Real Estate Investments in Romania

02 January 2004 (Invest Romania)

As indicated by the recent trends, the number of investors interested in the Romanian real estate market is constantly increasing. Among the real estate investments alternatives that might be envisaged at the present in Romania, depending on the foreseen purpose, we mention: (i) real estate direct or indirect acquisition; (ii) industrial park as greenfield or as brownfield investment; (iii) creation of a mortgage loan company or a mortgage fund; (iv) public private partnerships.

A real estate direct or indirect acquisition must be considered based on a corporative structure on several levels in which Romanian companies shall perform the investment through direct or indirect acquisitions and carry out the development of the project from the legal, economical and technical perspective, as such development would best require.

Constantly encouraged through governmental strategies and financing programs, the industrial park investments have also increased, either in the form of Greenfield or Brownfield (based on existing industrial platforms) investments. Mainly, an industrial park is a type of real estate investment that develops specific areas comprising lands, constructions, related utilities that are further leased or sold to interested companies and administered by an industrial park management company, with the possibility of benefiting from certain fiscal incentives, should the legal requirements be met.

Based on the regulated primary mortgage market in Romania, the number of mortgage loans has significantly risen, creating the potential for Romania to develop a large portfolio market, including for transacting mortgage-backed securities and mortgage bonds, either domestically or offshore. This type of activities may be carried out on the secondary mortgage market by deciding to invest in a mortgage loan company or a mortgage fund.

Investors might also be interested in developing a specific project together with the public authorities through the alternatives offered by the public private partnership real estate investment schemes, usually achieved through a project company set up together with the public authority supporting both the private as well as the public sector.

Nevertheless, the exact means of real estate investment should be thoroughly considered, including in view of the advantages and disadvantages pertaining to each type of investment according to the existing legal framework.



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