Hello,
The Hanukkah holiday, which we are in the midst of, has not yet brought the hoped-for miracle and an awakening in the real estate market in Israel and abroad, which has been in a waiting period since October 7. We are seeing few real estate transactions, especially after the hopes that arose at the start of the war with the growing interest in real estate in countries within a relatively short flight from Israel.
This month we would like to draw your attention to:
A. The forecast for economic growth in Greece for 2023 stands at 2.4%.
B. A slowdown in the real estate market in Bulgaria in Q3.
C. The VAT increase on new apartments in Romania from January 1, 2024.
D. Investment in the residential sector in Europe overtakes investment in the office sector.
We have launched a new international real estate column - every week we will share two stories from the field
Wishing quiet and safe days to us all, and enjoy the read,
Adv. Ilan Leibovitch and the office team
OECD report forecasts growth of 2.4% in Greece's economy in 2023
According to the report, the growth forecast for 2024 is only 2%. According to the report, private consumption is expected to decline because of the cost of living and the damage from the recent natural disasters, but to strengthen gradually as inflation falls and as the decline in unemployment supports household purchasing power.
The governor of the Bank of Greece, Giannis Stournaras, has also updated the 2023 growth forecast to 2.4%, although he expects growth of 2.5% in 2024.
Slowdown in the Bulgarian real estate market in Q3
A report published in Bulgaria in early November shows that in the third quarter of the year a decline in prices was observed in the second-hand apartment segment, together with a slowdown in the pace of transactions.
In Sofia, the capital, the effect is especially pronounced, with a decrease in the number of real estate transactions closed, 7,001 compared with the previous quarter (8,615). Plovdiv and Varna also recorded similar declines, while Burgas, by contrast, saw an increase in transactions, with 1,931 compared with 1,736 in the previous quarter.
Across the country, total real estate transactions in the third quarter came to 54,277, a slight decrease compared with 54,371 in the second quarter. This also reflects a decrease compared with the corresponding period in 2022, when transactions numbered 62,459.
Average housing prices in Sofia remained relatively stable compared with the previous quarter, with two-room apartments ranging from 1,600 to 1,800 euros per sqm and three-room apartments ranging from 1,500 to 1,700 euros per sqm. The city center commands higher prices, with properties in the center averaging about 2,500 euros per sqm and about 1,800 euros per sqm.
VAT on new apartments rises to 9% from January 1, 2024
Following last month's report on the increase in VAT on new apartments from 5% to 9%, it is important to note that the legislation has changed so that, in addition to the requirements of price, size of the apartment/house sold and area of the land on which the house is built, which were the condition for the reduced VAT, further conditions were added that must all be met together:
- 1. External finishes include at least: a roof, if, depending on the type of construction, this structural element is provided, windows, an entry door;
- 2. Internal finishes include at least: walls finished with paint, wallpaper, tiles or other elements used for finishing, floors finished with tiles, parquet or other elements used for finishing, interior doors, depending on the project;
- 3. Sanitary installations and sanitary fixtures, including preparation for a washing machine;
- 4. Electrical installations, including panels, sockets, switches/switches and sockets;
It is important to note that in the last two months, since the announcement of the VAT increase, an awakening has been observed in the real estate market and an increase of about 15% in sales, mainly of apartments in projects in the final stages and/or at handover, as buyers sought to enjoy the reduced VAT rate of 5%.
The concern in Romania is about the long-term effects of the VAT increase in the current interest rate environment, which may make it harder for developers and contractors to sell new apartments.
Development of apartment prices in Greece
Development of apartment prices in Romania
The Hagag Europe group signed a conditional agreement to acquire 51% of a residential and commercial project in Bucharest
According to the report, the Hagag Europe group informed the stock exchange that it signed a conditional agreement to acquire 51% of a mixed residential and commercial project in Bucharest, with an estimated scope of about 100 million euros. Under the agreement, the company will provide equity of 8 million euros for construction, and the partner will provide the land and receive its consideration from the project's surplus. The project is to be built in two stages and include about 600 housing units and retail space; the first stage already has a building permit, and construction of its structural frame is nearing completion.
Source: Ice, 03.12.2023
For the first time: investment in the residential sector in Europe overtakes the office sector
According to JLL data cited in the article, investment in residential real estate in Europe totaled 8.5 billion euros in the second quarter of 2023 and for the first time overtook investment in offices, which stood at 7.8 billion euros. The article explains the change mainly by a 67% drop in office investment compared with the corresponding quarter, against the backdrop of the shift to working from home and hybrid work since COVID, while demand for rental housing grew following rising interest rates and inflation. The student housing sector stands out in particular, with a yield of 4.8% according to JLL, and it is reported that Menora Mivtachim will invest in five student housing projects in the UK worth about 450 million pounds.
Source: TheMarker, Yosef Harash, 20.11.2023
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