Romania, foreign investors' favorite

Several multinational companies chose Romania for their regional business centers, instead of the smaller Bulgaria.
However, FDI in Romania dropped 8.7% year-on-year in H1, 2007, while foreign investments are increasing in Bulgaria.
According to estimates of Economist Intelligence Unit (EIU) for FDI during 2007-2011, Romania ranks 30, with an annual average of €5.5 billion in FDI, while Bulgaria ranks 53, with an average of €4.1 billion worth of FDI per year. As for FDI per capita, Romania ranks 38, with €253 per capita, while Bulgaria ranks 39, with €243.
As for the investment-friendly environment, Romania ranks 48, while Bulgaria was given a higher rank, 44.
Earnings of Bulgaria's top 100 companies are comparable to the earnings of four major Romanian companies - Petrom, Dacia, Rompetrol and Banca Comercială Română.

Markets with the highest development in the past few years are, in both countries, banking, retail and real estate.

Retail

The local retail market (including supermarkets, hypermarkets and cash&carry), is estimated to some €18 billion in 2007, almost double compared to Bulgaria. While the share of retail is expected to exceed 40% of the total FMCC market by the end of the year, retail amounts to some 25% of the Bulgarian market. In both countries, traditional small shops and markets still have the largest share in retail.
"We estimate the Romanian retail market will exceed a 55-60% share of the total market by 2010. I think Romania has the fastest increase pace in the region. In Bulgaria, the market is much smaller than Romania," said Jacobo Caller Celestino, General Manager of Carrefour Romania.
Two of the largest worldwide players are leaders on both markets - Metro Group and Rewe Group. The third largest player in Romania is Carrefour, while Kaufland ranks third in Bulgaria.
Real Estate

The Bulgarian market is less developed than the Romanian one, thus has a higher growth potential. In the first six months following the EU accession, Bulgaria had the highest rise in the Union in construction works - 62.8% year-on-year. Romania ranks fifth, with an increase of 29.8%.
Prices are about double in Romania. If the minimum price for an apartment in Sofia is worth some €30,000, an apartment in Bucharest can be bought for a cost twice as high, at least.
Yields are slightly better on the Sofia real estate market (more than 7%), given the market is smaller and less developed as far as commercial spaces and offices are concerned. In Bucharest, yields are around 6-6.5%, while yields in Warsaw and Budapest are around 5-5.5%.
Romanian companies have invested up to €20 million in Sofia.
"We are going to witness a significant increase in prices, on the local real estate market. One built square meter in downtown Bucharest could amount to 10,000 in the future. Things are different in Bulgaria, where stagnations and even drops in apartment prices occur," according to real estate consulting company Arco General Manager, Ciprian Lopată.

Banking sector

Th top three Bulgarian banks - UniCredit, DSK, (a division of Hungarian-based OTP bank) and Bulgarian American Credit Bank - posted net profits €117.2 million in H1, 2007, some €15 million less than profits posted by Romania's largest bank, BCR. Bulgarian bank's assets totaled some €16 billion, while assets owned by banks in Romania exceed €50 billion. Besides BCR, BRD-Societe Generale, Raiffeisen Bank are Unicredit Tiriac the largest lenders on the Romanian market.
Earnings of the Romanian banking system are estimated to some €1 billion in 2007, or 5% of the profits of all banks in Central and Southern Europe. The average increase of the market above 15% per year and the trend is expected to continue in the following 3-4 years. More than 60 foreign banks announced the central bank they intend to open offices in Romania.
Romanians have dealt more with banks than Bulgarians. Almost half of Romanians older than 15 (48%) have dealt with at least one bank, compared to 39% of Bulgarians.
Bulgaria, winner in tourism race

Romania's earnings from tourism amounted to some €1 billion in 2006, while Bulgaria's earnings were more than double - €2.2 billion. Lack of infrastructure and tourism projects and low-quality services are elements dragging Romanian tourism down. "Although Romania provides wider variety of tourism destinations, the difference is tourism has a better promotion in Bulgaria," according to Traian Bădulescu, representative of the National Association of Tourism Agency.
Some 500,000 Romanians went to seaside in Bulgaria this summer, attracted by better services and lower prices.
For vacations abroad, Romanians spent an estimate €1 billion this summer, while Bulgarians have spent abroad some €700 million the entire 2006.

Romanian business in Bulgaria
Romanian businesspeople see Bulgaria with ever higher interest, because of its development potential. Currently, retail is the most attractive field. Furniture producer Mobexpert is present on the Bulgarian market since 2005 and recently opened a furniture hypermarket in Sofia, following an investment worth €10 million. The Bulgarian furniture market is estimated to some €300 million, with four large retailer- Aiko, Como, Aron and Nov dom Simeonov - controlling the market.
The home appliances retail is also attractive for Romanian investors, because of the recent consumer credit boom in Bulgaria. Domo, one of Romania's largest retailers in the field, has 11 stores in Bulgaria, with a turnover of €3 million.