One Forth of Moldovan Real Estate Market Is Pledged to Banks

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Catastrophe can be avoided in the real estate market only with the introduction of national evaluation standards. This opinion was voiced by Dumitru Taraburca, director of the Society of Independent Evaluators of Moldova (SEI RM), reports. According to him, the real estate market is “the foundation of development of the domestic economy non-export sector, while its estimated value is the foundation of the debt market of Moldova. “At the end of May, the balance of loans in banks amounted to about 3 billion euros. With the existing approaches to risk insurance, this means that banks have 6-7 billion euros worth of real estate in collateral. If we assume that the total volume of the Moldovan real estate market is estimated at 25 billion euros, it is obvious that more than a quarter has already been used as collateral,” he said. To the problems we can add “a price bubble formed in the market as a result of the pandemic”, while “general overregulation of the market, corruption and shadow schemes make it difficult to understand the processes, to have a meaningful forecast of the market development and its influence on the economic development of the country. While “the need to improve the quality and transparency of resource management and property evaluation systems is long overdue,” since 2003 “there have been no real changes, and half of evaluators with mediocre knowledge are solving the most difficult tasks.” “The Agency of Geodesy, Cartography and Cadaster has been regulating real estate evaluation in Moldova for a long time. Any changes, including negative ones, have specific authors, in our case it is Olga Buzu (head of property valuation department of “Cadaster”). For over 20 years, Ms. Buzu, in fact, is the “gray cardinal” of the real estate market, providing both specific methodology of evaluation, and as a consequence, “admission” to work. According to the law On Evaluation activities six months were given for the development of national evaluation standards. The law went into effect in 2002 – now it is 2022. There are still no approved national standards. While back in 2016 SEI RM developed and proposed for approval three evaluation standards,” Taraburca said. In his opinion, while the European standards have been repeatedly reissued, in Moldova “they are trying to prove something to someone, using indexed data from the middle of the last century and fake market data, which, depending on someone's goals and objectives, for the same object can differ by several orders of magnitude.” “Obviously, the market is going to restructure. The restructuring will take place against a background of decreasing transfers, tightening of monetary policy against the background of poorly controlled and unregulated processes. Under these conditions, the most important task of the state is to ensure the effective capital flow within the country. It is impossible to ensure this movement, to reduce the disastrous gap between the official and real agendas, including without a modern evaluation system. Our primary task is to take European perspective on evaluation. It is necessary that in the near future, the real estate market will turn from another barrier into an internal source for the development of the country,” – said Taraburca. Point