Wednesday, 23 July 2025
As the Romanian government moves forward with raising the VAT rate for residential properties from 9% to 19% or higher, developers across the country are preparing for potential shifts in buyer behavior, project planning, and market dynamics. CIJ Europe spoke with three leading residential developers—Cosmin Savu-Cristescu (Founder and CEO of REDPORT), Bogdan Iliescu (Commercial Director at Nusco), and Bogdan Bălașa (General Manager of HILS Development)—to assess how the proposed tax change is affecting their outlook and strategy.
Mid-Segment Buyers Most Affected, Developers Say
Cosmin Savu-Cristescu of REDPORT believes the VAT hike will have the strongest impact on the mid-price segment, where buyers are more sensitive to changes in the final cost. He notes that affordability for young buyers and families may decline, potentially redirecting demand toward the rental market in the short term. However, he expects demand for premium homes to remain relatively stable. Bogdan Bălașa of HILS Development echoed this, adding that the outdated 600,000 RON price threshold no longer aligns with today’s housing supply, creating a mismatch that could push buyers to delay decisions. For many, the new cost structure could reduce eligibility for credit.
Bogdan Iliescu of Nusco anticipates a clear polarization in the market. Premium developments may be less affected, while middle-income buyers—already under pressure—could be priced out. He warns of a potential decline in demand, especially from first-time buyers, and predicts a short-term rush to sign contracts before the higher VAT rate takes effect.
Strategic Adjustments Under Consideration
All three developers agree that pricing and project strategies will need to be reviewed. REDPORT is currently analyzing the impact of the tax shift and may make limited adjustments to development pace and sales packages, particularly in the mid-range segment. At HILS, Bălașa says the company will focus on optimizing designs and maintaining affordability while continuing to deliver sustainable, integrated housing. He emphasizes flexibility and a diversified stock as key tools for adaptation.
Nusco anticipates developers will respond with more compact, cost-conscious housing products to offset the impact of reduced affordability. Iliescu also points to the likelihood of increased use of legal-entity purchases and alternative transaction methods to navigate the new fiscal environment.
Second-Hand Market Could See Temporary Boost
All three respondents expect a temporary uptick in interest in the second-hand market, as buyers seek more affordable options. However, they agree that this shift is likely to be short-lived. The advantages of new construction—including energy efficiency, modern design, and integrated amenities—remain compelling for most buyers.
Savu-Cristescu stresses that REDPORT’s portfolio, built on sustainability and strong locations, remains resilient to market fluctuations. Bălașa believes that well-planned residential communities will continue to attract buyers looking for long-term value. Iliescu, meanwhile, warns that if fiscal instability persists, the viability of large-scale development could be impacted, and a once-dynamic sector may lose momentum.
Despite the challenges posed by the VAT hike, Romania’s residential developers remain focused on long-term planning and adaptability, with the shared goal of meeting evolving buyer expectations in a shifting fiscal landscape.
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