Hello,
As every month, we bring you the hottest international real estate news from around the world.
This month we want to draw your attention to:
A. The golden visa in Greece - what it is and the expected changes.
B. Apartment rent increases since the start of the year in Hungary.
C. Brașov has become the second city in Romania in residential housing prices.
D. The average apartment price in Romania continues to slow for a second consecutive month because of falling demand.
E. The Israeli company Tefron bought a textile plant in Romania.
F. Have we reached the opportunity stage in the real estate market in the US?
Enjoyable reading,
Ilan Leibovitch, Adv., and the office team
The golden visa in Greece - what is it? And how is it connected to buying an apartment
Which of you has recently opened your Facebook feed without coming across an ad offering you a property in Athens/Thessaloniki or one of the Greek islands? The growing interest in real estate investment abroad these days is at an all-time high. Besides the investment motive, the search for buying a property abroad is also done in order to obtain eligibility for European residency/citizenship, whether as an option to live for a few months, for vacations, or on a permanent basis. The problem of third-country nationals, who cannot enter Greece or can stay only for a short period, was solved once and for all with the introduction of the golden visa program in Greece. With the renewal of the provision of Art. 20B of Law No. 4251/2014, Greek legislation allows the granting of a residence permit for five years, with unlimited renewal, to third-country nationals who invest by purchasing real estate in Greece.
The investment amount for golden visa eligibility in Greece
A necessary condition for obtaining a golden visa in Greece is buying apartments or houses in Greece, for sale, for a certain price, by notarial deed. This price will total 500,000 euro for the areas of Athens, Thessaloniki, Santorini and Mykonos (from July 2023, although it is possible that the date on which the change takes effect will be extended again) and 250,000 for real estate in the rest of Greece. An investment in Greece in the 250,000 euro areas may relate to the purchase of a single property or several properties up to the minimum investment value. For a property in Athens, Thessaloniki, Santorini and Mykonos, the 500,000 euro investment must be made by purchasing only one property.
At the same time, investors wishing to invest in Greece in the areas of Athens, Thessaloniki, Santorini and Mykonos are entitled to apply for a golden visa in Greece until 31.12.2023, with a minimum investment value of 250,000 euro. This is subject to the condition of paying a deposit of 10% of the purchase price by 31 July 2023, whether by signing a notarial preliminary agreement or by signing a private agreement. It is important to note that in areas such as Kalamaria and Panorama in the Thessaloniki area and Piraeus in the Attica area, the investment amount remains at 250,000 euro and applies to the purchase of more than one property.
Duration of the eligibility period
A golden visa in Greece is valid for 5 years and is renewable without limit every five years, provided that the property remains in the investor's ownership. Periods of absence from the country are not an obstacle to renewing the residence permit. It goes without saying that a resale of the property in Greece during the residence permit period to another third-country national entitles the new buyer to a residence permit, with the simultaneous cancellation of the seller's residence permit.
The golden visa in Greece - what does it give?
Besides the investor himself, his family members are also entitled to a residence permit in Greece, that is, the spouse, children under the age of 21, the parents of the person making the investment in Greece and the parents of his spouse.
A golden visa in Greece allows the right to live in the country, without limit.
The investor also has the right to rent out the property he owns.
Holders of a golden visa in Greece can move among the 27 Schengen countries (all European Union countries except Romania, Bulgaria, Ireland and Cyprus, plus Norway, Iceland, Switzerland and Liechtenstein, which are not members of the Union). Without any additional requirements.
It is important to emphasize that a golden visa in Greece does not grant a right of access to work in Greece.
Rents in Hungary continue to rise
Demand for residential rentals in Budapest exceeds demand for purchases, and as a result rents in the city and in Hungary in general continue to rise. Rising mortgage interest rates are driving the public to the rental market.
Since supply has not risen but demand has remained strong, rents in Budapest have begun to rise. According to Zoltán Gadanecz, founder and owner of GDN Real Estate, people are aware that they will not get hold of a good rental unless they are willing to pay more. “People do not mind paying 100-150 euro more for a property that meets their needs in all its parameters, one that is pleasant and feels like a proper home. Tenants are willing to spend more on rent and try to cut back on other expenses instead.” Rents are estimated to have risen since the start of the year by an average of 250 euro (depending on the size of the apartment, its location and its equipment).
Apartment prices in Bulgaria continue to rise
Property prices continue to rise, but there are already signs of slowing growth. It is expected to be more pronounced in the second half of the year, since that is when the more significant rise was also recorded last year.
According to the agency Bulgarian Properties, both investors and those looking for a home to live in are active in the market. The share of 3-room apartments purchased - 42% - is already equal to that of 2-room apartments, which dominated the market last year with a 70% share. Time on the market for properties continues to be short, and deals were often completed within a few days.
The agency also reports that new property listings rose by about 10% compared with the corresponding period in 2022. This is the first rise since 2019, as the first quarter of 2020 was marked by the pandemic and limited business activity, after which the available supply began to run out quickly. The properties that came onto the market could not meet the increased demand and catch up with the pace of completed sales, according to the company's analysis.
In addition, the volume of new housing loans is growing. According to BNB data, in the first months of 2023 the volume of loans rose by about 20% compared with a year earlier.
The average price of homes purchased in the first quarter of 2023 in Sofia, according to the agency's data, is 1,545 euro/sq.m., compared with 1,345 euro/sq.m. in the first quarter of 2022 and 1,550 euro/sq.m. at the end of 2022. This represents a rise of almost 15% on an annual basis.
The year-on-year price rise in previous quarters stood at 22-23%. It can be seen that the current growth rate is slowing, but remains significant, the report notes. After adjusting for inflation, real growth stands at only 1.3% on an annual basis, the lowest level since 2020. The largest price rises were recorded from the end of 2021 through 2022, according to the agency's data.
According to them, the overall average price of apartments purchased in the first quarter rose to 132,800 euro compared with an average price of 115,500 euro in 2022. This shows that market activity has moved to larger apartments compared with last year, against the backdrop of dominant purchases of 2-bedroom apartments.
Land registry office data for the first quarter showed a third consecutive quarterly decline in the number of transactions on an annual basis. In Sofia, the decline was 12.2% in the January-March period, compared with 15.17% in the second half of 2022.
The agency's data show a much smaller decline in sales volumes in Sofia during the first months of the year - below 5%. This is explained by the active new-construction market, in which transactions are registered at a later stage.
How much tax will you pay on a real estate investment in Romania
At the outset, let us put this on the table - Israeli residents are required to report to the Israeli tax authorities on ownership of a property abroad and also on income from properties abroad (even if in practice you did not physically transfer the income from abroad to Israel).
Brașov has become the second residential real estate market in Romania after Bucharest
According to a report by the consultancy SVN Romania, Brașov has become the second most important residential real estate market in Romania after Bucharest, after more units were sold there in the first quarter of 2023 (2,180) than in Timișoara (2,050) and Cluj (1,800).
According to the report, more than 250 million euro will be invested in the next 5 years in residential projects in Brașov and its surroundings, intended mainly for tourism, in addition to investments in building hotels and guesthouses.
Shikun & Binui Energy will build a solar power generation facility in Romania
Shikun & Binui Energy will build a photovoltaic park in Satu Mare in northwestern Romania with a generation capacity of 70 megawatts. For the construction of the project the company will receive financing of about 40 million euro from Raiffeisen Bank.
Tefron buys a textile manufacturing plant in Romania
The Israeli company Tefron signed an agreement to buy the shares of the Romanian company Adesgo for 2 million euro, plus assets and inventory worth 1.5 million euro to be paid in several installments by the end of June 2025. As part of the deal, Tefron receives, beyond Adesgo's customer list, also 125 production machines.
Adesgo was founded in 1926 and, after the end of the Communist regime, was privatized in 1993. The Romanian company has 100 employees and manufactures leggings and women's underwear, with 85% of its output exported.
Apartment prices in Romania - April 2023
In 4/23 a further decline in the average price was recorded across the country.
“The war in Ukraine is pushing rents in Eastern Europe upward”
In an interview with Merkaz HaNadlan, Avi Barzilai, CEO of Efi Nechasim, describes the rise in demand for rental apartments in Poland and Eastern European countries, which he says stems from rising interest rates that divert potential buyers to the rental market, from the movement of the population from the countryside to the city, and from young people's growing preference for renting over owning. According to him, another factor that makes Poland distinctive is the arrival of 3.5 to 4 million refugees from Ukraine, about 10% of the country's population, who were absorbed into the existing infrastructure, including the rental apartment market. Barzilai also notes that the yield from rental apartments in Poland is around 6%, compared with 2%-3% in Israel.
Source: Merkaz HaNadlan, Nimrod Buso, 13.04.23
The real estate market in the US - have we reached the opportunity stage?
The indications are that the US real estate market is experiencing a slowdown, as the central bank fights inflation through interest rate hikes. The base rate has reached about 5%, a high not seen since 2007, and it does not look like it is about to stop.
Beyond the collapse of banks in the US and Europe, we are witnessing a retreat in prices and a general slowdown in the real estate market, together with companies cutting their workforces.
Apartment prices in the US according to the Case-Shiller index (the index tracks apartment prices in 20 major US cities) continued to fall in April as well, most likely as a result of costlier mortgages and the burden on companies that took loans for leverage purposes. We are not yet witnessing a situation like the 2008 crisis, but continued interest rate rises and the continued insistence of sellers, who have become accustomed to a high price, on not lowering prices may bring a decline in the number of transactions and consequently continue the downward price trend.
Can one person's troubles be another's opportunity?
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