Profile: Bucharest There's a whiff of opportunity lurking amid apparent chaos in the city some call the Moscow of the Balkans. Daniel McLaughlin reports from Bucharest

Bucharest, many guests and residents of the city declare, is like a Moscow of the Balkans. Foreign investment and local capital are helping both cities overcome the excesses of communist city planning, and crumbling Soviet-era piles now jostle with the kind of sleek apartment blocks and business centres that abound in every Western capital.

Bucharest's mix of broad boulevards and jumbled backstreets, its snarled-up traffic and fierce seasonal extremes of heat and cold are also reminiscent of Moscow, along with the whiff of huge opportunity lurking amid the apparent chaos.

"Moscow aside, if you look at central and eastern Europe, Bucharest is probably the biggest and most interesting opportunity for property investors right now," says Edit Vesser, corporate director for CB Richard Ellis in the city.

"It is the next big location in this part of the world, with many people looking to get involved here having moved on from Budapest or missed the property train there," she says. "The big guns are already getting involved alongside the private investors."

As new-build properties continue to flood the market in places like Budapest and Prague, leaving prices becalmed or even falling, Bucharest is now a magnet for adventurous individuals and major developers alike. "This city is not as obviously attractive as somewhere like Budapest, so the financial reasons for getting into the market here are paramount," says Ms Vesser. "And it can offer very good returns."

Just as its central European neighbours boomed as entry to the European Union beckoned, so Romania's likely accession in 2007 has sent optimism and interest in the country's property surging.

Multinational firms and international organisations are rushing to this country of 22 million people, where the combination of a highly-educated workforce with low labour, taxation and real estate costs is hard to resist for many companies.

Their interest has prompted a boom in refurbishment and construction of commercial property space, and a subsequent rise in demand for residential property to house all those future ex-pat employees and local staff on improving wages.

"Banks here started offering mortgages four or five years ago that allowed locals to buy, for example, a two-bedroom place in the suburbs, and the rent they received from tenants was enough to cover the mortgage payments," says Razvan Camuescu of RHR, a Bucharest property services firm.

"Prices surged, and those kind of places are no longer a great investment. In other old communist blocks, closer to the centre, we saw about 30 per cent price growth from October 2004 to April this year, though they are levelling off now," he added.

Mr Camuescu and other agents agreed on the three most desirable residential areas in Bucharest, where the majority of foreigners and well-off Romanians hunt for property.

The Aviatorilor-Kiseleff region in the north of the city, close to the domestic airport and on the way to the international terminal, is the pick of the bunch with, according to Mr Camuescu, space costing €2,000-€2,500 per sq m (€186-€232 per sq ft), and €18-€21 per sq m (€1.7-€2 per sq ft) to rent each month. This would mean an average €400,000 for a 200sq m (2,152sq ft) apartment.

Then comes the leafy Herastrau-French Village area, where prices are about €1,400-€2,000 per sq m (€130-€186 per sq ft) to buy and between €16-€18 per sq m (€1.5-€1.7 per sq ft) a month to rent. (€280,000 for the average 200sq m (2,152sq ft) apartment.

Central Bucharest is also in demand, with property currently running at around €1,400-€1,700 per sq m (€130-€158 per sq ft) to buy and monthly rents hovering around the same level as in Herestrau.

Luxury villas on the edge of the city are also increasingly popular with foreigners and wealthy Romanians, who appreciate the swimming pools, tennis courts, privacy and security that most such complexes offer.

The most sought-after areas offer some green space, a little quiet and a whiff of fresh air, all of which are at a premium in a city that can, on a bad day, feel like a morass of blank concrete blocks and snarled up, horn-blaring cars crawling along crumbling roads.

Most of those elite areas were home to cronies of Nicolae Ceausescu, the communist dictator who razed most of a city once dubbed the "Paris of the East" to make way for thundering thoroughfares and monolithic buildings whose gracelessness is only matched by their bulk.

His most infamous, awesome creation was the House of the People, the work of three shifts of 20,000 workers and 700 architects over five years, which was still unfinished when Ceausescu was toppled and executed with his wife in a 1989 revolution.

At 330,000sq m (3,552,087sq ft), what is now the Palace of Parliament is the second largest building in the world, after the Pentagon in Washington.

"It's so unfortunate that Ceausescu managed to destroy Bucharest as completely as he did, and the city authorities have little money to rebuild and renovate," says Ms Vesser.

And it is not just the bricks and mortar of Bucharest that need an overhaul. "There is a serious lack of transparency here," she cautions. "You need specialist help to check the structural integrity of your building, and to make sure the person you are buying it from is the real owner."

Bucharest is susceptible to earthquakes, and some predict the next big one is on the way.

The political shock waves that have hit Romania have also left many buildings clouded by disputes over ownership, with many people dispossessed by the communists now returning to the country to try and reclaim their property.

Foreign investors should avoid getting tangled up in Romania's courts or - any more than necessary - in its Byzantine bureaucracy, and take their time getting to know the market with the help of a reputable agent.

"You have to be realistic. You are dealing with locals here, and the property sector has had so much coverage recently that many Romanian businessmen are looking to invest their money in property here. Competition is hotting up," says Ms Vesser.

For many investors, the most exciting potential in Romania is in land. According to law, a foreigner cannot buy land in Romania as an individual, but can fairly easily establish a company that can.

"Outside Bucharest we have seen the price for some land double over the course of two months," says Mr Camuescu. "In one area, the price per sq m has gone from €5 to €50 in the last two years. But the most important thing is to find out the plans for your land - does someone hope to build there, what is the situation with the water, gas and electricity utilities," he advises.

"Again, the key thing is to have good contacts, local knowledge, and someone here who you can trust."