The local real estate market seems fare particularly good despite unfavorable international circumstances. However, higher loan costs and excessive increases in the price of inputs (labour, energy, construction materials) jeopardise the developers margins. The global credit crunch however caused a slowdown in real estate transactions locally, generated by investors' problems in financing their investments amid a more challenging credit environment. As an alternative to increasingly expensive bank laons, developers consider stock exchange as an option for raising funds (through IPOs). The present financing conditions on the international market indicate that one will witness a slightly slower development pace or a stabilization in H1 2008. However, we expect strong warm -up in H2 before a new growth episode on the real estate market, which is quite predictable because of the real estate investors' interest in Romania. Total foreign real estate investments in the country reached EUR 2.2bn last year, Romania ranking the third in CEE after the Czech Republic and Poland, in terms of foreign property investments in 2007. The value represents 20% of the amount directed to the region and almost one third of total foreign direct investments in Romania. In the same time, local real estate market is becomming more mature and less speculative. Buyers become developers, the new projects anounced are big-sized and the real estate consultancy gains ground. While the commercial segments of the real estate market do not post significant changes over the last three months, we notice increased competition on the residential segment, once several big projects are finished and launched on the market.
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