National currency weakening in Romania: worst case scenario
The global crisis has seriously hit developing countries, including Romania. Here we can observe the weakening of the national currency, which affects the real estate market trends. Experts say that rental rates may grow up to 25 euros per square meter.
Romania’s economy is in the process of development, and the coronavirus pandemic and the global crisis have destabilized a number of processes within the state, which led to the depreciation of local currency. So far, the authorities have managed to cope with the rate, but if the situation is prolonged, the consequences will affect all segments, especially the real estate market.
Analysts are considering the worst-case scenario where the depreciation of Romanian lei will continue, increasing from 1% to 10%. In this case, rental rates will increase significantly, especially for premises in Bucharest, the area of which starts from 1000 sq.m. Expenses for such office facilities will increase by about 250 thousand Euro per year, including maintenance costs. These figures are impressive for the residents of the country. At the same time, not all tenants will be able to afford real estate at an increased price, and the owners of objects will also be limited in providing discounts.
Due to the coronavirus pandemic and quarantine, part of the market participants revised their rental agreements, and delays in payments were introduced. But at the same time a number of companies refused the premises, there were those that were closed down altogether.
The situation in the real estate segment of the country is not stable yet. Positive dynamics began to be traced a few months ago, but it will not be possible to reach last year’s figures in the near future.
At the end of 2019 there was an increase in demand in the residential real estate market. In 6 largest megacities of the country the number of deals for purchase of objects increased by 16% on average. In Bucharest, the buying activity was recorded at 12%, in Timisoara – 19%. The greatest increase in demand was recorded in Cluj-Napoca – 32%.
Demand for dwelling also resulted in the growth of its value. Last year, apartments went up in price by 4%, and a square meter averaged 1340 Euro. In Bucharest, you have to pay 1410 euros for it, and in Cluj Napoca – 1710 euros.
The yield of real estate in the capital of Romania is fixed at 6% per annum, the most advantageous option is compact apartments. Renting such apartments will cost about 550 euros per month.
It is interesting that the demand for premium real estate has been steadily growing over the past few years, but this year the interest in it has somewhat calmed down, which experts explain the global crisis.