I venture from time to time to the much hyped Romanian property fairs organised by developers and estate agents. My interest is to check out if the offer also comprises houses or apartments with period architectural themes or examples of original and high quality architecture. I have to say that they always disappoint me in that regard.
The largest such fair in Romania, pompously called “The National Property Fair”, went on between 5-8 February at the Parliament building in Bucharest and presented offers only form certain areas of this city. I went there on the opening day and saw an event that was just a window dressing exercise for the falling local property market. The big name international property consultants were absent, a sign that they try to keep the distance from such over-optimistic gatherings in a rapidly deteriorating Romanian economic environment. Most of the exhibitors were either developers with their headquarters in Mediterranean countries, companies that have a heavy presence in Romania, or local estate agents. The offer consisted in bland new apartments or houses (affectedly called “villa”) in non-descript assemblies with English sounding aspirational names (“Champions Residence”, “City Garden” and so on). Most discouraging were the extremely high and unrealistic prices in sharp contrast with the promises made by the organisers in the in media that this fair will bring heavy discounts on the market.
Illustrative of these aspirational names was a stand named “American Village” advertising houses that did not have anything to do with the American architectural styles, urban planning or not even with the McMansions that blight the US suburbia. Nearby was another stand promoting an “Austrian Village,” located on the outskirts of Bucharest, not having anything in common with Austria and its building styles.
There was an unreal atmosphere in which the developers and the estate agents tried studiously to avoid references to the economic crisis or the ubiquitous burst of the Romanian property bubble. The fair was conceived like a capsule for an ideal euphoric market that ignored the grim reality outside its limited confines.
The whole set up was an exercise in bad taste and pretentiousness beginning with the place where the event was taking place, the tacky brobdingnagian building of the Romanian Parliament built by the late dictator Ceausescu, to the high heeled, mini-skirted incompetent young ladies that were staffing the developers’ stands.
I was very amused by a stand for a company called “Money Consulting” manned by young women dressed like miss universe contestants. It certainly was a PR disaster if they wanted to lure people in giving their money to that company to “manage”.
Another amusing and symptomatic scene of this fair was a stand where a security services firm proudly displayed its vehicles mounted by macho body guards. I was left wondering what on earth were they doing at a property fair aimed at the ordinary Romanian buyer that surely did not have such fancy services on the shopping list?
To crown it all, outside, next to the exhibition entrance, a Hummer SUV having New Jersey registration plates, belonging to that Romanian security company was ostentantouslty parked. The foreign number plates were plain illegal for a company supposed to assist in upholding the law in Romania, as they were obliged by law to have that car registered with the Romanian vehicle agency. That was even more amusing as the jeep was parked within the Romanian Parliament grounds where the fair was taking place, next to the law making institution of this country. It was symptomatic for the high posturing and supposedly supercharged testosterone level that the fair wanted bring to the ailing Romanian real estate market.
In conclusion, the fair was just another hapless ploy of the property developers and estate agents to lure the Romanian customers to part with their cash or to contract burdensome loans to buy their overpriced-overrated and doubtful quality apartments and houses. That type of property would sell for less than half in Hungary, Austria or France. The Romanian asking prices are in many aspects closer to the UK market, in a country with third world infrastructure, some of the lowest wages in Europe and a crumbling economy that has to face one of the worst crises in memory.
My advice for every type of investor, from private individuals to investment funds is to not touch the offers from these developers and estate agents even with a bargepole. They and the Romanian market need to go through a serious correction and a change of attitude (the “paradigm shift” mentioned by the finacier George Soros in his writings would be a good description of that process). The ungrounded euphoria of the past four years that made possible the Romanian property bubble is just plain daft human behaviour displayed by the locals and western investors alike, resulting in toxic assets very difficult to clear. The next generation of investors that will eventually emerge after the crisis will have to do their homework before putting money in Romanian property. They also have, for a change, to enlist capable and knowledgeable professionals and not only high heeled women employees and the plethora of local unprofessional “experts” and agents that emerged during the bubble. ©Valentin Mandache
Valentin Mandache, architectural historian 