| "Don't take the trains. They are slow. Too slow. Better to go by car."
We thought about this advice for a moment. Then we remembered we had no place to go... and plenty of time to get there.
"That's OK," we told the taxi driver. "The train station will do just fine, thanks. We'll take the slowest one they've got."
Romania is a country on the move. That's what we hear, anyway. No time for dawdling journeys through the Transylvanian hillsides. For a nation with a troubled history and a present (and persistent) brain drain, tomorrow's economic growth can't come too quickly.
By some measures, at least, it looks like they're on the right track...
A Romanian Rebound?
Romania acceded to the European Union back in 2007... just in time for the global financial crisis to bite it in the neck. GDP growth, which at a robust 6% to 7% during the previous few years had been among the highest on the continent, promptly collapsed. The economy contracted by a whopping 6.5% in 2009 and remained in the red the following year.
It's been in a state of tentative recovery ever since... but projections look promising...  Figures released just this week show Romania to be the fastest-growing economy in the EU, with GDP growth outpacing estimates to register 3.9% in the first quarter. That follows a 3.5% jump in output last year, according to figures from the World Bank.
Of course, those figures are to be taken with a grain of salt... or a clove of garlic... choose your own metaphor. (We've opined in these pages before about the coven of bloodsuckers infesting institutions like the World Bank, IMF and the U.N.: See Vampires in Lusaka.)
Salt, garlic and other assorted condiments aside, optimism regarding future growth in Central and Eastern Europe - in general - and in Romania - in particular - is spurring investment... at least in some sectors.
According to CBRE - a research and consultancy firm covering property markets across Europe, the Middle East and Africa - strong growth in the first half of this year pushed commercial real estate investment volumes in Central and Eastern Europe to €2.5 billion, an increase of 15% on the same period for 2013.
And the country front and center of that growth...?
"Romania saw the greatest rise in commercial property investment volumes with close to 300% increase year-on-year, however, coming from low levels of activity," the firm's research revealed. "This can be explained by continued low interest rates, increasing allocation of institutional investors to real estate, relatively high yields and the belief that economic growth should be solid in the coming years."
Whether this is a sign of a healthy, recovering economy... or something more akin to the "undead" variety - a walking stiff propped up by low rates and delusional enthusiasm regarding future growth - we can't say for sure.
The private real estate market remains at depressed levels. Prices in the capital city, Bucharest, ended 2013 off by about 6% year over year. And there they remain. The drop was less severe in the countryside, to where those slowly ambling trains depart from the capital, but it was still felt nonetheless.
Exodus
Part of the reason for the soft real estate prices might have to do with the aforementioned brain drain - an exodus of young professionals from Romania to higher-paying positions in Western Europe. The crisis is particularly prevalent in the medical sector, doctors being in high demand in countries like France, the U.K. and Germany.
According to official data, one-third of the nation's doctors left Romania during the last two years alone. The number of physicians declined from 20,000 in 2011 to just 14,000 last year. Romania has lost as many doctors over the last five years as it has, in total, working in the country today.
The motivation is easy enough to understand. The net starting salary for a doctor in Romania's capital city is just €350 per month... and even that's a handsome increase from the €200 per month it had been as recently as the last couple of years. In the U.K. and Germany, however, those same doctors can earn as much as €3,000 per month... more if they work "graveyard" (night) shifts.
While the immigration debate rages over in the U.K., with the far right arguing that newly arrived foreigners are likely to choke the already-bloated welfare system, including the National Health Service, Romania watches as its best and brightest doctors go to work for the NHS.
A stronger economy would certainly help slow the brain drain, but for now, the flight of Romania's top professional talent is continuing.
Vlad's Pad
Feeling refreshed after the train ride from Bucharest to Brașov, we took a journey out to the neighboring medieval village of Bran. And there, nestled in the hillside, we found a humble dwelling for sale...  Bran Castle, the supposed setting for Bram Stoker's Dracula tales, is looking for a new owner. According to hearsay, folklore and commonly accepted mythology, none other than Vlad the Impaler (the real-life inspiration for Stoker's nocturnal menace) spent much of his leisure time up in the castle.
New York-based law firm Herzfeld and Rubin will handle the sale of the 57-room, 22-acre property. It's rumored to be listed at the bargain-basement price of $80 million... though some experts reckon it could fetch up to $135 million.
Interested parties are invited to inquire within... if they dare.
Should Dracula's Castle prove a bit rich for your blood (to torture the metaphor one last time), you might find something more to your liking in Brașov. We found a four-bedroom, three-bathroom villa for sale on a 400-square-meter plot of land for €260,000 (about $350,000). The scenery going down into the valley town is magnificent.
Or, if you'd prefer something in the historic center, you can easily find a comfortable pied-à-terre for around €100,000. It's a winter town with some of the best ski facilities in the country, so you could probably expect some seasonal rental while you're out of town.
We'll have more details in future editions. For now, it's off to Sighișoara on yet another wending ol' rail track.
Until next time...
Cheers,
Joel Bowman
For Free Market Café
Follow Joel on Twitter @JoelBowman |
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