Romanian
Opportunities
If anything, property is a
better buy than stocks. Bucharest is very cheap by most
standards; I'll guess about 25% of Western European levels
for equivalent buildings. But that's not what got my
attention. The fact is that the country probably has the
best farmland in Europe-- flat, deep, rich topsoil in the
Danube basin, combined with a fairly mild climate. Those of
you in the farming business may be shocked to know the
finest farmland in the country-which is to say some of the
best in Europe and the world-can be had for US$250-300 a
hectare, or US$100-120 an acre, or about 5% or less of what
it would be in North America. There are two reasons for that
I can figure. It's mostly in small, hence uneconomic,
holdings of peasant farmers and there is not enough domestic
capital to make it productive. I think it's a great
speculation.
Scenic land in the mountains
of Transylvania is available for US$50 per hectare, or $20
an acre, and is also a superb speculation. Other than that,
it seems to me there are two parts of the country that are
worth looking at. One is around Timisoara, the university
town where the 1989 revolution began which, since it's on
the Western border, is the most culturally westernized, and
most likely to benefit first from Western investment. The
other place to look is Romania's Black Sea Gold Coast, where
a 100 room hotel with 10 ha of land can be had for $1
million. How secure are these investments? In my view
they're quite secure. Nationalization is a dead duck the
world over. Especially in countries that have been through
the meat grinder of socialism for a few years, there's
usually a special reluctance not to make the same mistakes
again-at least so soon. And that's usually compounded by a
desperate need of foreign capital, further insuring straight
dealings. In any event, title is kept in a central registry,
where any claims or debt are recorded. And, as with Romanian
stocks, there are no restrictions on property purchases by
foreigners.
SOME MISCELLANEOUS
OPPORTUNITIES
Oddly, even though you can
buy stocks and property freely, there are restrictions on
the export of large crystals and old furniture (and probably
any number of other things), in the ridiculous view that
they're national treasures that should stay at home. What
that's done is depress the prices of these things, creating
an excellent, but very small scale, speculative arbitrage
opportunity. I purchased six fairly large (say eight inches
on a side) crystals of various types for a total of about
US$300, less than 1/10th of what they're worth in the
States. Of course they're still in Romania with a friend,
but that doesn't bother me; the restriction on them will
necessarily vanish by the time the country readies for EC
entry. And since superb mineral specimens (advice: always
buy the biggest and best you can afford) will continue to
appreciate rapidly as a form of artwork, the things will be
worth even more then. The same is true of fine old
furniture. Romania is awash with the stuff, and you can buy
it more cheaply than the veneer-covered pressed fiber junk
that's so popular in the States. The other thing of
interest was old stock and bond certificates. Romania had an
active securities market right through WW2. I especially
like the old bonds, where the coupons stopped being clipped
in 1948, after the Communists took over. Of course it wasn't
worth clipping them by then anyway, in that the Lei was
being inflated at about 10,000% annually by the end of 1945.
Old bonds are excellent reminders of what eventually happens
to most currencies and most debt in the long run. I bought a
stack of excellent specimens, suitable for framing, as they
say, for about $1 each. Sad to say, each of them may well
have represented someone's life savings. Romania, with brief
intervals of respite, has been a hard luck story for most of
its history. Unlike a lot of other countries of which that's
true, I have a good feeling about the place. But most
investors give the country a discount, mainly because
they're unfamiliar with it. And, insofar as they are
familiar with it, they've heard mostly dated and unfavorable
things. That's fine. It's why the opportunity exists.
