If bank interests are no longer attractive, you can invest your money in a much more profitable way in land and new houses. According to a real estate study conducted by the Capital Magazine, the profit from purchasing land and reselling it a year later starts from 20% and can go up to 100% in foreign currency.
By comparison, the interest for a deposit in foreign currency can reach at most 3% a year.
DOUBLE, EVEN TRIPLE PROFIT
Experts state that the most profitable investment currently is to purchase large plots of land, especially in the vicinity of Bucharest, on an area of up to 20 km. The West side of the city is the real estate “star” of the past 6 months. In Domnesti for example, the land price has evolved beginning with December 2004 and up until now from 20 Euros/m² to 35 Euros/ m², with an increase of 65% in just 6 months. Thus, if one had purchased 1,000 m² with 20,000 Euros, they would have sold the same plot in June 2005 for 35,000Euros, with a profit of 15,000 Euros. “These investments can bring yearly profits between 20 and even 100%”, declared Razvan Spataru, representative of the Platinum Expert real estate advice agency in Bucharest (qtd. in Capital Magazine).
According to Spataru, it would be advisable for those who are interested in a medium and long-term investment (2-4 years) to purchase land in touristic resorts or areas, because in a few years its value would double, or even triple.
RISKS AND SOLLUTIONS
Everything seems very simple at a first glance: you buy cheap and sell a year later for a higher price. However, you should know that there are also risks, which you can avoid by following a few rules.
First of all, you should avoid buying a cheap piece of land with a tangled legal situation (for example: the former and current owners are involved in litigations, or several alleged owners or heirs are making claims to the piece of land etc).
The piece of land could also lack minimum utilities (water, a sewer system, electricity, gas pipes) in the proximity. In this case, it would be better to inform yourselves if and when the introduction of these utilities is scheduled in the area’s urbanism plan. If the scheduled date is reasonable (6 months to a year) and the land is legally „clean”, the investment could turn quite profitable. On this segment, the analysts quoted by Capital Magazine estimate a balanced rise of prices of maximum 20-25% for the following months. At any rate, this is 10 times more than the profit form bank interests.
LOSING
According to the real estate study carried out by Capital Magazine, the least profitable current investment seems to be the purchase of a flat in an old apartment building located in marginal districts of Bucharest. Real estate analysts estimate that the prices of these residences will easily decrease in the following months and will considerably drop in the following two years. Thus, a 3-room apartment in Brancoveanu area for example was selling in December 2004 for 40,000 Euros. Currently, it is sold for 38,000 Euros, and the list of dropping offers can go on, especially for apartments in marginal areas.

Author: ARPAD DOBRE - ZIARUL