Indiana Jones and Romania are not as they used to be…

The upcoming days I will be in Greece, having returned on Friday. After 2 extremely hard weeks, with the working hours exceeding 11 in the night (several times even midnight too) I was able to slow down a bit, especially during the weekend. So, it was a good chance for me to remember one of my old hobbies, cinema (once upon a time, I used to declare myself as cine-maniac). The choice of this period is only one, Indiana Jones.
Back in the late ’80s, I still remember myself fighting over the movies with my friends, all of us teenagers. In Greece of 1989 (even until the late ’90s) the May’s blockbusters in USA were on premiere after 5 – 6 months. So we had plenty of months to fight and decide which was the best (…objectively the one we liked its stars more, or when the woman star was a sex symbol). That year, 1989, there was the third movie of Indiana Jones and the first movie of Batman which… split the world in 2. (The ones who liked Indiana didn’t go to watch Batman and vice versa, I was one of the few ones who broke this “rule”, as my father was always telling me “try everything and choose the best”…)

….

Having all these in my mind, I felt a little bit awkward with the fourth part of the series, that I watched this time (of course now we watch everything in the same time with USA, sometimes some of us even earlier, from the internet. Globalization…). Everything was different: The time (20 years after), the bad enemy (not anymore the Nazi Germany, but the Communist Soviet Union), the main “bad character” is a woman, not a man (with Cate Blanchet proving why she is one of her legends of her age, being able to make you believe that she is really from Ukraine). In the same time, Indiana Jones is not anymore the main hero, sharing his part with his son. He is much older, more mature, but also he says very few “clever lines”. The action is less complicated than what it used to be in the previous parts of this movie series, even the end of it is too simplified, showing us that extraterrestrials lived in our planet thousands of years ago. With one phrase, Indiana Jones of 2008 has nothing to do with Indiana Jones of the ’80s, just the name is the same.
In my younger years, I used to think a lot about the movies I had watched, trying to analyze them and get into their deeper meanings, if they were any. My lazy Sunday, except a brilliant business idea that you will find out in few months, inspired me for a strange comparison. Indiana Jones today has nothing to do with what we knew from the past, in the same way that Romania of 2008 has nothing to do with the country we knew few years ago (if you go back 15 years, Romania of that time looks like it is sent back to another planet…).

…

What do I want to say with all these? That if you keep trying to understand the market using the tools you used to, you will find yourself making mistakes and being in risk of losing money, or being simply out of the game. I mainly refer to Real Estate, but the changes have influenced the majority of the society. Let us see 8 + 1 main differences comparing the past and let us choose to compare Romania of 2008 with Romania of 2005, just 3 years ago!

1. The E.U. integration. Back then we were just in the middle of the procedure. The clock of Europe, in Piata Universitatii, opposite Intercontinental hotel, was still counting the days. The majority of population had the impression that the E.U. integration would solve all their problems. Major reforms took place, as the country was forced to speed up, so as to enter in European Union in 2007. Today, people have realized that E.U. can not save them, maybe it can improve their lives when there will be a smart politician who will use the European funding so as to invest in public works and other urgent needs. But for sure being in E.U. is an advantage which added stability and security in the approach of all foreigners to the country.
2. The banks. I start with them, because they are one of the main factors for the huge change. Now they give endless housing loans, while just 3 years ago they had just started. During this period, they opened thousands of branches all over Romania, sending the rental prices up to the skies. Also, they hired tens of thousands of new personnel, having created in a very short time a new market segment, with more than 60.000 employees, who have a very good average salary. Finally, in 2005 they just started granting loans for Real Estate investments. The next 2 years this trend became a rule, which helped the pumping of prices. Now it is a history and it gives the pulse of the new era.
3. The Foreign Direct Investments. With almost 25 billion euro entering the country from 2005 to 2007 and another 7 coming this year, this huge wave of money has changed the country forever. Thousands of new companies, hundreds of new multinationals entering the market, all of them hiring hundreds of thousands, millions of people. Also this money gave a vote of trust in Romania’s economy, allowing to the local currency, RON, to stabilize its position and the National Bank of the country to control the situation without several problems.
4. The unemployment rate. For me this is one of the most important parameters in a country’s economy. Today Romania is the no.1 country in the world in missing workforce! There are almost 200.000 people missing today, thus the problems have started to be very big. The official rate is around 4%, but in reality many cities starting with Bucharest, Cluj, Timisoara etc, have unemployment around… 1%! Whoever wants to work, is able to find a job fast. Combine this fact with the wealth which is spread around the population and you will understand why we have started having the appearance of the first arrogant young people who simply refuse thinking about work seriously. Few years ago, they would almost beg for a job, now they don’t really care, or they search for the right job for them, not just anything that pays little better than the past.
5. The salaries. When billions are invested in real economy and the unemployment reaches… 0, what is next? The salaries are rising. Millions of Romanians have entered in the middle class of the society. Back in 2005 you could find just a small minority with money. Just 3 years ago, people were migrating for a better life in the other countries. Today we have the first signs of Romanians who return back in their country, as they can find very good opportunities here. We have millions of people behaving totally differently, being much more demanding in everything, consuming a lot, setting up different priorities than just the survival, traveling abroad as much as possible. In 2005 you could run a company keeping the budget for salaries under control. In 2008 you never know what will happen tomorrow morning, even if the salaries are practically triple than then.
6. The needs of people. Just 3 years ago, people had totally different needs. A new car – any car was more than welcome. A new home, with new pipes and better quality of construction was more like a dream. An expensive interior decoration at home was a target for the years to come. The large screened televisions were one of the new trends, together with other consumer goods which are easy to get. The expensive clothes and brands were a top priority (never forget that a big part of Romania society prefers to keep a Prada bag in hand, than having to eat for 3 days). Today all these make us smile. Hundreds of thousands of people have advanced and almost reached the western standards, trying to get everything as fast as possible. Today the needs are different, more sophisticated. People are more demanding; the quality of products better and the variety has increased more than 5 times.
7. The Real Estate developments. Just 3 years ago, there were no serious projects in the market. Couple of Malls, by the Turkish giant Anchor (it is not irrelevant the fact that this giant belongs to a group of companies that includes a bank too, thus it had guaranteed financing while his competitors were suffering). Also couple of major residential projects were under construction, one with prices around 1.200 euro / sq.m. (a low cost project in… Nordului area) and one expensive (“Washington Residence”). Some more had just been announced, but nothing concrete. Now we have over 100 major projects and over 300 minor ones only in Bucharest, while you can find endless projects spread all around the country. Practically this means that the buyers have many more choices and better quality of construction. Of course now everything is much more expensive too, but with the banks offering loans and the salaries being really improved, the supply can not cover the demand.
8. The prices of properties. Today people we have a vast majority of property owners who have really lost their mind. They are not only Romanians, but also endless foreigners, who have the impression that they are hunters and they wait for the bunny that will come to them, pose and wait to be shot by them. Meaning: They search for the stupid who will come and pay to them a price which is much more than the real one. This is why the market is frozen. This is why the market enters in the “correction period”, when prices will go down. Just 3 years ago everything was totally different. You could close your eyes, invest anywhere 1 euro and in 1 year you would have from 2 to 10. Now this is impossible. Some people will say that “now owners have woken up”. I will say that now almost all people are hungry. And hunger leads the mind to wrong decisions…

8 + 1. Speculation is over. So, with prices up to the skies while the demand for new   properties remains high, we have entered in a new era, the era of serious investors and developers. The speculators who believed that they can multiply their money in few months will be exterminated by the market itself very fast. Too fast even for them, who will be out of the game before they will realize this. Romania of 2005 was a country for investment gamblers, an “Eldorado” as it was presented by many people. Today it is an almost mature market, in which you can not play games, you can not do stupidities, and you can not behave like you are the only one who knows. Of course you can always try to do this (as far as I know, committing suicide is forbidden by the Church but it is allowed by the state) but your chances of success are too few and the risk too big. This is why it will be easy for all of you to buy a property in a price that you consider as “bargain”, but it will be very difficult to justify why someone else will pay you much more so as to buy from you the… “treasure” that you keep.

Indiana Jones is still charming; Romania is even more appealing nowadays. But both of them are attractive for totally different reasons than the past. Please keep this mind while planning your investment here in this blessed country. Respect the current reality and you will be awarded. Try to treat Romania with arrogance and you will be found losing millions of euro, without even to realize how fast it happened.
In Indiana Jones’s film, his son is the one who is climbing the trees like Tarzan, trying to catch the bad one. 20 years ago it would Indiana himself. The message is clear: Stop expecting crazy things from mature people. Stop expecting crazy results and hidden treasures in a mature market, like Romania.
Got it?