Keep answering your comments …
and The Financial Times for Romania
Hello to all my friends out there. I am out of Bucharest, just for one day in Rome for business and then to Greece for V A C A T I O N. I would like to thank you all because the record that this post created, regarding Greece of 1999 and Romania of today, is really impressive for me, as this blog will start to be promoted from September. I have received so many comments; I will do a big effort to reply to as much as I can.
Before I start with my replies, I have for you 3 links that one of you has sent to me. They are from Financial Times and they are really interesting for the Romanian fight of corruption and the really important agricultural segment. Here you go:
Analysis regarding the differences between Romania and Bulgaria in fighting corruption:
http://www.ft.com/cms/s/0/d9a281ba-570c-11dd-916c-000077b07658.html
The Romanian production of wheat is expected to be double this year:
http://www.ft.com/cms/s/af3518fe-5917-11dd-a093-000077b07658,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Faf3518fe-5917-11dd-a093-000077b07658.html&_i_referer=http%3A%2F%2Fsearch.ft.com%2Fsearch%3FqueryText%3Dromania%26aje%3Dtrue%26dse%3D%26dsz%3D
You comment – I answer (part 2)
Gabriel says:
“Yes, you have perfectly right. The correction is needed. I shall wait for the Autumn.”
Gabriel, when you find the real value, as you feel it, always proceed and purchase what you are interested in. My opinion is that the correction just started and before the Easter of 2009 we will not know the duration of it. But I repeat: We will continue purchasing properties meanwhile, because not all owners are crazy. You can also find many serious people to deal with.
Andreea Elefteriu says:
“Kali mera, Ilias!
Congrats for this analyze!
Regarding ur PS – the truth always hurts. ”
Thank you for your good words Andreea. I know that truth hurts, tell me about it. I feel this pain every time I look at myself in the mirror, I see my belly and I remember the diet I promised to start…
Catelu Says:
“Sure, some of the big players will get burnt being left with some real estate investments in their hands, but I feel sorry for the little guys who paid double or triple the price of some old communist-era apartment and will now be left with 20-30 years mortgages to pay for. If the salaries will also go down it will be really frustrating to pay for the rest of your active life for a house whose market price halved.”
The salaries to go down? In Romania? I don’t think that this is a serious possibility. Most probably in few years what the serious analysts expect to happen here is the situation to reach the standards of other countries, with salaries being increased only just by the inflation rate. For more, you will need to prove your skills and capabilities (at work or at licking, depends what kind of boss you have).
A loan of 20 – 30 years is not bad by default, it is actually the easiest way for the mass to obtain a good property by paying something more than the rent. I am 200% sure that the vast majority of Romanian citizens has not paid the crazy prices of some owners (especially developers). Trust me, the normal people in this country are really very careful regarding their own residential investment for their family. They may consume a lot of goods, but when it comes to big numbers, they get very careful and they have all my respect for this, as they don’t follow some exaggerations of the foreigners.
Dan Says:
“Dear Sir, during your articles, you seem to wonder and act surprised when you discover some many similarities between Romanians and Greeks.
However you forget or ignore some important fact:
these resemblances are valid for the south east of Romania, who has a long history of importing greek values and people.
Bucharest: greek phanariotes, during 1711-1821 have colonized these lands.
Dobrogea/Constanta: even earlier, the greeks have established very powerful colonies.
So no wonder you see in these regions the same excitation, vanity and greek habits. Those people are the descendants of the greek colonists.
Those being said, i find your blog interesting ”
Dear Dan, it is very nice to be contacted by someone who is crazy for History, like me. Yes, Romania and Greece have very strong connections, many times stronger than the Romanians and the Greeks want to admit. Don’t forget that the Romanian language has hundreds of Greek words and even God in Romanian language is called “Dumnezeul” = The master Zeus. All people know that Zeus was the leader of the 12 Greek ancient gods. So if Romanians call God with the name of Zeus (while not even Greeks don’t do this), imagine how close we were throughout thousands of years…
I’m not an expert in social studies, but when I came in Romania I felt that I really know some situations. I am not surprised by the similarities, but I can not hide that many times some behaviours of people here make me wonder. Big story…
Marcel Says:
“Ilias,
Thank you for your fair, fun, and educative story. Also thank you for your time investment in writing this. For sure it is EXTREMELY needed this story, but I really doubt how many people will really appreciate it. I’m affraid it will be rather the ones already understanding this. Wish you best of luck and sucessful business here!”
Speranta moare ultima, my friend, Hope dies last! It needs time to write, but when you do your hobby, the impact of what you write is the best compensation.
Toader Says:
“you are right. I wonder where you did learn so much about Romanian market&society”.
Psychology is one of my hobbies, especially the psychology of the mass and everything that has to do with the approach of a big number of people. But most of all, I am here for 4,5 years, if I don’t try to understand the people, the economic and social environment, how can I do serious business? How can I consult someone else? For me it is the minimum requirement for a foreigner to do business in another country. And be sure that there are thousands who also know what is going on, I’m not any special exception.
Otto Says:
“You have a very intersting point of view but, on the other side, I have to agree with the things that A has written in his/her previous comment. In Romania the situation is somehow more complex than you have revealed, and the end of the story in Romania won’t have the magnitude the Greek one had, that’s for sure.”
Otto, you are absolutely right, Romania is more complex situation than I described. This is why I have written a lot and I still write, plus I really believe in the potential of this country. Don’t forget that I consult investors to invest in Romania and I talk in endless international conferences about this country. But it is one thing to believe in a country and it is another thing to believe that all prices of all properties in Romania will continue rising non stop.
This country has some excellent healthy economic years to come, in terms of real progress, but this can not happen with the majority of the people having in mind how to consume all their income and to borrow more so as to consume even more. And about paying the debts? “We will see…”
Last but not least: This correction period that it starts, it is a time for investment opportunities. Let us not forget this.
Horia Says:
“That’s why every one should consider:
first accumulate the financial knowledge,do the investmentsand then collect the financial reward.
Harsh but true!.”
I am sorry, but I didn’t see the majority of investors in Romania searching for financial knowledge, sometimes not even for basic legal and accounting assistance. They tried to save money from everywhere possible (so as usually to invest it in… the night). Up to a limit, it is healthy, but many investors really tried to squeeze all costs, risking their investment in the end. Guess what? Most of them are the ones who bought expensive properties in the end of the day…
Semar Says:
“After my opinion, your pretty much right. I fell very sorry there aren’t any ways of shorting the real estate market in Romania.
PS. you perfectly describe the local “investor”.”
Personally I don’t like to see the Romanian Real Estate market “shorted”. I prefer it healthy, corrected, with fair values and prices that allow to all people to have profit, both the seller and the buyer. Because when the owners forget the basics of economy (that both sides must have a profit) or when they think of a profit by calculating a huge unrealistic price, they simply ask too much and this winter they will find out that they will not find clients for these huge prices. Soon not even agencies interested in promoting their overestimated properties.