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 European Commission's economic forecast projects an improvement in growth and a decline in inflation only in 2024
B. The authorities in Greece are fighting illegal construction in Mykonos.
C. Bulgaria is preparing to switch to the euro at the start of 2025.
D. The price of an apartment in Budapest has risen by 50% in the last two and a half years.
E. The European Commission's economic forecast projects that the economic recovery will begin only in 2024.
F. A report by imobiliare.ro reviews rental prices in the large cities in Romania.
Enjoyable reading,
Ilan Leibovitch, Adv., and the office team
Israel Aerospace Industries bought about 90% of the shares of Greece's Intracom Defense
Intracom Defense (IDE), a subsidiary of the Greek group Intracom Holdings, signed a deal to sell 90.91% of its shares to Israel Aerospace Industries (IAI).
The deal is valued at almost 60 million euro and is expected to close in the second quarter of 2023, subject to fulfillment of the required conditions and approvals.
IDE specializes, among other things, in manufacturing missile launchers, missile subsystems, land and naval tactical communications, and hybrid manufacturing. The company is active in Greece and other NATO countries and has defense cooperation with major companies in the US and Europe.
As a Greek entity, IDE will be integrated into IAI's business activity in Greece and Europe, offering solutions to the challenges facing the countries of the continent. “Following the current acquisition, the company's Greek customers will continue to enjoy the company's independence, as well as a wider range and broader deployment of services to new markets,” IAI's announcement said.
The Greek authorities are fighting illegal construction in Mykonos.
Authorities on the island of Mykonos carried out a wave of arrests at the end of April and the beginning of May over illegal construction works that are changing the island's beaches.
The arrests are part of ongoing activity following revelations of rampant illegal construction, and among other things the authorities on the island halted the issuing of new building permits.
The so-called “Operation Mykonos” against urban planning violations was launched after the brutal beating of an archaeologist in Mykonos in March.
The arrests also include workers who built even inside archaeological sites.
Economic forecast of the European Commission
The spring report of the European Commission's economic forecast has been published and states, among other things, that during the last winter the European Union economy performed better than expected. With disruptions caused by the war in Ukraine and the energy crisis clouding the outlook for the European Union economy, and monetary authorities around the world launching an aggressive tightening of monetary conditions, a winter recession in the European Union seemed unavoidable last year. The autumn 2022 forecast predicted that the European Union economy would contract in the last quarter of 2022 and in the first quarter of 2023. Instead, the latest data point to a smaller-than-expected contraction in the last quarter of last year and positive growth in the first quarter of this year. The better starting position raises the growth forecast for the European Union economy for 2023.
According to a preliminary Eurostat estimate, GDP in the first quarter of 2023 grew by 0.3% in the European Union and by 0.1% in the euro area, a notch above the interim winter forecasts. A decline in energy prices, easing of supply constraints, improved business confidence and a strong labor market underpinned this positive result. As for inflation, the headline index continued to fall in the first quarter of 2023, against the backdrop of a sharp slowdown in energy prices, but core inflation strengthened and pointed to persistence of price pressures. In the second quarter, indicators point to continued expansion, with services clearly outpacing the manufacturing sector and consumer confidence continuing to recover from the historic low of last autumn.
Housing investment, which is especially sensitive to interest rates, is expected to contract. By contrast, business investment is expected to continue growing, although at a slower pace than last year, aided by the generally healthy balance sheet position of companies. A gradual normalization of economic activity is expected to reinvigorate companies' investment decisions, pushing overall investment growth up by 2.1% in 2024.
Inflation continues to erode consumers' purchasing power. Following the fall in the last quarter of 2022, private consumption is expected to weaken again in the first quarter of the year. Overall, private consumption growth in the European Union in 2023 is expected to be 0.5%. As inflation loosens its grip on household budgets, private consumption should recover to 1.8% in 2024.
Greece - the Commission forecasts growth of 2.4% in 2023 and of 1.9% in 2024. The Commission estimates that the inflation rate will fall to 4.2% in 2023 and 2.4% in 2024.
Romania - growth is expected to continue, although at a slower pace than in 2022, owing to persistent inflation, tight financing conditions and low growth among trading partners. The Commission forecasts growth of 3.2% in 2023 and 3.5% in 2024. The inflation rate in 2023 will fall to 9.7% (from about 12% in 2022) and to 4.6% in 2024.
Bulgaria - the Commission forecasts a contraction in 2023 and a drop in growth to a rate of only 1.5%. The inflation rate in 2023 will fall to 9.4% and to 4.2% in 2024.
Hungary - Hungary's GDP contracted and inflation surged in the second half of 2022, when the economy was exposed to higher commodity prices, weaker external demand and tighter financing conditions. A decline in energy prices and disinflation are expected to spark a gradual recovery starting from the second half of 2023. GDP in 2023 will stand at only 0.5% and growth is expected to resume in 2024 and reach 2.8%. Inflation will continue to rise and reach 16.4% in 2023, with a decline expected only next year, to 4%, according to the Commission's forecast.
The average apartment price in Budapest rose by 50%
In a little over two and a half years the psychological price of apartments rose from 20 to 30 million forint.
Apartments offered at 30 million forint are popular among singles and young couples. Because of the significant rise in the price per sq.m. in recent years, there is marked demand for properties at this value. The pace of price rises is clearly shown by autumn data from Otthon Centrum (Hungary's largest brokerage company).
However, according to the latest market data, the pace of price rises has slowed, mainly as a result of rising credit interest, the inflationary environment and the decline in solvent demand.
High inflation and rising interest rates affected second-hand apartment prices the least. The current price per sq.m. of 1,017,000 HUF (2,728.63 euro) is 5% higher than the prices in Q4 2022. By contrast, the rise in the price per sq.m. for new apartments has effectively stopped and stands at 747,000 HUF (2,004.22 euro), which is only 0.6% higher than in the previous quarter. Only the average price per sq.m. for family houses fell by a significant rate. The average price of 603,000 HUF (1,617.86 euro) is 18% lower than the average price per sq.m. in Q4 2022.
The report notes that there are marked price differences between the different districts of the city. Marked differences can be seen in terms of the size of apartment available for 30 million forint. With this budget, in District 3 one can find a 40 sq.m. apartment while in District 11 a 35 sq.m. apartment. The same trend continues on the Pest side, where in the popular District 13 this sum will be enough for a 35 sq.m. apartment, while in District 14 it is for a 37 sq.m. apartment. In the outer suburbs of Pest, on the other hand, one can buy a 40 sq.m. apartment, at least one and a half rooms, and in Csepel one can buy a 56 sq.m. apartment, two and a half rooms, for 30 million forint. It is almost impossible to find an available family house for 30 million forint. Considering the average price per sq.m., one can buy a house of 50 sq.m. with this budget. However, there is a shortage of such small family houses on the market.
Bulgaria is preparing to switch to the euro at the start of 2025
Bulgaria's finance minister, Rositsa Velkova, declared that Bulgaria is preparing to switch to the euro on 1 January 2025.
Following the announcement, the Bulgarian central bank said at the end of the month that Bulgaria is in the final stretch on the road to joining the eurozone.
How much does it cost to rent an apartment in Romania?
According to a report by the website imobiliare.ro
In Bucharest the average rent for a studio apartment stands at 300 euro, 460 euro for a 2-room apartment and 640 euro for a 3-room apartment, with the largest price rise in 2-room apartments (10.5%).
In Brașov the average rent for a studio apartment stands at 280 euro, 400 euro for a 2-room apartment and 550 euro for a 3-room apartment, with the largest annual rise in rents for 3-room apartments (14.8%).
In Cluj the average rent for a studio apartment stands at 300 euro, 460 euro for a 2-room apartment and 599 euro for a 3-room apartment, with the largest annual rise in rents for 3-room apartments (15.5%).
In Constanța the average rent for a studio apartment stands at 263 euro, 400 euro for a 2-room apartment and 550 euro for a 3-room apartment, with the largest annual rise in rents for studio apartments (20.3%).
In Iași the average rent for a studio apartment stands at 270 euro, 370 euro for a 2-room apartment and 450 euro for a 3-room apartment, with the largest annual rise in rents for 2-room apartments (10.4%).
In Timișoara the average rent for a studio apartment stands at 220 euro, 350 euro for a 2-room apartment and 400 euro for a 3-room apartment, with the largest annual rise in rents for 3-room apartments (9.3%).
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.
Apartment prices in Romania - May 2023
In 5/23 a rise in the average price was recorded across the country.
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