians and Hungarians mix harmoniously at work, in government and socially.

Tourism and Transport links:

During summer months the bulk of tourists in Tirgu Mures are from Hungary, and there are now two airlines that fly direct from the city to Budapest several times a week(Malev and Wizz Air). The airport was expanded a few years ago and now has the most modern runway and night landing facilities in Romania.

The Transylvanian Highway will be completed in 2013 and will connect Mures to Europe and southern Romania. The city is also on the main Transilvanian extant transport route, the E60, which links Bucharest with Budapest.

Local Government:

One of the most noticeable features of the city is how well run it is.
In a country where corruption is still an endemic problem, (especially in areas such as awarding public works contracts) it is noteworthy to see how clean the city is and how efficiently road and pavement repairs are carried out.

The standards of city management and the council’s evident interest in the “live-abilty” of the city are noticeably higher than many of the other major cities in Romania, as well as having a relatively client focused bureaucracy.

The city has a nationally renowned emergency rescue service, heart hospital and medical University, and has recently guaranteed loans that will complete the financing of a 28million Euro overhaul of its drinking and waste water treatment facilities.

Local Economy:

Tirgu Mures has a well diversified economy with factories producing everything from gloves to fertiliser, and its status as the county seat and largest city, has given it a strong commercial base in areas as diverse as the services industries(including medical), food wholesale, industrial and farm machinery supply, and IT.

Education:

The city also has a long history of education, and several important figures in science and culture lived and worked in the city through the ages, such as Farkas and János Bolyai (famous father and son mathematicians), Petru Maior, an outstanding personality of Enlightenment in Central Europe, and count Sámuel Teleki who amassed a library of over 40,000 books and rare manuscripts during the early 1800’s. Tirgu Mures boasts three universities, including a well renowned medical and dental university , and a Hungarian University, in all the student population tops 10,000.


Summary of the main advantages of Tirgu Mures:

•A well run city and county council that actively promote themselves to business and tourism, and are investing in long term infrastructure improvements.

•A medium sized city with a good business and education base and a high quality of life that has the capacity to retain its educated and professional youth, as well as attract new businesses and families.

•Strong transport links by road and air auger well for further development of business, industry, and particularly tourism.

•Attractive city centre with a good supply of un-renovated apartments in what is currently a buyers market.

•An expanding young professional class that will provide a strong re-sale market in coming years.

•Good house price growth in the last 3 years has caused a surge in interest home ownership, particularly among young professionals who now have access to affordable mortgages

Targu Mures is a prime example of a Romanian city quietly getting on with improving itself and building prosperity. It is probably the least corrupt and best run place I know in Romania, and it is staggering what a difference there is between the clean, calm Central Euopean feel of Mures, and the chaotic, Balkan feel of Brasov and Bucharest.

THE hotspot of Romania? Probably not, but a good solid place to invest, which has already shown strong returns for me.

Invest in Mures before the rest of the investors from Cluj and Brasov arrive!

Ben

Hi

Its good to know that there are other readers resident in Romania who know it well.

Since becoming resident in Cluj I have perhaps become a little insular however recently I have got out ofthe city and drove to Bucharest and spent another day getting to know Turgu Mures.

First, Brasov I would say is 'done' in relation to Cluj. Brasov is a fine city with all the big commercial and retail names present and very low unemployment. Cluj has great potential still but there are some local problems and it is not totally protected from national and global factors. I often say 'nothing is certain until it happens' and its true that much of the promise of last year and the early part of this remains to be fulfilled.

TM is a place I previously drove through or flew to Luton from the airport. Next to the airport is a very large industrial estate which last year had no occupants. I was very pleased to see that buildings are now going up...a sign of investment. I agree with all that is written above about the city and as for the historical centre it rivals the beauty of Sibiu for sure. In short TM is a charming place and ticks many of the same boxes as Cluj...its in the west on the route of the Transilvanian Highway; its got a good airport; its got high quality Universities (best Pharmacy Faculty in Romania I'm told) and a relatively young population; and it has history and culture - definitely worthy of more investigation.

Just as with anywhere in these troubled times it pays to do your homework. From what I read the Romanian banking system appears in relatively good shape. However the stock market is not...its extremely turbulent with an extremely high decline in value over the last twelve months....countered over the last two days by a 30% increase in value!

Yesterday the Constitutional Court deemed legal a 50% wage rise for teachers voted through by Parliament even though the government opposes it. We now wait to see whether the President will approve the law. Civil servants - of which there are many - have already asked for the same with medical professions likely to follow suit. Its election time!!!!

If such rises carry through to the private sector as they surely will that takes away one of the positives for Romania in relation to FDI. Sure the public sector have been neglected and are extremely poorly paid but this must be dealt with in an incremental way and take account of what the country can afford...otherwise all the progress over recent years will simply be blown away.

All the best,

Charles

Hi

I must say that it worries me to see the wage rises that are going on. I agree that the public sector needs some big rises (teachers paid roughly the same as bin men!), but lets hope the private sector resists 50% wage rises!!!

On the one hand higher property prices boost property prices, but they threaten competetiveness and play havoc with an already very large balance of payments problem for the government, and fuel inflation.

Lets hope sense prevails (although in an election year....)

ben

Recent FDI news from Diplomat.ro

TARGU-MURES Israeli real estate developer Plaza Centers will pour over 80 million Euro in the development of a mixed use complex in Targu-Mures. The complex will include a shopping centre and office spaces on Strada Gheorghe Doja. The building will cover 34,000 sqm, with 1,200 parking places and will be delivered by the end of 2010.

Interesting article.

Any views on the future prospects of Iasi? I understand it is the 2nd or 3rd lagest city with 8 universities & 60 000 students?

Hi

Iasi is certainly worth a mention. Its a beautiful, historic city in the heart of the north east which is reputed to be the poorest region of Romania and therefore should be able to offer relatively low wages. It has thriving Universities which leads to the city retaining an essentially young working age population.

I am told that politically there are problems with those in power resistant to change which, if true, would provide an impediment to serious foreign investment and under-sourcing of EU funds.

Whilst the road to Bucharest is reasonable - it takes about six hours - access to Cluj and the promise of the Transilvania Highway is a different matter it taking a minimum of 10 hours driving. A new motorway linking the city to Cluj is 'planned' but that means nothing in this country. The airport is limited with flights to Bucharest and to some western European countries - but they are expensive and go via Carpatair's hub in Timisoara http: / /www .carpatair .ro/ .

I've just come back from lunch with a few friends one of whom works for the North West Regional Development Agency. That region covers Maramures, Salaj, Bihor, Cluj counties ...but not Mures. He let me into a few secrets one of which I will share with you.

The Agency, its constituent county councils and other local government structures have teamed up with the Transilvanian Universities and signed an agreement to develop a Cluj equivalent of the Cambridge Science Park. Accepting that nothing is certain until it happens in this country I am told that a site has been secured for the Park.

For me a number of cities here hold attractions - T. Mures, Iasi, Craiova etc - but Cluj continues to have features which stand out above all other locations.

All the best,

Charles

Thanks for this great information, Charles! Cluj seem to be a great place to invest!

I have however bought into the first luxury development in Iasi. This flat have a view over the city. Maybe I should have bought in Cluj, but I hope this will do well for me.

I have also heard that some IT companies e.g. IBM are opening ofices in Iasi and that the airport will be modernised. I have seen the following on Wikipeedia (under Iasi).
'Future development - It has been announced that Iasi International Airport will be undergoing modernisation, the airport will basically be reconstructed into a state-of-the-art airport'

This will hopefully improve the connection from Iasi to other cities.

Best regards

Hi

I am sure you have made a sound investment. Iasi shares many of the positives of Cluj - young working dynamic population; high levels of English and education...and of course IT. The last time I was in Iasi I stayed at a hotel which was hosting an Irish company which had just bought into a Iasi IT business.

That's another measure of economic activity... hotels in Iasi have high occupancy..and its not always easy to get a room. I happened to be a friend of Alina who was my hotel's Manager.

Iasi is wonderful in its own right but if that airport expands and attracts low cost airlines it will become the gateway to the most beautiful region in Romania - Bucovina - a region transcending the border into the Ukraine. See en.wikipedia.org/wiki/Bukovina and www.bucowina.ro/ for a taste of history and a truly beautiful land.

Go to http: / /wizzair .com /destinations /map/ and you will see that Wizz have started to open up the Ukraine albeit not Ukranian Bucovina...which gives Iasi a chance.

Iasi clearly has potential and starts from a lower base than Bucharest or Cluj. Just be certain that that airport is going to develop because that will bring with it direct connections to Western Europe.

Charles

Hi Charles

Thanks for the great information. It is great to talk to somebody with this kind of knowledge.

I have read that the major stumbling block for the redevelopment of the airport was the ministry of defence (the land around the airport apparantly belong to the ministry of defence). This caused major delays, but there is finaly an agreement that the local govermant will give other land in exchange for the land around the airport.

I also see their is a link on the Iasi Airport website called 'New: Airport modernisation project'. I do not understand the language, but there are pictures.

http: / /www .aeroport .ro /index -eng .htm

Kind regards