“The Romanian leu is not expected to appreciate significantly by 2010, so the financial burden caused by loans will remain constant. If Romania’s economy continues its slowdown, foreign currency loans will have a negative influence on the purchasing power,” said the authors of the market report.
Foreign currency loans made up 12 percent of Romania’s gross domestic product (GDP) in 2008. The local currency depreciated five percent against the euro between January 2004 and March 2009.
Currency fluctuation also influences the activity of real estate investors. Thus, local investors that own buildings where the rent is computed in euro will register a significant increase in rent revenues. According to CBRE, the biggest risk is for market rents to decline while demand drops.
