A former Communist state, ruled over by the dictator Ceausescu until he was violently deposed in 1989. For many centuries Romania's economy was based on agriculture. In the 1930s Romania was one of the main European producers of wheat, corn and meats and it used to be called "the bread basket of Europe." In the 1950s the communist leader of Romania, Gheorghe Gheorghiu Dej, began developing heavy industry.
There has been a shift towards heavy industries since the 1970s but the agriculture is still economically important and employs about one-third of the workforce.
Romania produces coal, natural gas, iron ore and petroleum but most raw material for the country's large industrial capacity potential are imported. Prominent industries include chemical (petrochemical, paints and varnishes), metal processing, machine manufacturing, industrial and transport equipment, textiles, manufactured consumer goods, lumbering and furniture.
39.2% of Romania's territory is arable land, 28% forests, 21% pastures, hay fields and orchards and 2.5% vineyards. Corn, wheat, vegetable oil seeds, vegetables, apples and grapes for wine are the main crops and sheep and pigs the main livestock. Forestry and fisheries are being developed under long-term programs.
Since 1990, successive governments have concentrated on turning Romania into a market economy.
Where is Romania?
Romania is situated in the south-eastern part of Central Europe and shares borders with Hungary, Yugoslavia, Bulgaria, the Black Sea, Ukraine and the Republic of Moldova. Romania is the second largest country in the area, after Poland. Bucharest is the capital city of Romania. Romania's territory features splendid mountains, beautiful rolling hills, fertile plains and numerous rivers and lakes. The Carpathian Mountains run the center of the country bordered on both sides by foothills and finally the great plains of the outer rim. Forests cover over one quarter of the country and the fauna is one of the richest in Europe including bears, deer, lynx, chamois and wolves. The legendary Danube River ends its eight-country European journey at the Black Sea by forming one of the biggest and most interesting wetlands in the world, the Danube Delta. About a third of the country consists of the Carpathian Mountains, also known as the Transylvanian Alp. Another third is hills and plateaus, rich with orchards and vineyards. The final third is a fertile plain, largely devoted to agriculture.
- Mountains: 31% of Romania's territory
- Hills and orchards: 36%
- Plains: 33%
- Areas covered by rivers and lakes: 3.7 %
- Total number of lakes: 3,500
- Lakes greater than 250 acres: 300
- Highest mountain peak: Moldoveanu Mt. — 8,349 ft. (2544 m.)
Romania has four distinct seasons. Spring is pleasant with cool mornings and nights and warm days. Summer is quite warm with extended sunny days. The hottest areas during summer are the lowlands in the southern and eastern regions of Romania during July and August. The mountainous areas are always cooler during summer. Autumn is dry and cool with the trees producing colorful foliage a clear indicator that autumn has arrived. Winters can be cold, especially in the mountain areas while not the rule, snowfalls might occur throughout the country from December to mid-March.
Become an Expert Investing in Romania
When investing in any property market always look to those in-the-know for the real deal. In Romania, in 2008 investors both big and small, from investment funds to smaller private developers, are continuing to hedge their bets on Romania. In a year in which we saw the sub-prime mortgage crisis in the US and the near collapse of real estate markets in much of the world, Romania proved once again the virtually unchallenged place to be for the profit-making property investor.
Buying ‘off-plan’ is the most common method of buying property in Eastern Europe and has a number of advantages over buying existing, older properties:
- Purchase prices for off-plan developments are normally set 12-18 months prior the property is finalized and therefore buyers are in the advantage of gaining from any market appreciation in the time stage between agreeing to buy and the final completion date.
- Apart from the deposit, the full purchase price only needs to be paid upon completion. This offers cash-flow benefits to the buyer/end user.
Tax Implications of Property Ownership
As a result of the dual-tax agreements between Romania and the UK, US and most Western countries offers the advantage to the investors to avoid double taxation. If you are not resident and need to pay any taxes in Romania then these taxes can be declared on your country tax return to avoid you having to pay tax twice. Direct sale of real estate is subject to notary fees and possibly to judicial stamp duty or cadastre duty and VAT as described above, while transfer of shares in a Romanian entity is not.
As long as profits are re-invested in the company, no tax needs to be paid!
If you are still questioning in investing in Romania or not, we have been collected some of the best options of acquiring properties:
- Investment. Romania has emerged as the best European destination to invest in all types of properties – residential, commercial & land.
- Economic. With strategic and visionary efforts by Romanian government, the economy is becoming stronger and stronger over the years. Romania is one of the fastest growing economies in Europe.
- Diminished prices. As investment experts says the house prices in Romania are expected to increase by 4 times higher over the next 10 years. In past few years, property prices are already raised by 25%. Even though, property price in Romania are still 20-30% reduced comparing with other eastern European countries.
- Fast growing GDP - It is growing at more then 20% per annum. This rate is definitely setting Romania as one of the largest economies in Eastern Europe.
- Foreign Direct Investment Boosted. Foreign investment in Romania is increasing drastically. From 2001 to 2005, foreign direct investment in Romania has reached over 5000 million euros and more 8000 million euros added in 2006. With 55% of FDI in capital city Bucharest, major companies from all over the world are coming toinvest in Romania.
- Falling inflation and increasing employment are two other boosters of rapidly growing economy. Inflation has dropped to 7.5% low in 2005 from 22% high in 2002. Unemployment rate also fell to 6.2% in 2006 with less than 3% in capital Bucharest which is far lower than the many other developed European economies. With under control inflation and falling unemployment rate Romania is confidently creating the strong property buying opportunities over the country.
- EU Funding - Most of these funds will be invested into the local infrastructure such as - road, hospitals, schools, bridges etc. The EU funds will assist in creating more jobs and therefore more potential customers who are looking to buy/rent properties, hence investment opportunity in property. As far as it looks…the boom is yet to come!
- Increase in tourism. Based on the research report from MarketResearch.com it has been registered over 7.7mn of foreign visitor arrivals, representing a very strong increase of nearly 28% compared with a year earlier
- Low taxes rates. The set up of flat rate of only 16% it makes Romania a great location for investment opportunities.
- Strategic position. Nevertheless, Romania is an exquisite country with a variable and harmonious relief: the Carpathian Mountains, beautiful hills and plateaus, the Delta Danube and a 190 km border with the Black Sea.