Significant Investment in Commercial Property Market in Romania

With the news that CB Richard Ellis Group has acquired the largest independent commercial property services company in Romania released this month, the rest of the world cannot remain ignorant about the massive growth occurring in this relatively small corner of the central and eastern European region!

There is significant investment happening in the commercial property market in Romania and the Romanians are targeting this sustained foreign direct investment commitment with a single mindedness that is really enhancing the investment climate.  If you were wondering why the Romanian residential sector was less than exciting, it’s because all focus is on commercial property and if you’re looking for a solid long-term bet, maybe a fund in this nation and this particular segment of the property market might be worth closer inspection.

Remember, we don’t dish out advice though – so do your own due diligence before buying in!  CB Richard Ellis Group certainly did.  They have acquired Eurisko Consulting for about USD 35 million because the company is so well placed strategically across Romania, because they have massive presence in and understanding of the market, and because they have a well established client base already.

Specialist in investment, agency, valuation, consultancy and research, Eurisko is key to promoting the benefits of commercial property investment in Romania and what’s more, they have assisted companies to relocate to the nation as well.  Bulgaria was recently seen as losing out significantly to Romania when it comes to commercial commitment simply because the Romania’s have moved faster – moved faster to construct stock and moved faster with attractive taxation and legislation reforms to bring in big companies.

Nokia have relocated significant operations from Germany to Romania and have made a thirty-year commitment to the nation in order to achieve the most attractive taxation breaks possible.  As long as they remain committed to Romania for thirty years they will pay no property tax and only 16% flat corporation tax – how could Germany compete?

Nokia have bought in to an industrial park in Jucu near Cluj and already some of their suppliers are making a move on remaining space in the industrial park. 

Nokia is one of the highest profile companies to make the move to Romania because of the upset created by them leaving Germany.  But if you look at the property news headlines in Romania it is totally dominated with stories of companies relocating lock, stock and barrel to Romania or of choosing the nation for their expansion into central and eastern Europe.

So successful is commercial property in Romania as a capital appreciating asset and/or an attractive rental and lease yield generating commodity that the Lewis Charles Romania Property Fund Ltd said the value of the Fund’s portfolio had increased from EUR 33.8 million by the end of December 2007 from a purchase cost of EUR 27.2 million, and a spokesperson for the company has stated that they expect 2008 to be another positive year for the Fund.

And funds like these have plenty of room for expansion in Romania, Extenso are opening four more stores in Romania, there is a shopping and entertainment complex being constructed in Honedoara and all across the nation there is expansion, relocation and development in the commercial property sector.

Shying away from complete reliance on the emergence of a residential market, Romania’s authorities have been highly sagacious in honing legislation and targeting tax reform at the commercial sector.  It’s clear, Romania wants to be the leading commercial centre for the central and eastern European region, and it is also clear that it is well on its way to achieving its goal.

Special Reports: Property News for Romania

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