The value of real estate in Romania - malls, office buildings, houses and land – has declined by an average 30-35 percent since January, after a sound 15 percent annual increase since 2004, according to Colliers International consulting company Managing Partner, Bogdan Georgescu. According to the company,the depreciation is caused by the global financial crisis, which has sharply affected the local Real estate sector, making investors think twice before acquiring a property.

The value of buildings and land have now plunged to their 2005 levels. The sharpest decline was registered on the retail segment, especially in cities outside Bucharest, where there has been extreme over-building in the past few tears.

Mr. Georgescu peered into his crystal ball and declared that the financial crisis was now over - “The value of real estate properties will not decline significantly next year.  It will drop a further 10 percent, and then begin appreciating,” he said. Which is possibly the biggest load of bull I have heard come out of a so-called professional analyst.

What he should have said was, “I am hoping and praying that….”

Realistically, the Romanian property bubble was based almost entirely on foreign investment and hype. There is very little domestic demand, with many Romanians choosing to move abroad for work. Property prices have risen some 1000%+ since 2002, and I would expect them to return much closer to this level over the next 2 years. Expect a massive crash here.

Following on from our prediction that Romania will be a good property investment in 2008. News has just been released that UAE-based real estate developer Fortune Group, which has projects worth about Dh7 billion in Dubai, said it will launch two “multi-billion euro” developments in Romania.

It said the commercial launch of the two projects is expected early next year.

The first project will be a waterfront residential and commercial development located in southern Romania, spread over six million square feet. It will comprise apartments, a five-star hotel and other facilities.

The second project in the north of the country will be a residential development set amidst golf courses and ski slopes with the Transylvanian mountain range as a backdrop. Syed Mohammad Ali, chief executive officer of Fortune Group said, “Though Romania remains a rather untapped market, many GCC nationals, including Emiratis, have been buying property in Europe - Both our projects will be targeted towards the expatriate community. Many British, French and Italian property buyers have evinced interest in our project, but we are keen on attracting GCC nationals as well.”

Romanian real estate is attracting a growing number of overseas buyers with many British buyers shifting their attention away from traditional markets such as Spain in the search for better returns.