Institutional investors and the state: Reciprocal ‘catching-up’ in a ‘super-homeownership’ housing regime

Abstract

This article analyses how institutional investors in residential real estate advanced in a context they describe as challenging. The article examines which local constellations and path dependencies directed institutional investors to and away from specific segments of the housing market. We argue that the subordinate state’s role in ensuring spatio-temporal fixes for global real estate and financial capital transformed over time under ‘catching-up’ pressures and narratives employed by supra-state and transnational actors. At the same time, there is a parallel ‘catching-up’ process of institutional investors striving to increase their presence in a market with limited room to penetrate, characterised by high homeownership rates and dominated by rather small private actors (‘super-homeownership’, as it has been called). We propose the concept of reciprocal ‘catching-up’ to reveal the specific challenges posed by the context of semi-peripheral financialisation in Central and Eastern Europe to institutional investors. Reciprocal ‘catching-up’ highlights that actors linked to global financial flows had to deal with local historical arrangements and small local actors, who make the market and subsequently dominate it, until the market is ready to ‘mature’ and gradually open to them. Given the contradictory dynamics between the global-national-local scales in semi-peripheral financialisation of housing, different actors seem to be catching up to the others – depending on the scale chosen as a vantage point and the particular historical moment.

Introduction

The article examines how institutional investors in residential real estate have advanced in a context they describe as challenging: a country with the highest homeownership rate in Europe and one of the lowest mortgaged homeownership rates, with almost absent public housing, and a fragmented residential market hitherto dominated by small private owners. This is a context referred to as a ‘super-homeownership’ country (Lowe and Tsenkova, 2003). Our analysis is thus revealing for an exploration of (1) housing financialisation and the role of institutional investors; (2) longue durée aspects of financialisation processes and (3) the ambivalent role of the state in semi-peripheral financialisation.

The recently emerging trend of institutional investors penetrating the housing market in Romania has been hitherto under-researched. Our article aims to fill this gap through a political economy approach in housing studies (Aalbers and Christophers, 2014; Fernandez and Aalbers, 2017), by analysing how the housing regime changes in the last decades created the conditions for the appearance and advancement of institutional investments in residential real estate. We highlight that the fragmented nature of the Romanian residential property market, characterised by a high homeownership rate, presented an obstacle that had to be overcome for the penetration of institutional investors in the residential market. We thus examine how local constellations and path dependencies orient institutional investors into and away from specific segments of residential markets; and how such investors advance in the context of an East European country, part of the semi-periphery of the world system (Kennedy and Smith, 1989; Kováts, 2020; Shields, 2009). We consider Romania a revealing case of the power-ridden ties and dynamics between the state, the global rise of institutional investors, and their advancement in local housing markets.

The contribution of our article is threefold: First, we trace how housing regime transformations influenced the pace and strategies of institutional investors as they advanced in urban housing markets, in a subordinate economy of global financialised capitalism. Second, we contend that an analytical approach following a longer-term history of changing housing regimes enables a theorisation of the advancement and relationships of diverse actors – ranging from local investors, local state, central state, international credit institutions and supra-state actors to institutional investors – in the urban residential market. This historical perspective is crucial in understanding the specifics of housing financialisation in different local contexts impacted by global processes. Third, we show how the subordinate state’s role in the housing regime and the housing market has transformed in time under ‘catching-up’ pressures and narratives. We reflect on how, simultaneously, institutional investors also had to ‘catch up’ with the local context to increase their presence in a market and housing regime they considered disadvantageous.

The article places the analysis in the context of subordinate semi-peripheral financialisation. It then discusses critically but recuperates analytically the concept of ‘catching-up’ often used for semi-peripheral and peripheral economies. We propose the concept of reciprocal ‘catching-up’ to disclose the specific processes of mutually constitutive interactions between the dynamics of global finance and national/local institutional histories, actors and configurations in the Central and Eastern European (CEE) semi-peripheral context. In this endeavour, we align with Engelen et al. (2010) and Santos and Teles (2020), who illustrated and insisted upon these co-constitutive interactions.

In the section ‘Conditions and restrictions for the advancement of institutional investors’, we advance chronologically, following the path dependencies that, in the past three decades, created the conditions (and sometimes the restrictions) for the advancement of institutional investors in residential real estate. We highlight that during the 1990s, there was Western pressure towards manufacturing a market-dominated housing regime in Romania; the resulting ‘super-homeownership’ regime was made and dominated by individual developers and traders. We then discuss the transformation of housing into a financial asset in a subordinate financialisation process; the investment fever and larger investors ‘catching up’ after 2014 and the current trends of institutional investors penetrating and, at the same time, enhancing the private rental market.

In conclusion, the article highlights the entanglement of the state with real estate capital in a parallel and reciprocal ‘catching-up’ process, viewed from the interconnected global-national-local scales. It reviews how this process paved the way for the advancement of institutional investors in the context of subordinate financialisation of a ‘super-homeownership’ housing regime in Eastern Europe.

Financial actors and logics in a subordinate semi-peripheral country

Through the case of Romania, our article contributes to understanding the advancement of institutional investors in housing markets from the perspective of subordinate financialisation. Aalbers et al. (2020) showed that ‘if we treat financialization as variegated and decentred, [. . .] we can start seeing [. . .] the subordinated role that countries at the peripheries of the world economy play [. . .] and to understanding specificities’ (p. 483).

Characteristics of semi-peripheral financialisation are defined by Santos et al. (2017) as the combination of ‘elements of relatively backward structures with a rapidly modernised financial sector fully articulated with core financial centres’, where ‘the process of European integration shaped the evolution of the financial sector’ (p. 3). Moreover, Bonizzi et al. (2019) associate subordinate financialisation with a ‘subordinate position in global production and finance’ (p. 10) accompanied by currency subordination. Romania exhibits these specificities of semi-peripheral financialisation, being subordinate to German production chains, to Austrian and German banks and, respectively, to the euro.

Recent literature defines financialisation in the CEE region as a case of semi-peripheral financialisation (Karwowski, 2022; Mikuš, 2019; Mikuš and Rodnik, 2021), where the pressure exercised by different transnational actors originating in core West European countries creates instances of subordinate financialisation (Ban and Bohle, 2020). Santos and Teles (2020) identify as specificities ¹ of the semi-peripheral financialisation in EE ‘the post-socialist trajectory, the later integration into the EU, and the geographical proximity of EE countries to the European core, which shaped their process of European integration and the forms and contents of financialisation in the region’ (p. 2). Pósfai and Nagy (2017) and Büdenbender and Aalbers (2019) analysed CEE as a site for subordinate financialisation and showed how the real estate market and the housing market became financialised in specific ways shaped by post-socialist transformations. We take this path further with a more profound historical account.

Mikuš and Gagyi (2022) and Florea and Dumitriu (2022) discussed the rise of financial logics and instruments in CEE housing markets and how this is linked to class tensions. We take a complementary stance by focusing on state transformations unfolding in connection with market (actors) transformations. Gabor (2012, 2013) discussed the profound changes of CEE states under global pressures of rising financial actors. We add to this approach a focus on the role of specific housing regimes (such as ‘super-homeownership’) in these processes. Rodrigues et al. (2016) discuss the specifics of semi-peripheral financialisation in the world system, which is subordinate to capital in the core countries but is advancing faster than it does in peripheral territories. We complete this point of view by adding Romania as an illustrative and extreme case of housing regime transformation at the intersection of local, national, and global processes. Thus, we contribute to the existing literature by focusing on the state’s role in forming and restructuring the housing and the broader real estate market in the context of dismantling state-socialism, which created new locations for the geographical expansion of capital.

The dismantling of the socialist regime in the region created profitable investment opportunities for capital from core capitalist countries (Büdenbender and Aalbers, 2019; Raviv, 2008; Vincze et al., 2024). These processes illustrate the role of subordinate territories in the global capitalist system as spaces for investment and profit extraction, bound to cycles of development and devaluation/destruction (Harvey, 2003; Vincze, 2019), and as buying time, delaying crises in more prosperous territories in core countries where the bulk of the ‘wall of money’ is accumulated (Aalbers, 2016, p. 139).

Our main contribution to debates on subordinate housing financialisation in semi-peripheries consists of theorising the reciprocal nature of ‘catching-up’, highlighting the struggles and alignments between local and global actors and the structural transformation of the housing regime. We believe that ‘the increasing dominance of financial actors, markets, practices, measurements, and narratives, at various scales, resulting in a structural transformation of economies, firms (including financial institutions), states and households’ (Aalbers, 2019, p. 2) is not a smooth process. As we observed in the Romanian context, this occurs through tensions, struggles and negotiations between global investors, local developers and the local or national state. While states in semi-peripheral countries are pressured to ‘catch-up’ with the economic processes in core capitalist countries (such as housing privatisation and financialisation), the institutional investors also depend on local economic and political processes and actors that facilitate the formation of the market, which is only possible in historical sequences, as the housing regime transforms. As institutional investors strive for dominance and negotiate with local forces in a particular economic context, they themselves might undergo important transformations.

Housing regimes and financialisation

In the last two decades, there has been intense mass-media and policy coverage of Romania as the country with the highest homeownership rate in Europe (or even in the world, as some media outlets claimed), coupled with a modest mortgaged homeownership rate and a residualized public housing stock. We contend that the historical formation of this ‘super-homeownership’ regime is relevant for the understanding of emerging processes of housing financialisation.

The expansion of owner-occupied housing systems was addressed by Ronald (2008), investigating across several regions of the globe. Homeownership in post-socialist countries was addressed in the housing studies literature as a market faced by a growing crisis (Tsenkova, 2003), a result of mass privatisation (Stephens et al., 2015), in its potential to become an additional source of welfare (Mandič, 2010), or as a phenomenon mostly ensured by intergenerational transfer (Lux et al., 2018). In Romania, homeownership was studied, for example, by Soaita (2017), with a focus on the nature of homeownership and the so-called passive/reactive strategies of mobilising it, and by Ciocănel (2025), who addresses housing assetization through the concept of liquid homeownership to capture the increased interconnections between money and housing through mortgages.

In analysing housing regimes, we follow Esping-Andersen’s (1991) call to capture the relationship between the state and the economy. Still, we go beyond the welfare approach and categorisations, towards perspectives addressing the organisation of housing provision influenced by finance systems (Blackwell and Kohl, 2019) and shaped by the global circuits of capital (Jacobs et al., 2022). We are guided by recent analyses about the relationship between the housing system and the institutions of monetary and financial policy and the globalisation of finance as a convergence force (Stephens, 2020); path dependency (Ruonavaara, 2020) and questions about the coexistence of different policy regimes in a hybrid housing system (Cristophers, 2013). Regarding Romania, we expand on our previous work where we analysed the mixed housing regime of state-socialist Romania, including regulated home ownership and public rental (Vincze, 2022), and how this was converted into a market-dominated system after the 1990s as part of capitalist transformations in the country.

Büdenbender and Aalbers (2019) illustrated the relevance of examining the legacies of the state-socialist housing system for understanding current trends of real estate financialisation in the case of Poland. We follow a similar analytical path, agreeing that ‘only by considering the interplay of global hierarchies [. . .], local dynamics [. . .] and specific historical legacies [. . .] we can fully understand the specific dynamics that shape real estate financialization in different places’ (Büdenbender and Aalbers, 2019, p. 1). Moreover, our longer-term historical approach is inspired by Kaika and Ruggiero (2016), who illustrated how the financialisation of land advanced as a sequence in century-long economic and social transformations and signalled the need for ‘detailed historical – geographical accounts’ of the processes through which ‘the financialization of urban land and its insertion in globalised financial capital circulation unfolds’ (p. 2).

Our proposal for an analytical approach linking the advancement of institutional investors to the longer-term history of housing regime transformations builds on Ward et al. (2019) and Aalbers (2017), who showed that housing financialisation is variegated, path-dependent and uneven in strong connection with how housing systems developed in time (influencing each other) across the globe.

Revisiting the concept of ‘catching-up’

The ‘catching-up’ ideology was central to the transition politics promoted by the World Bank (2002, 2019), International Monetary Fund and the European Union (EU; Socol, 2017). It was especially strong between the end of state-socialism and the credit crunch, preparing Romania to leave behind its socialist past, including the supposedly dysfunctional command economy (Vilenica et al., 2021). As such, it justified destroying the existing economic and financial system, intending to create capitalist structures that promised civic-political rights and living conditions at idealised Western standards. This politics integrated Romania as an emerging market into global capitalism. The ‘catching-up’ ideology supported the idea of the inevitability of the transition from socialism to capitalism in CEE and was focused on proving that ‘the public housing experiments of centrally planned economies failed’ (Renaud, 1999, p. 757).

Analysts with the World Bank (WB) were committed to policies enabling housing markets. They advised governments to abandon their earlier role as producers of housing, develop property rights and mortgage finance, rationalise subsidies, provide infrastructure for residential land development, regulate land and housing development, organise the building industry by creating greater competition and develop the institutional framework for managing the housing sector (World Bank, 1993). Moreover, they aimed to transform the old state-financing mechanism into a competitive financial system and make an overall banking reform (Renaud, 1996). WB experts provided ‘practical policy recommendations on actions that need to be undertaken, designing a blueprint for housing reforms’ (Tsenkova, 2009, p. 7).

We address the concept of ‘catching-up’ critically but use it as a tool to reveal the ambiguities, contradictions and reciprocities in the relationship between state and housing market actors. When viewed from a global scale, ‘catching-up’ pressures and narratives were paramount in the hierarchical relationship between core and semi-peripheral economies until the mid-2000s, setting the base for subordination and specific housing regime arrangements. They are still significant in popular public discourses (even though more subtly in policy, since EU accession). When looking in reverse, from the local scale, global investors complained about being restrained by state policies (e.g. Romania Insider, 2016), about having to enter a fragmented housing market, and about ownership rights that hampered large-scale developments (World Bank, 2015). Due to these disadvantages, global investors were in need of ‘catching up’ to the multitude of local actors prevailing in the residential real estate market.

Thus, even though academic research has gradually abandoned the concept, it is still revealing to work with it critically, as it still reflects real-life vocabularies and pressures in the local context. Its intensive use in the first two decades after 1989 still echoes today. It was initially employed when privatisation was imposed as a condition of WB and International Monetary Fund (IMF) loans and EU accession; it came up during the long-term negotiations around Romania’s accession to the Schengen area starting in 2007; it was then used when striving to respect the provision of Capital Markets Union in the hope that Romania will become a eurozone country and more recently when pushing to advance from a ‘frontier’ to an ‘emerging’ market among the Organisation for Economic Co-operation and Development (OECD) countries. It was also present as the main slogan of the mid-2010s-wide middle-class mobilisations against corruption. During all these stages, the semi-peripheral status of Romania continued to be reproduced in relation to core capitalist countries.

Thus, we consider ‘catching-up’ to be revealing when dealing with the tense and contradictory dynamics unfolding in time between the global-national-local scales in semi-peripheral financialisation of housing: depending on the chosen scale as the vantage point, and on the historical sequences, different actors seem to catch up to one another. Moreover, we propose the concept of reciprocal ‘catching-up’ to understand the specific challenges posed by the context of semi-peripheral financialisation in CEE to institutional investors: It highlights that financial actors linked to the global financialisation processes had to deal with local historical arrangements and small, but often powerful, local actors, who make the market and subsequently dominate it, until the market is ready to ‘mature’ and gradually open to them.

Methodology

Our methodology stems from a political economy approach, suitable to analyse the entanglement of state transformation (as expressed through transformations of the housing regime) and dynamics of economic actors, as they unfold across time. We find inspiration in studies that focus on policy histories within changes of capitalism (Jacobs et al., 2022), on the transformations occurring within the state in several policy domains determined by the differentiated positions countries occupy within the world economy (Santos, 2022) and on the role of global, national and local institutions involved in the financialisation of the housing system (Aalbers, 2016). We make our analysis through two lines of investigation: on the one hand, a historical reconstruction of public policies and legislation (on housing, banking and household lending, urban planning and construction, privatisation, etc.), determining the housing regime, and on the other hand, identifying the temporal dynamics of private investors in the housing market, with a special focus on institutional investors (as they appeared and advanced in Romania).

For the first line of investigation, we analysed laws and strategies from the Official Monitor, across their implementation and amendments over time. We followed the official websites of ministries (development, finances, economy) and their subordinate institutions. To follow the social and economic impact of legislative changes, we engaged in secondary data analysis of databases and reports from the National Statistical Institute, Eurostat, the Romanian National Bank, the WB and several local urban development strategies.

For the second line of investigation, we used data from the National Trade Register Office, county offices of the Cadastre and Land Registration Agency and a large pool of grey literature, especially economic mass-media, company websites and reports of real estate consulting companies acting in Romania (such as Colliers, Knight and Frank, Crosspoint, Kiwi). We also performed document analysis of materials available on real estate and economic news platforms such as CBRE Group, ERSTE Group Research, Property Forum CEE, Global Property Guide, Imobiliare.ro, Economica.net and Wall Street.ro. We focused on identifying real estate market actors as they become visible and larger, finding their links to specific projects and business strategies and to public declarations and opinions on the housing regime. We backed these with interviews with public authorities, real estate developers, agents, brokers, consultants and architects. ² Our main questions were related to chronological timelines of local or national investment projects, main investors in specific sectors, perceptions about the pace and challenges for investment, relationships among different actors populating the real estate domain across time and the emergence and spread of new investment instruments and business strategies.

In the Romanian context, there are only disparate data and reports on these actors and interconnections. One of our empirical contributions is identifying the significant companies and their changing positions in the housing market, the reason why we enumerate their names and projects, or strategies in the next sections. This endeavour can encourage further research into their business models and relations to other market actors and the state.

Conditions and restrictions for the advancement of institutional investors

Understanding the actors, instruments and logics that populate today’s housing market in Romania, how they interact and what new trends they are nurturing requires an analysis of how they developed and advanced to the current constellation. Thus, to trace institutional investors in the residential and especially rental segment, we look at the dynamics of the context in which they emerged and developed, the state policies that facilitated or limited their advancement across time, the interactions with other actors, instruments and logics that made/make and populate the real estate market across time. We follow these processes chronologically, highlighting the tensions and contradictions that unfold between global-national-local scales – which we capture by using the concept of reciprocal ‘catching-up’.

Contradictions of an emerging market-dominated housing regime

After a long history of housing precarity and highly unequal property regimes, the advent of state-socialism brought modernization efforts that elevated Eastern Europe from periphery to semi-periphery status (Kennedy and Smith, 1989). The state created and sustained a mixed housing system with a mixed property regime at its core while acting as a housing producer, manager and regulator (Vincze, 2022). About 70% of the population lived in owner-occupied homes (especially in rural areas, where the state has supported self-building endeavours). However, personal property was strictly regulated, as housing could not become an asset or a source of profit. This represented the baseline for creating a ‘super-homeownership’ regime in the context of capitalist transformations after 1989.

The entrance of institutional investors into the residential real estate market needed, first and foremost, an actual market and was thus preconditioned by the emergence of a market-dominated housing regime starting with the 1990s. Two major sets of state policies facilitated the formation of the housing market but had contradictory results.

On the one hand, the massive privatisation of the state-owned housing stock through right-to-buy measures rapidly transferred flats to the ownership of former tenants and freed the state from the obligation to maintain them (Lowe and Tsenkova, 2003). As a result, nationwide, the percentage of homes in public property decreased from 32% in 1989 to 4.8% in 2000, 2.3% in 2010 and 1.23% in 2022. This complete change in property structure had an important role in creating the housing market, where, initially, in the 1990s, small owners were the first to transact their apartments. The wide-scale privatisation policy resulted in the highly fragmented nature of the residential market, based on a small-scale household-level property regime. Compared with cities in core capitalist countries, with more consolidated properties and larger owners, this delayed the creation of opportunities for institutional investors to enter the housing market.

On the other hand, the (re)privatisation of state property through in-kind restitutions expanded the real estate market: Valuable properties restituted in the city centres opened the luxury segments of the residential market, while extensive plots at the urban outskirts cleared the way for suburban development. This trend advanced slowly throughout the 1990s but expanded since 2001, when the restitution law was passed, as required by EU accession conditions. In addition, the privatisation, bankruptcy and closing of the formerly state-owned factories, starting in the 1990s but fully accomplished in the 2000s, opened up new territories for real estate development in semi-central areas (Vincze et al., 2024). These market segments allowed (a decade later) for the emergence of larger investor-developers and the first significant real estate transactions – which, in market actors’ terms, would signal a ‘maturing’ process of Romania’s urban real estate market.

Institutional investors missing a head start in the ‘super- homeownership’ regime

The state restructuring process was accompanied by policies that contributed to the expansion of the real estate market, some hindering and others advancing the creation of opportunities for institutional investors. The 1991 Construction Law and the 2001 Territorial Landscaping and Urbanism Law decentralised spatial urban planning and transformed the local public authorities into a bureaucratic apparatus with limited powers. As our interviews also confirmed, this gave immense power to investor-developers, facilitating their advancement to the detriment of urbanism’s public function. Moreover, the end of the 1990s marked the state’s retreat from housing credit programmes and the privatisation of state banks, which were acquired mainly by large Western European banks, as discussed in the next section. This represented a profound transformation of the state and its relationship with finance capital, a change long insisted upon by international creditors.

On the contrary, the 1996 Housing Law passed the responsibility of creating and managing new social housing to the local public authorities. Such a framing kept (the limited stock of) social housing in state ownership (Zamfirescu, 2015). In the long term, in the context of Romania, the public ownership of social housing delayed the financialisation of social housing – a phenomenon currently advancing in core capitalist countries.

Given the contradictory state measures mentioned earlier, in the 1990s, institutional investors in residential real estate were almost absent in Romania. The private production of new housing was assured mostly by ‘physical persons’. The first year for which there is National Statistical Institute data about newly built residential units from private funds other than physical persons’ is 1995. Between 1995 and 2005, there was evidence of only around 100–300 new residential constructions/year being made with private funds other than the physical persons’. Nevertheless, it was a known informal practice for developers and investors to act as ‘physical persons’ and not register as companies for taxation reasons. Given the significant scope of this practice, as suggested by our interviewees from the real estate market, available statistical data may not be entirely accurate. Still, the existing information reflects a steady increase in the percentage of newly built homes from private funds, excluding the ‘physical persons’, from 1% in 1998 to 20% in 2022.

Institutional investors were also scarce in other real estate market segments, with a minimal presence in retail and brownfields of privatised factories. The only real estate market sector in Romania where larger investors, organised in holdings and trusts, rapidly advanced in the 1990s was agricultural land due to its massive restitutions. Thus, in the following decades, when the big cities became targeted by institutional investors, the rural areas from their vicinities offered plenty of land for new real estate complexes.

By the early 2000s, all the above-detailed state and market (co)transformations led to a housing regime labelled as ‘super-homeownership’. The re-privatisation of pre-1989 nationalised properties was an important factor in this process (Chelcea, 2003; Dawidson, 2005). As a result of right-to-buy policies and dramatically reduced public investment into public housing, this regime is characterised by the residualisation of public housing (Vincze, 2024) and a very high percentage of housing units in private property (growing from 67% in 1990 to 98.76% in 2023, according to National Statistical Institute data). In a housing regime with high private ownership rates but fragmented property, institutional investors missed a head start on the residential market. As our interviews with real estate consultants illustrated (and confirmed economic media opinions and declarations of WB consultants), investment funds and larger foreign investors complained about their disadvantaged position and the difficulty of ‘catch-up to’ to the local environment and (legal, administrative, practical, economic) changes. At the same time, their spectacular advancement at the global scale was just taking off.

Subordinate financialisation allowing institutional investors to ‘catch up’

By the mid-2000s, when most industrial enterprises, land and housing were already privatised, all the premises of capitalist transformations were created in Romania. For housing to become a financial asset, there were only a few more steps to be accomplished: opening the field of real estate development and transactions to financial actors, facilitated by the state. This counterbalanced the hindering effects of the super-homeownership regime in the direction of facilitating the advancement of institutional investors in the real estate sector.

The door towards subordinate financialisation, as described below, was opened by the state through dismantling the socialist financial system, integral to the dissolution of the pre-1989 centrally planned economy. In 2007, Romania became a member state of the EU, so all the rules of the Single Market, the Capital Market Union and the Banking Union that sustain the free movement of capital and restrict public investments via the Competition Law and the Stability and Growth Pact (Vincze and Betavatzi, 2024) had to be obeyed in this country, too. In the 2000s, the Romanian state further created conditions without which the advancement of institutional investors in the housing markets could not have happened.

First, through privatisation, the ownership of the three formerly state banks specialised in financing and crediting different economic sectors (The Romanian Investment Bank, Bank for Agriculture and Food Industry and The Romanian Bank of Foreign Trade) was transferred to foreign banks. They were taken over, respectively, in 1999 by the French Group Société Genérale, in 2001 by the Austrian Raiffeisen Zentral Bank and in 2006 by the Erste Group Bank. The Savings Bank was kept under state ownership but in a reorganised form, becoming a joint-stock company. The Romanian Central Bank was reorganised as an independent public institution free of state control, and within the European Banking Union, the European Central Bank supervises it. In addition, new commercial banks were established, most of them as Romanian branches of Western banks (for a similar account from other CEE states, see Raviv, 2008). They launched the first mortgage programmes in the country. Although credit indebtedness was and still is generally low in Romanian households compared to the EU average (housing credits represent about 8% of GDP), it meant a fast-growing path for financialised residential developments. This represented one of the paths for institutional investors to advance in the housing market.

Second, the state introduced the legal framework for establishing investment funds. The beginnings of the mutual investment funds in Romania are marked by the creation of the five Romanian Private Property Funds through Law 58/1991 regarding the privatisation of state-owned enterprises. The law stipulated that in 5 years, these commercial societies, originally entitled to 30% of the social capital of the to-be-privatised state enterprises, would be transformed into mutual funds. This was a ‘catching-up’ legislative framework, developed together with WB experts, aimed both at speeding the privatisation of state property and at creating new market actors such as investment funds, large enough to stabilise and expand the market, including in the financial sector.

Due to this favourable legislative environment, hitherto scarce large residential real estate investments also took off but were soon hindered by the global financial crisis. After the 2008 crisis and new loan agreements with the WB, IMF and EU, the state employed several measures to limit the fall of real estate asset prices, thus aiding the construction sector and stimulating the household lending market in a context of severe austerity. The most important measure was the launch, in 2009, of the First Home programme of state guarantees for private mortgages. This illustrates the subordinate state’s vital role in providing institutional paths and public budgets for private (super)homeownership and its steady financialisation and, at the same time, in facilitating the safe, though limited, entrance of institutional investors on the residential market.

After 2014, with the onset of a new economic growth cycle, standard bank mortgages gradually overpassed the number of state-backed mortgages. Buy-to-rent gradually expanded in the larger regional cities (Colliers, 2025). These were signs of a growing trend of housing being used as financial assets in a ‘super-homeownership’ regime. The number of new state-backed mortgages fell from over half of all mortgages in 2010 to around 20% in 2019, illustrating a reinvigoration of the real estate and mortgage markets, and the advent of a credit-based housing regime – which we discuss in the next section.

Investment fever since 2014

After the post-2008 austerity period, a relative economic revival followed in Romania in the global context of increasing transnational real estate investments by institutional actors (Aalbers, 2017; Fernandez and Aalbers, 2019). The real estate market grew strongly in urban regional centres. In this context, larger investors emerged from consolidating local actors, while subsidiaries of global investors entered large- as well as medium-sized cities of Romania. Through our interviews, media analysis, industry reports and company websites, we identified four main trends in the evolution of institutional investors since 2014. These trends reveal a change in the housing regime, with ever-larger actors advancing in and dominating the residential market.

First, real estate developers and investors became interested not only in the largest cities but also in smaller towns. Here, investors and developers in retail, manufacturing and logistics (rather than residential or office) could more easily penetrate local societies to enlarge their portfolio and generate rent returns. Some of these real estate actors were financialised – backed by transnational investment funds or using land properties solely as collateral for loans for further purchases or making investments for rental income. At the same time, due to the outsourcing and near-shoring of foreign IT, insurance, consultancy, management or technical assistance companies in Romania, larger regional cities created demand for office and residential buildings. Consequently, these localities ended up with a larger pool of buildings to be rented out for the service economy in retail, office and logistics. The residential units built-to-rent were still produced to a reduced extent, as built-to-sell dominated the residential market.

Second, institutional real estate actors have advanced in Romania over the past 10 years, ‘catching up’ with the other actors that have dominated the local market. Information about the total number of housing units they built or hold for rent and the value of total assets they traded is scarce – as the practice is for large companies to register several new satellite companies for each new project (‘offsprings’ as one real estate broker called them in an interview). There are cases when investors in real estate are directly connected to global pools of capital. Examples include the Romanian Evergent Investments (the successor of one of the Private Property Funds created by the state in the 1990s); the American New Century Holdings company (a private equity firm with headquarters in New York and present on the Romanian market since 1994); certain banks with designated branches that transact shares connected to the real estate sector (such as BT Real Estate and BCR Real Estate Management).

The role of the state in this period manifested especially on the local level: The administrative decentralisation meant that local authorities were directly interested in facilitating large real estate developments as sources of tax money and symbolic capital, thus aligning with ever-larger investors’ interests. Nevertheless, this role was again ambiguous and contradictory at times, supporting divergent local, national and global investors competing for urban plots, media visibility, buyers or local market share.

Among the major Romanian institutional investors developing residential real estate, who function predominantly through the build-to-sell model but are also forerunners of the build-to-rent strategy and share-holding practice in this sector, we identified One United Properties, listed on the Bucharest Stock Market; Nordis Group, selling hotels as investment and taking over property management in touristic zones, and Impact Developer & Constructor, the first real estate developer registered in Romania. The latter managed to be listed on the Bucharest Stock Market and partnered in the first Real Estate Investment Trust made in Romania (Star Residence Invest). Housing financialisation is also sustained by institutional actors like the holding company Meta Exchange Trust, which enhances a new business model for the Romanian market by linking the real estate and capital markets, or Hubix, a real estate investment company that promises to revolutionise the market by evaluating property owners and mediating lending relations with financial partners.

Third, many mixed-use property developers ensure high returns by combining renting retail spaces and selling residential units. The most famous company using this strategy is Iulius Group, backed by Atterbury Europe, collaborating with a consortium of private equity investors to expand into the European market since 2014. Following this strategy, since 2022, the large national retail chain Dedeman commenced to build residential assemblies. Some Romanian developers search for investment funds as partners. An example is Maurer Imobiliare, an expanding developer selling and renting apartments in several regional cities across Romania, who mandated Capital Partners (the biggest investment company from Romania offering consultancy in real estate acquisition, corporate finance and mergers) to identify a strategic partner for its future projects.

Fourth, several formerly retail-based transnational companies present in Romania have transformed into developers-investors-operators of mixed-use (commercial and residential) real estate, with a special focus on CEE. Using retail and offices for rent as a strategy to increase the value of neighbouring residential developments and developing residential projects to take advantage of the added value of new commercial developments, these approaches reflect paths for commercial investor-developers to ‘catch up’ with the local residential market. The largest and most active companies illustrating this trend are AFI Europe (part of AFI Properties, headquartered in The Netherlands); Prime Kapital (backed by pension funds in South Africa) and NEPI Rockcastle (the leading property investment and development group in CEE, listed on the Johannesburg Stock Exchange). Moreover, in 2016, Immochan, the real estate branch of the French retail multinational Auchan, changed its name into Ceetrus and its business strategy in order to become a global real estate development company. Some of these actors employ diverse activities such as acquisition and development of properties, asset and property management, mortgage financing, debt finance, leasing, sale and marketing. Some are listing their bonds on the stock market.

A few foreign investors develop residential-only complexes in Romanian cities, like Speedwell (from Belgium) and Bina Real Estate (from France), setting up local companies to run their activities in the country. Nevertheless, foreign institutional investors still favour the office sector, such as Taco Holding AG (Swiss), Robert Bosch GmbH engineering company (German), First Property (British), BlackRock and White Star Real Estate (USA-based).

Concerning investment funds in Romania, at present, the non-governmental professional organisation of the Undertakings of Collective Investments became a full member of the European Fund and Asset Management Association in 2009. The currently available data on the Romanian Financial Supervision Authority website shows that there are 158 listed open-end funds, of which 100 were established after 2014, and 227 Alternative Investment Funds, of which the majority registered after 2020. Of the latter, 37 are registered in Romania, and the rest abroad, mainly in German cities but also in Stockholm, Luxemburg, Amsterdam, Dublin, Vienna and Paris. Links between these funds and the real estate market or the institutional real estate actors presented earlier are unclear due to the lack of public data. But their expansion in the last decade reveals a diversification of the real estate market, of financial instruments and of paths through which financialisation can advance. Moreover, it reveals a form of subordinate financialisation, as most of these investment funds originate in Western countries.

The aforementioned trends illustrate an increased investment fever in residential (but not only) real estate in Romanian cities in the last decade. Different types of large foreign actors are part of it, including institutional investors (e.g. banks, pension funds, hedge funds and even global asset managers such as BlackRock). Most other players in the residential market – individual and smaller local developers, local authorities, brokers, real estate agencies, consultants, lawyers, economic journalists – view them as key actors in the ‘maturing’ and expansion of the market. As our interviews and articles on international economic news platforms such as Property Forum reveal, there is still dissatisfaction with the pace of these advancements. In response, there are lobby attempts at easing legislation and supportive state measures for even larger chunks of the ‘wall of money’ to be spatially fixed through institutional investors in the Romanian real estate market.

Thus, viewed from the local scale, institutional investors seem to be ‘catching up’ with the local actors who made and hitherto dominated the local residential market (interview with a manager at the Romanian office of an international investment management company, 2022, confirming economic media accounts). Just as the local actors and instruments, viewed from the supra-local scales, seem to be ‘maturing’ following Western models. Acknowledging the present-day trends in the real estate market, the next section reflects on its future.

Institutional investors ‘catching up’ with the rental market

In the process of reshaping the Romanian housing system through state policies, the formation of the ‘super-homeownership’ regime hindered the advancement of institutional investors in the residential real estate market. At the same time, the creation of conditions for the transformation of housing into a financial asset facilitated the advancement of institutional investors. Out of these contradictory tendencies, in the past 4 years, both globally and nationally, and both from the point of view of the state and the capital, Romania’s economy entered a new phase, which we discuss below.

Estimates from 2021 indicated that residential investor-developers only kept 6%–9% of what they constructed for rental purposes (interview with a CEO of a Brașov-based real estate development company, 2022). Our interviewees active on the real estate market declared that lately circa 30% of the new flats were bought from developers for investment or rental purposes, and about 20% of these acquisitions were from larger investors (interview with the CEO of a Romanian real estate agency, 2022). Most of the buyers purchased up to six units for rental purposes and a few between 10 and 30 apartments (interview with a CEO of a Romanian real estate development company, 2022). In 2022, the office sector claimed 62% and the retail 25% of the investment volume (where rentals bring the highest returns), while only 7% went into residential assets and hotels. Nevertheless, in terms of future use of purchased lands, plots suitable for residential and mixed-use (residential and commercial) developments were the most invested in: 51% of the total transacted surface, followed by 41% for industrial purposes (CBRE Research, 2023).

In 2020, despite Romania’s ‘super-homeownership’ regime, developers began to announce their intention to build-to-rent – which is a very recent and only emerging trend. Recently, AFI Europe, Forty Management and One United Properties announced their interest in the private rental residential market segment. In 2023, a study made by Unlock Research for the real estate investment advisor company Colliers estimated that, in regional cities, the percentage of private renters was around 15% of the dwellers. The estimated numbers for private rentals are expected to grow in the regional cities to 25% in the next 7–10 years. Colliers Romania approximated that, besides the existing 1000 units of the new residential complexes used in the private rental regime by both institutional investors and local developers, in the next 2–3 years, in Bucharest, another 3000–4000 such flats are expected to appear (Business Magazin, 2023). There is a growing trend of private persons purchasing residential properties as investments, for renting them out. As the consultants we interviewed suggested, this trend also signals to institutional investors the convenience of further investments in these localities and enlarges the number of residential units they can use for extracting rent.

In 2020, the share of mortgage loans in the Romanian GDP increased to 8.4%, which is low from a global perspective, but it was a significant increase compared to 3.3% in 2007. Furthermore, in 2021, the loan sums granted to the population for housing increased by 12.9% compared to 2020 (according to the National Bank reports). This growth started to moderate from one semester to another in 2022 due to rising interest rates. The later trends of monetary policies suggest that, because mortgage accessibility is expected to decrease, demands for rental housing are going to expand, all these under conditions of lack of public rental opportunities. These data are corroborated by articles on real estate news platforms such as Property Forum, Profit.ro, ZF.ro financial magazine and Global Property Guide. Moreover, our interviews with the largest real estate consulting companies reveal that the prices on both the housing and rental market entail the potential of their further growth.

Until now, build-to-rent has not characterised residential development, which is similar to most European cities except the global centres. Nonetheless, in June 2023, in the context of rising interest rates, Blitz Imobiliare showed that in Cluj-Napoca, the country’s most expensive real estate market, rental prices increased by more than 20% to an average amount of 505 euros/month (much higher than the minimum wage in Romania, at around 300 euro net in 2022–2023). According to Colliers and other consultants we interviewed, this makes Romania a new target for institutional investors ready to move across borders within the region. Their expectation is that in countries where prices are low but increasing, there is opportunity for them to increase even more in the future.

The data gathered in this section reveal the signs of growth in the rental housing sector in the context of an overall dynamic and growing real estate market in Romania. Several institutional investors have affirmed their interest and have started or even completed a few acquisitions or developments in this sense. The advancement of institutional investors in the private rental sector could not have been possible – in the limited but promising position it finds itself today – without decades of state measures in housing, planning, public administration and finances, all vital in the overarching process of state restructuring with the aim of ‘catching up’. We review these interconnections in the next and final section.

Conclusions

For a long time, in Romania, state measures hindered the advancement of large (institutional) investors in the housing sector. The 1990s right-to-buy measures that transformed millions of former state-owned flats into private units and public renters into owners created a highly fragmented ‘super-homeownership’ regime. This was a contradictory process: Even if these measures were crucial for housing privatisation and the formation of the housing market, they did not provide an outstanding number of dwellings that could be easily accumulated in the hands of a few institutional investors. The accumulation of multiple residential properties in the possession of one owner is a recent phenomenon in Romania, alongside institutional developers constructing a significant quantity of flats for rental purposes. From the vantage point of the local scale, institutional investors looking to expand their portfolios in this country had to start from a disadvantaged position in the local market, to adapt to its historically formed conditions while pushing to change them for their benefit. The historical formation of the ‘super-homeownership’ housing regime is thus revealing to disclose that institutional investors need to ‘catch up’ with the property market and the rental market, made and dominated by other actors.

These analytical findings contribute to the semi-peripheral financialisation literature, as they highlight the ambivalent role of the state in subordinate territories’ real estate financialisation. The Romanian case illustrates that, across different time periods, the state facilitates but also blocks the expansion of the market and the diversification of real estate and financial investors. It is required or strives to ‘catch up’ with external conditions to make the national market suitable for foreign capital, but also conditions to a certain extent the new actors penetrating its internal circumstances. Therefore, in a semi-peripheral economy, although the state is pushed to ‘catch up’ economically or to implement economic models from the core Western countries, the ‘catching-up’ process is not unidirectional: It happens on the ground as reciprocal adaptation and competition between the (national and local) state, the local actors and the large real estate investors linked to the global financial flows.

The strategies of institutional investors, as they penetrate subordinate terrains, are also ambivalent: They adapt to the local and national conditions and ‘catch up’ from their market-entry and limited positions but also create the market as other actors try to accommodate and ‘catch up’ to them. Thus, we believe there is empirical and theoretical value in investigating whether there is a reciprocal ‘catching-up’ and adjustment between the state and real estate capital, in countries that, as emerging markets, entered later in the global financialised economy. Contributing to decentring the housing financialisation literature, we propose that the reciprocal ‘catching-up’ story of subordinate territories and housing markets could help illuminate how global pressures push simultaneously on the (semi)peripheral states to restructure and on capital to penetrate new territories and fix its contradictions.

Our analysis argues for a historical perspective, as it is the most suited to reveal processes such as the double-directional ‘catching-up’ dynamic. This is consistent with calls from researchers in other semi-peripheral contexts advocating that ‘financialisation must be understood as a process that interacts with others in specific circumstances, which requires considering historically given conditions and particular geographical contexts’ (Santos and Teles, 2020, p. 242). The historical transformations of Romania’s housing regime explain why it lags behind the core capitalist countries and cities regarding the presence of institutional investors in housing, especially in the rental market. Even though the country is attractive for real estate investment and development (due to its low prices, high demand, favourable legislation, state backing for mortgages, etc.), the fragmented property regime, the informal rental practices, the ‘super-homeownership’ and the build-to-sell paradigms came to dominate residential real estate. Therefore, we scarcely see institutional investors in housing, especially in the rental market. But although initially disadvantaged until the early 2000s, their presence has risen in recent years as they also create and transform the market and the state’s response.