Land of opportunity
At the beginning of 2007, the European Union was enlarged to 27 member states with the addition of Romania and Bulgaria. Those two markets add a population of 30 million to the EU community. Real-estate market analysts are confident that the political process of the unification of both countries with the EU's structures presents a great business opportunity, as happened in previous years in Poland.
Poland's accession to the EU in 2004 had and still has a significant impact on the construction and development market in the country. As one example, experts point to the growing number of international investments in Poland.
"Poland's market became more attractive and investment security has improved," points out Edmund Kubeczka, the head of the construction sector department at ING Bank Polska. "Furthermore, the flow of EU funds helped to develop the Polish market."
EU membership brought with it increased foreign investment, particularly in the services sector, and a boom in demand for outsourcing and business-process outsourcing centers has fueled demand for office space.
"Economic growth had an impact on the purchasing power of Poland's society," says Mariusz Kozłowski, a member of the management board and investor relations manager at developer GTC. "This resulted in an increasing demand for retail space in shopping centers."
New markets
Aleksandra Żyłka, a sales manager at Life House Properties, a company that offers properties in Bulgaria and Romania, explains that both real-estate markets are similar and the low cost of one sqm as well as the potential for future high profits are still the biggest advantages of these markets.
Rapid price increases in recent years have put Bulgaria and Romania on investors' radars. "This is why the attention of international investors, including Poles, was brought to the market," says Mikołaj Martynuska, director of the residential department in CB Richard Ellis Polska.
However Żyłka points to a difference in terms of investments locations, between Romania and Bulgaria. "Bucharest is the prime location for Romania," Żyłka says. "But for Bulgaria, besides its capital Sofia, the Black Sea region is a very interesting market, because of the development of the tourism industry."
However, Żyłka is convinced that many investments have already been in the pipeline for several years. "The biggest profits are still ahead," she says. "Some investors from Poland, because of the higher investment potential, could soon decide to move their funds to Bulgaria or Romania."
Steady as she goes
The main advantages of the Bulgarian and Romanian markets are their predictability and stability. "The investment is safe and will grow evenly," believes Martynuska. "A sharp increase in residential prices began a couple of years ago, which is like in Poland where prices jump from month to month."
Kozłowski is also convinced that after EU accession, Romanian and Bulgarian markets will face all the positive processes that were noticed in Poland, especially because those markets are much less developed than Poland's at the moment of EU accession.
"The convergence processes will be much more dynamic in Romania and Bulgaria then it was in Poland, Czech Republic or Hungary," says Kozłowski. "The residential construction market will be one of the fastest developing sectors."
Impact on Poland
Mikołaj Martynuska believes that the EU accession of both countries will not affect Poland's residential construction market because Romanian and Bulgarian markets are simply much smaller then Poland's.
"So much money is available on the market from both private and institutional investors that the recent EU enlargement won't have any impact on the investment attractiveness of our market," explains Martynuska.
According to Kubeczka, Bulgaria and Romania's accession will not mean a decrease in the number of investments in Poland. "Moreover, it gives Polish companies a chance to enter a new market," he says. "Many Polish companies are already present there, especially those from the road construction, environmental construction and residential construction sectors."
"GTC has been present on the Romanian market since 1999 and its portfolio of completed projects or those currently in progress or planned investments have reached 450,000 sqm," says Kozłowski. "We have also entered the Bulgarian market this year."
Martynuska also believes that several international funds will decide to enter the markets of the new EU member states by using Polish companies.
No flow of workers
The experts agree that EU enlargement won't solve one of the construction sector's largest and most urgent problems - the lack of construction workers. Due to a big demand on the Bulgarian and Romanian markets and the relatively low unemployment rate (8.38 percent for Bulgaria and five percent for Romania), builders from that part of Europe are unlikely to look for work on Polish construction sites.
Moreover, even where the countries of the old EU have not opened their labor markets for the EU newcomers, workers from those countries, if given a choice, would rather work or are already employed on contracts in non-CEE states.
"Construction sector staff [from Bulgarian and Romania] are already present on the Spanish and Greek markets," says Martynuska. Kubeczka is also convinced that the Romanian and Bulgarian accession will not have a major impact on the Polish construction sector in terms of employment.
"If any workers from those countries appear in Poland it will be only temporary because the construction markets in those countries will develop very dynamically within the next two to three years and all workers will be absorbed by the domestic markets," he says.
