Many professional real estate investors are increasingly looking at the Eastern European real estate market for investing. The people unfamiliar with this market may wonder why these professional brokers and real estate investors are marking this choice. As this is also the first market that MetaWealth operates on, we also get asked why this was our first choice. 

In today’s pretty much globalized and interconnected world, business is most certainly global, even with all the shortcomings of inflation and war putting a damper on global growth for a while. There’s no reason for which investors should limit themselves to their local markets, even at the level of small to mid-level investors. 

According to a recent McKinsey study,  68% of global net wealth is stored in real estate and over 72% of growth in global wealth came from higher asset prices - beating savings and investments (28%). Real estate remains one of the strongest areas to invest in, globally, with the Eastern European real estate market taking the lead on profitability and attractiveness for investors. 

Here is a brief overview of why the Eastern European real estate market is a great place to invest in and why professional investors are choosing to invest here. 

Outline of Eastern European real estate market

There are several factors that make the Eastern European real estate market attractive to international real estate investors, including:

#1. Affordability: 

Compared to Western Europe, real estate prices in Eastern Europe are still relatively lower. This makes it an attractive option for investors looking for higher yields.

This is due to several factors, such as:

• Lower Property Prices: The property prices in Eastern Europe are generally lower compared to the prices in Western Europe, especially in capital cities like London, Paris or Berlin. This means that investors can purchase properties in Eastern Europe for a fraction of the price they would pay in the West.
• Lower Living Costs: The cost of living in Eastern Europe is also generally lower than in Western Europe. This means that the cost of building or renovating a property is also lower, which can contribute to the overall affordability of the market.
• Higher Yields: Due to the lower property prices and living costs, the yields that can be generated from rental income in Eastern Europe are generally higher than in Western Europe. This is because the rental income from a property can cover the cost of the property purchase faster, and generate a higher net return on investment.
• Currency Exchange Rates: Many Eastern European countries have their own currency, which can be weaker than major currencies such as the Euro or the US dollar. This can make property purchases and investments even more affordable for investors who have stronger currencies.

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Still, it's important to note that while the affordability of the Eastern European real estate market can be attractive to investors, it's also important to consider other factors such as economic growth, market stability, infrastructure development, and local regulations before making investment decisions. Not all affordable real estate markets are stable enough to be worth considering without a high degree of risk as well. 

That is why MetaWealth is working with independent third party evaluators (Colliers International), as well as a full team of both external and internal legal counsel, in addition to the cumulative experience of our senior team members, two internationally experienced real estate investors and developers from Canada and the U.K. 

Our accumulated real estate investment experience of over 800 apartments and a full-cycle development track record of over 1,000 residential units in the past decade enables us to analyze Eastern European real estate market opportunities with a keen eye and take the best decisions for our base of users. 

#2. Economic Growth: 

Several countries in Eastern Europe, especially Poland and Romania, have experienced steady economic growth in recent years. This has created a stable environment for real estate investments.

This impressive economic growth is another factor that makes the Eastern European real estate market attractive to international investors. In recent years, several countries in the region have experienced steady economic growth, which has created a stable environment for real estate investments. Here are some key points that contributed to Eastern European’s economic growth facto as a highlight in investor’s decision to get involved in this real estate market:

• Increasing GDP: The Gross Domestic Product (GDP) of many Eastern European countries has been increasing steadily in recent years. For example, Poland, Romania, and Hungary have experienced strong economic growth rates, which have outperformed the average GDP growth rates of their neighbors in Eastern Europe.This GDP growth, coupled with a relatively low cost of living, is resulting in growing spending power and demand for real estate in the region. 
• Growing Consumer Class: Economic growth has also led to an expansion of the middle class in many Eastern European countries, which has increased demand for high-quality housing and commercial real estate.
• Attractive Investment Climate: Many Eastern European countries have implemented pro-business policies, such as reducing bureaucracy and lowering taxes, which have attracted foreign direct investment (FDI). This has contributed to the overall economic growth in the region and has made it an attractive destination for real estate investment.
• Strong Demand: Economic growth has also led to increased demand for real estate in Eastern Europe, particularly in major cities such as Warsaw, Budapest, and Prague. This demand has led to the development of new properties and the renovation of existing ones.
• Stable Environment: Overall, the economic growth in Eastern Europe has created a stable environment for real estate investments. This stability, combined with attractive investment conditions, has attracted many international investors to the region.

#3. Infrastructure Development: 

Infrastructure development is another factor that makes the Eastern European real estate market attractive to international investors. 

In recent years, many countries in the region have invested heavily in infrastructure, especially thanks to EU funding and transnational investment funds such as the Three Seas Initiative Investment Fund, which has improved connectivity and accessibility tremendously. 

Here are some key points about the infrastructure development factor that makes the Eastern European real estate market a great attraction for international investors:

• Transportation: Many Eastern European countries have invested in transportation infrastructure, including new highways, rail networks, and airports. This has improved connectivity within the region and with Western Europe, making it easier for investors and businesses to access and manage their properties.
• Urban Development: Several Eastern European cities have undergone significant urban development in recent years, with new residential and commercial projects being developed. This has improved the overall attractiveness of the cities and created new investment opportunities.
• Technology Infrastructure: Many countries in the region have invested in technology infrastructure, such as high-speed internet and advanced telecommunications networks. This has enabled businesses to operate more efficiently and has made it easier for investors to manage their properties remotely.
• Tourism Infrastructure: Many Eastern European countries have invested in tourism infrastructure, such as new hotels, resorts, and attractions. This has increased tourism activity in the region and created new opportunities for short-term rental properties, such as vacation homes and apartments.
• Sustainable Development: Many countries in Eastern Europe are prioritizing sustainable development, which has led to the implementation of green building practices and the development of energy-efficient properties. This has created new opportunities for investors looking to invest in environmentally friendly properties.
• Better proximity to Asia and its growing economic power: As you can see in the chart below, the ongoing infrastructure development from the Belt and Road Initiative, meant to better connect Asia to its neighboring regions, is going to transit and benefit Eastern European countries first. This will have a positive impact on the economic development and growth of these countries, create a richer business environment and ultimately lead to an even more attractive Eastern European real estate market. 

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There is no doubt that Asian economic growth will disrupt the global economy and create different dynamics of hegemonic power in the next few decades. The share of Asian GDP (Gross Domestic Product) from the world’s total is steadily increasing and, especially with better infrastructure development, that growth will spill over in the next regions too. 

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That makes Eastern Europe more privileged than Western Europe to benefit from this growth and will also positively influence the real estate market in these countries for years to come. 

Overall, the infrastructure development in Eastern Europe has created a more attractive investment climate for real estate investors. It has improved connectivity, accessibility, and sustainability, and has created new investment opportunities. 

#4. Tourism: 

Eastern Europe has a rich cultural heritage, and many cities in the region, such as Prague, Budapest, and Krakow, are popular tourist destinations. This has created a demand for short-term rental properties, such as apartments and vacation homes.

Therefore, tourism is another factor that makes the Eastern European real estate market attractive to international investors. Many countries in the region have experienced significant growth in tourism in recent years, which has created opportunities for investors looking to capitalize on the short-term rental market. 

Here is why the tourism factor is having such a great impact on the attractiveness of the Eastern European real estate market:

• Increasing Tourist Numbers: Many Eastern European countries have experienced a steady increase in tourist numbers in recent years, thanks to improved infrastructure, marketing campaigns, and increased air connectivity. For example, Poland, the Czech Republic, and Croatia have all seen a significant increase in tourist arrivals.
• Diversification of Tourism Offerings: Many Eastern European countries have diversified their tourism offerings beyond traditional cultural and historical attractions to include outdoor adventure, culinary experiences, and wellness tourism. This has created new opportunities for investors to develop properties that cater to these niche tourism segments.
• High Yield Potential: The short-term rental market in Eastern Europe can be highly profitable due to the high demand for short-term rental accommodation from tourists. Many properties in popular tourist destinations can achieve high occupancy rates and generate significant rental income, making it an attractive investment opportunity for investors.
• Low Seasonality: While tourism in Eastern Europe is still largely concentrated in the summer months, there has been a push to promote the region as a year-round destination. This has helped to reduce seasonality and create more opportunities for investors to generate rental income throughout the year.
• Favorable Regulations: Many Eastern European countries have favorable regulations for short-term rentals, making it easier for investors to operate their properties as vacation rentals. For example, in Croatia, property owners can obtain a license to operate a vacation rental property relatively easily.

As we all know, tourism has taken a short-term dive due to the impact of the world Covid-19 pandemic, with the past year showing slow recovery towards pre-pandemic levels. But the Eastern European region has shown remarkable recovery and even growth in their overall tourism activity, compared to Western European countries and beyond.

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Overall, the growth in tourism in Eastern Europe has created new opportunities for real estate investors to capitalize on the short-term rental market, and made major cities here more attractive for long-term rentals as well. That is a fact that cannot go unnoticed by professional real estate investors who rightly see Eastern Europe as an (yet) undervalued gem. 

#5. Favorable Policies: 

You heard us mention the favorable regulations and climate several times already when discussing the previous factors that make the Eastern European real estate market a great place to invest in. Here are more details about how this works and why it favors investors of all levels.

Many countries in the region have implemented policies and incentives to attract foreign investment, which can make it easier and more attractive for international investors to invest in the region, in real estate and beyond. 

Here are some key factors that are shaping this business climate with favorable policies:

• Investor-Friendly Regulations: Many Eastern European countries have implemented investor-friendly regulations to attract foreign investment, including streamlined permitting processes, tax incentives, and other investment incentives. For example, in Poland, foreign investors can benefit from tax exemptions and reduced property transfer tax rates.
• EU Accession: Several Eastern European countries have joined the European Union in recent years, which has brought greater economic integration with the rest of the EU and access to EU funds. This has led to increased investment and economic growth in the region.
• Property Rights and Ownership: Many Eastern European countries have strong property rights and ownership laws, which protect the rights of property owners and make it easier for investors to purchase and develop properties in the region.
• Transparent Legal System: Many countries in Eastern Europe have implemented transparent and reliable legal systems, which make it easier for investors to navigate the legal and regulatory environment.
• Government Support: Some Eastern European governments have implemented policies to support foreign investment in the real estate sector, including the establishment of investment promotion agencies and the provision of investment incentives. Furthermore, whereas a couple decades ago foreign investors were more concerned about corruption, and rightly so, international reports showcase a much improved transparency and rule of law in Eastern Europe in the past decade, with the situation continuing to improve. 

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Many countries in Eastern Europe offer tax incentives and other favorable policies to attract foreign investment. For example, in Bulgaria, foreign investors can obtain permanent residency by investing in real estate.

Bottom line on the Eastern European real estate market: 

Overall, the combination of affordability, economic growth, infrastructure development, tourism, and favorable policies make Eastern Europe an attractive destination for real estate investors. However, investors should still conduct thorough due diligence and work with local partners to navigate the local market and regulations.

Romania and Its Privileged Place within the Eastern European Real Estate Market

Within the Eastern European real estate market, the Romanian market is especially attractive for investors in the current stage of its development. The economic growth here has been among the best of Europe in the past years, and the prices for real estate assets are on a rapid growing curve to become better aligned with the prices for similar assets in Western Europe and the world.

According to a recent Deloitte report, it takes Romanians only 6 annual salaries to purchase a standard apartment here, which puts the Romanian market at the top of affordable housing on the Eastern European real estate market, right below Bosnia and Herzegovina. 

By comparison, it takes Austrian citizens over 10 years of saving their salaries to invest in a standard home, and Czech citizens over 12 annual salaries to purchase a standard dwelling in their country, over 15 annual salaries in Serbia and so on. The Romanian real estate market is still among the most affordable in Europe, with prices rising pretty fast to close the gap, as the country is experiencing steady economic growth. 

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Besides the advantages of the entire Eastern European region for real estate investing, Romania comes with a few aces of its own that make it particularly attractive to foreign investors. 

• Economic Growth: Romania has experienced significant economic growth in recent years, driven by a strong manufacturing sector, rising consumer spending, and increasing foreign investment. This has created tangible demand for new office, retail, and residential real estate developments, along with a solid consolidation of its middle class, which also represents the biggest guarantee of future growth as well.
• Strategic Location: Romania's location at the crossroads of Eastern and Western Europe makes it an attractive destination for logistics and transportation companies looking to access the wider European market. The country is also well-connected to major European cities by road, rail, and air. Furthermore, there are several Romanian cities acting as regional transport and business hubs of regional importance within Central and East Europe, such as Oradea, Cluj, Timișoara, Constanta and Iasi, beyond just its capital, Bucharest. The well-developed infrastructure and good business connectivity of these centers proved pivotal in alleviating some of the pressures of strained flows of goods coming from Ukraine in the context of the war. This helped prove the strategic importance of Romania and its important role in the future of business in the region. 
• Affordable Real Estate Prices: Compared to other European countries, real estate prices in Romania are relatively affordable, with low entry costs for investors. This makes it an attractive investment destination for those looking for good returns on their investment.
• Strong Rental Market: The rental market in Romania is strong, with high demand for both residential and commercial properties. This creates opportunities for investors looking to generate income from rental properties. The fact that several Romanian cities are also strong university centers with international students, especially in the medical field, is also contributing to a growing demand for real estate property rentals, further contributing to the country’s attractiveness for foreign investors. 
• Favorable Tax Environment: Romania has a relatively favorable tax environment for real estate investors, with a flat income tax rate of 10% and important VAT exemptions for certain real estate transactions (only 5%, down from the usual 19% VAT applied in other business fields). This makes Romania one of the most desirable destinations for investors within the Eastern European real estate market. 
• Growing Tourism Industry: Romania's tourism industry has been growing steadily in recent years, thanks to the country's rich history, cultural attractions, and natural beauty. This has created opportunities for investors looking to capitalize on the short-term rental market.
• Government Support: The Romanian government has implemented a number of policies to support foreign investment in the real estate sector, including the establishment of investment promotion agencies and the provision of investment incentives.

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It may be that the next few decades will bring tremendous opportunities for international real estate investors to experience vibrant growth in a country with rising demand and earning power, as well as levels of asset appreciation hard to encounter anywhere else in Europe. 

Investing with MetaWealth in real estate assets located in Eastern Europe

The MetaWealth platform was created to empower anyone to become a real estate investor with fractionalized investments, starting with just $100 for each share of real estate. 

Although our headquarters are in Dublin and we also have offices in North America and Canada, we chose our first real estate assets on the Eastern European market for precisely the reasons highlighted above in this guide.

We are democratizing access to the best opportunities in real estate investing regardless of starting funds, geographic location or know-how. We perform the research, the vetting, the fractionalization, renting and asset management, as well as the legal paperwork and taxes on behalf of our users, reducing a process that would take over 3 months to complete for a professional investor down to 10 minutes.

Because we want to offer our users consistent returns on their investment, we believe there is no better place to invest in real estate than Eastern Europe in regards to cumulative profits from both rental income and asset appreciation. For example, our first real estate asset offered as fractions to users on the MetaWealth app delivers a 6% rental income per year and a cumulated 86% ROI in the first 5 years through rental income plus asset appreciation.

This example illustrates just how profitable the Eastern European real estate market can be when the assets are curated carefully and managed well. Don’t hesitate to get in touch with us if you are a real estate developer who is interested in a partnership, or download the app and start your investing journey if you want to get started with high-ROI and low-risk European real estate assets. 

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