Hello,
As every month, we bring you the hottest real estate news from around the world.
This month we want to draw your attention to:
A. Expected changes to the golden visa in Greece
B. The continued trend of rising prices and transaction volume in Romanian real estate.
C. US mortgage interest rates, which are breaking new records and affecting local purchasing power.
We recommend examining your preparation for the tax changes taking effect at the start of 2023, and the readiness of companies in the target countries for 2023.
Enjoyable reading,
Ilan Leibovitch, Adv., and the office team
Greece's golden visa program - third in Europe
The golden visa program has proven so popular that it is the third most sought-after in the European Union, together with those of Latvia and Portugal. The program grants investors and their family members five-year residency and a valuable European Union passport, with the minimum for eligible applicants to be raised to 500,000 euro.
In Greece, demand for the golden visa is reported to have risen by 290% since last month's announcement that the minimum required investment would double.
Foreigners continue to flock to Greek real estate
According to Bank of Greece data, capital inflows from abroad for the purchase of real estate in Greece totaled 414.4 million euro in the second quarter of the year, an increase of 67% compared with the corresponding period last year. Foreign investors' demand focuses on apartments in central Athens, along the Athens Riviera, and luxury country homes in popular tourist areas.
In the first half of 2022, foreign capital inflows into Greece rose 61% year on year to 788 million euro, compared with 488 million in the corresponding period last year.
Analysts say that, based on the current pace and given that real estate investment activity traditionally grows in the second half of each year, it is now almost certain that 2022 will set a new record.
So far, the largest amount to flow into the country in a calendar year was 1.45 billion euro in 2019. This year the figure will probably approach 1.6 to 1.7 billion euro.
Credit rating agency S&P - Greece's credit rating is BB+
Greece's credit rating remains at the low BB+ grade, but S&P's outlook states that the Greek economy is stable. The agency forecasts growth of 5.8% in the Greek economy in 2022, but expects a slowdown to below 2% in 2023.
“Higher energy prices and accelerating inflation will slow Greece's gross domestic product growth in 2023 to less than 2%, compared with 5.8% in 2022.” S&P wrote in its report.
7.7% rise in the number of new apartments built in Hungary since the start of the year
Of the 13,617 apartments completed in Hungary since the start of the year (an increase of 7.7% compared with the corresponding period in 2021), about 46% are detached houses. Since the start of the year, building permits have been issued for 25,984 new apartments (a decrease of 11% compared with the corresponding period in 2021).
The average price of a second-hand apartment in Hungary stands at 524,000 HUF/sq.m., with the most expensive city being Debrecen (225 km east of Budapest), where the average price per sq.m. is 713,000 HUF.
Credit rating agency S&P - Romania's credit rating is BBB-
Romania's credit rating remains at BBB-, but S&P's outlook states that the Romanian economy is expected to enter a crisis starting next year. The agency forecasts growth of 8.8% in the Romanian economy in 2022, but expects a slowdown to below 3% in 2025. The main problem observed in the Romanian economy concerns the use of European Union budgets to reduce the budget deficit.
Record volume of real estate transactions in Romania
The international real estate consultancy JLL forecasts a record volume of real estate transactions in the country, the second highest after the 2008 peak, after transactions totaling 656 million euro were recorded in the first nine months. The company expects the volume of transactions in 2022 to reach 1.2 billion euro.
A report by the consultancy Cushman & Wakefield Echinox also reports an increase in transaction volume in the first half of 2022 compared with previous years, with a record volume of land transactions worth 720 million euro recorded in Bucharest in the first half of the year. It should be noted that this transaction volume was achieved during a period in which real estate developers kept blaming the negative effect of the Bucharest municipality's cancellation of the zonal urban plans (PUZ) for all the districts of the capital.
At the same time, the website imobiliare.ro published its quarterly report for Q3 2022, which shows a 30% decline in housing demand in the 6 largest cities in the quarter compared with Q2 2022. Sales in the 6 largest cities also fell compared with the corresponding quarter last year, by 4.4% for apartments and 14.1% for houses. The report also shows an 18.7% decrease in the number of building permits issued nationwide in the quarter compared with the corresponding quarter last year.
Romania's accession to Schengen
The Romanian media gave much attention during October to the question of Romania joining the Schengen area, which allows free movement within European Union countries, with an emphasis on the movement of labor from country to country.
Despite a resolution of support adopted by the European Parliament on 17/10 for Romania and Bulgaria joining Schengen by the end of the year (besides Romania and Bulgaria, Cyprus and Ireland are also not part of the area), the Netherlands remained the main opponent of accession pending further checks on border-crossing controls and on the reduction of corruption and organized crime in the two countries. Romanian President Iohannis commented on the matter and said that another postponement of Romania's accession would only strengthen the skeptical voices opposing Romania's membership in the European Union.
Financial aid to Ukraine
In mid-October the Dutch government announced that it would give Ukraine aid of 70 million euro to ensure adequate heating for residents during the winter season. In addition, the Netherlands will help Ukraine by supplying anti-aircraft missiles worth 15 million euro in light of the renewed Russian attacks on Ukrainian cities.
At the end of the month the President of the European Commission announced that the Union intends to give Ukraine aid of 1.5 billion euro, after at the beginning of the month the Executive Board of the International Monetary Fund approved emergency aid to Ukraine of about 1.4 billion dollars to enable it to meet its obligations, mainly in view of the significant decline in wheat exports from Ukraine.
The war in Ukraine: how Israeli real estate people are trying to do business under fire
The article presents the testimonies of three Israeli businessmen in real estate operating in Ukraine, about eight months after the outbreak of the war. According to the interviewees, foreigners' investments in Kyiv real estate have almost completely stopped since February, transactions are carried out only in cash and in foreign currency, sales of new apartments have stopped and most buyers in existing projects have stopped paying; the office market has also shrunk after most international companies left. One of the interviewees says that his company now focuses on humanitarian aid and, at the request of the Kyiv municipality, is storing about 2,200 tons of dry food for distribution to the needy.
Source: Yedioth Ahronoth, Eduard Dux, 17.10.22
The American dream home recedes: mortgage rate at a 20-year high
According to a Freddie Mac bank survey, the average rate on a 30-year mortgage in the US reached 6.92%, compared with 3.05% a year earlier - the highest level in more than two decades, above the peak recorded in the 2008 crisis. The article describes how the rise, against the backdrop of the Federal Reserve's rate hikes, is eroding purchasing power: a household with a median income and 20% equity could have bought a home at about 339 thousand dollars, compared with about 449 thousand dollars in January. According to mortgage industry sources, activity in the market has cooled considerably.
Source: Calcalist, 14.10.22
Accurate as of the issue date. Laws, tax rates and procedures change; check the current position before any decision.
Translated from the Hebrew original. עברית