The Association of Real Estate Investors in Romania (AREI) represents the voice of all four sectors – office, residential, industrial and retail, in relationship with the Romanian national authorities.
CEEREM: What are the most ardent legislation issues AREI aims to solve, and solutions that could help level the real estate market?
In the past few months, we focused on Law 114 – a 1996 piece of legislation regarding housing standards and norms residences. Law 114 suffers from a great deal of gaps that result in mixed interpretations from the authorities. For example, there is a new term in the market, the “studio”, composed of a small bedroom and a living space. Legally, this cannot be considered either a two-room apartment (52 sqm), nor a one-room apartment (30 sqm), because of its 46-48 usable sqm, leaving it somewhere in limbo. Likewise, Law 50 regarding building permits should be more flexible regarding the time frame developers have to obtain all the documents needed for utilities connection (I.e.water, electrical energy, sewage, etc.) since providers usually act after their own internal laws.
Bottom line, the main issue is the lack of procedure and consistency. The most recent proposal in the legislative system is to put all real estate laws under a single roof, known as the Construction Code. We were present when the draft was conceived and we fully support a set of updated laws and regulations, much needed by the rapidly evolving real estate sector.
CEEREM: Regarding the discussions you had with authorities – what are some of your most important wins and are there any notable standstills?
The bright side is that during our discussions with central authorities we were always met with respect and they showed genuine interest towards solving the problems we were raising. For example, the inspectorate for emergencies immediately took note and understood our deadlocks that rose from the daily implementations of the pieces of legislation under review. By contrast, local authorities (especially Bucharest’s city hall) are more rigid and it’s hard to establish a clear cut relationship with them.
CEEREM: What is your vision for how the Bucharest of the future should look?
First and foremost, Bucharest should have better planned integrated projects that give the urban scenery a smoother, more consistent look. Developers alongside authorities must acknowledge that the city is already busy enough and there are areas where you simply cannot build anymore. Reducing traffic is a top priority and by following European solutions (bigger taxes, no parking on main streets, etc.), one that should be easy enough to solve.
CEEREM: From your professional perspective how does the Romanian real estate market compare to other markets of CEE, and what trends should international investors keep an eye out for?
From a bird’s eye view, in Romania it is in fact much easier and faster to obtain a building permit than in Western European countries. For instance in Spain it can take up to seven years. Similarly, in other countries it’s mandatory to design the entire infrastructure of the project before applying for the building permit. If you are a law-abiding investor, Romania has a market full of opportunities, especially in the residential sector where there is a stock of over 50% ageing apartments in need of a makeover. Regardless of all the challenges mentioned before, the Romanian market is a lot more lenient and welcoming than other countries of CEE.