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Moldova: Land Registration Sparks Modern Real Estate Market

Last Updated: Sept 2009
Moldova: Land Registration Sparks Modern Real Estate Market

Challenge

As was the case for the other former Soviet republics, the Government of Moldova once owned and allocated all of the country’s land and most of its buildings. After Moldova achieved independence in 1991, the country underwent transition to a market economy, but its progress was severely hindered. A big obstacle was the lack of enforceable ownership rights in real estate, which resulted in insecure titling, a lack of collateralized credit and high transaction costs. To spur the economy and create better opportunities for its people, Moldova needed a modern land administration system to create security for local property owners, as well as for international investors, lenders and governments.

Approach

The IDA-financed First Cadastre Project was launched in 1998 to establish an efficient national system to comprehensively register property, including details of ownership, tenure and location. With this new property system providing the legal framework, formation of a modern real estate market in Moldova could occur. The project established a platform for multiple donors to cooperate in provision of technical assistance and investment services.

Results

Secure ownership was established, allowing increasing numbers of households and businesses to readily buy, sell, and inherit real estate or use it for collateral in borrowing for the first time in Moldova’s history. Commercial banks are offering credit secured against this registered property, and the private real estate market is blossoming.

Highlights:
- The new system proved efficient. According to the 2007 Doing Business report, Moldova outperformed its neighbors on ease of land registration requiring 48 days to register property, compared to the average of 102 for the Europe and Central Asia Region.

- Impact is widespread. More than three-quarters of all real estate has been registered, vastly exceeding program targets thanks to collaboration with other donors.

- Pent-up demand exploded. Sales transactions quintupled from 17,907 in 1999 to 89,451 in 2005, while the number of registered mortgages increased by a factor of 12.

Contribution

The total original project cost was US$24.6 million, of which IDA provided US$15.9 million. IDA later provided US$3 million in additional financing to scale up the project. IDA coordinated donors and stakeholders to enable the project to become the primary focal point for the sector. Donor activities, in turn, allowed for better coordination across various relevant government agencies. This improved the performance of donors that had been working somewhat independently of one another, and proved especially useful for Moldova, allowing the government to assemble resources and direct them to meet the needs of the country.

Partners

Other donors included Norway (for public information), Switzerland (for equipment, technical assistance, and training for the mapping agency), and Sweden (technical assistance for project implementation, surveying, mapping, property valuation, and other such services). USAID provided parallel assistance through the Land Privatization Support Project. Donors have continued to provide financial support well beyond the amounts originally envisioned.

Next Steps

The IDA-Financed First Cadastre Project is complete. The project established a sound basis for the country’s real estate market. The challenge now is to apply the same system to reform the agricultural sector, and to financially sustain the system, particularly during the global economic downturn.

Learn More

First Cadastre Project and Additional Financing for Project Scale-Up (1998–2007)
Project Documents I | Project Documents II


For more information, please visit the Projects website.



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