Hello,
The war continues, and at the outset we want to send greetings to the IDF soldiers and to wish all of us that everyone returns home safely soon, together with all the hostages.
This month we would like to draw your attention to:
A. The double-digit rise in apartment prices in Greece in 2023.
B. Apartment prices in Romania continued to rise in January 2024 as well, despite a slowdown in prices of new (first-hand) apartments.
C. Is a changing trend visible in real estate in Hungary in terms of purchases by locals?
D. Concern in Bulgaria about rising property prices after the switch to the euro.
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
Apartment prices in Greece continued to rise in 2023
Greece's Golden Visa program - changes among investors
According to figures from the authorities in Greece up to the end of November 2023, the number of Golden Visas granted to investors from the United Kingdom rose by 77.8% to 370 by the end of November 2023, compared with 208 in January. Correspondingly, visas for US citizens (among them some second- and third-generation expatriates) grew by 47.5%, from 183 at the beginning of 2023 to 270 by the end of November.
The great demand for the “Golden Visa” program, despite the doubling of the amount to 500,000 euros in central Athens, the northern and southern suburbs of Attica, Mykonos, Santorini and Thessaloniki, continues among investors despite the sky-high prices.
In parallel there are reports of increased purchases in Rhodes, Crete, Halkidiki, Lefkada and Corfu, with buyers focusing on smaller properties that will also serve as an investment
Colliers forecast for the Romanian real estate market in 2024
Romania's real estate market will continue to be a sector with high growth potential, even if the pace may be slower in 2024 than before COVID, Colliers consultants predict in a report they published. However, this year is expected to be better than 2023 for a large number of sub-sectors.
2024 is expected to remain difficult for the local investment market as well, with better days expected further on, owing to falling interest rates, a growing shift in focus from retail parks to large retail projects, and rising demand and affordability in the residential market. Colliers analysts note that the year will also be dominated by a lot of political noise, in light of the presidential elections, the local elections and the European Union parliament elections.
2024 looks fairly optimistic for Romania's economy, and subsequently for the real estate market too. Some of the most encouraging signs are the large ongoing infrastructure developments, the significant capital inflow expected through European funds, and the fact that Romania is becoming a more prominent regional distribution hub, especially for Southeast Europe. In addition, the still tight labor market, a better external context for Romania's main trading partners, plus a retreat in inflation, indicate that 2024 should be better than 2023, and Romania's economic growth is estimated at around 3% this year. Still, there are also concerns, both internal, such as the country's huge fiscal imbalance, and external, where several key uncertainties persist, especially regarding geopolitics.
2023 was a decent year for infrastructure development in Romania, with 80 km of motorways and expressways put into service, well above the annual average of the last 33 years (26.6 km). And the major infrastructure transformation continues in 2024 and beyond. Major modernization improvements are also planned for railways in certain parts of the country. The prospect of an improved business environment, together with potential entry into the Schengen area for land borders, is attracting investors' attention, especially to areas of the country with lower wages and better labor availability, according to Colliers consultants, which leads to better dispersion of growth and economic resources.
Romania's geographic location, as well as its specific economic advantages - in particular the high gap between labor costs and labor productivity, compared with China, for example - support the idea that Romania will become a hub for logistics and manufacturing activity in the context of the “friend-shoring” trend.
Politics will be in the spotlight this year, as Romanians are expected to vote four times. For the first time in the country's history, the president, mayors and parliamentarians are finishing their terms in the same year. This means there will be local, presidential, parliamentary and European Parliament elections. The main scenario that local political analysts are now pushing is the continuation of the current governing coalition after the elections, a pro-European/pro-Western socialist-liberal coalition, but there is still room for surprises. On the other hand, the absence of elections from 2025 creates a more favorable context for less popular but necessary reforms.
The office market is expected to see its lowest delivery rate in about two decades. Only one large project of about 16,000 sqm is expected to be delivered this year in Bucharest, making it the weakest year since 2004-2005, when the office market was in its initial stage, note Colliers consultants.
The industrial and logistics sector remains active, especially compared with pre-pandemic levels, although the unprecedented rise in rents, of more than 10% a year, both in 2022 and in 2023, affects the attractiveness of Romanian warehouse facilities for international companies. The outlook remains promising, as Romania ended 2023 with less than 7 million sqm of modern warehouses, a fairly limited supply by European standards, especially in light of the ongoing infrastructure improvements and the demand expected to grow against the backdrop of reshoring.
Colliers consultants expect an increase in demand and prices in the residential market. Many of Romania's dynamic cities and economic regions are dealing with congestion, which in the long term sustains demand for affordable housing units in many parts of the country. In addition, the expected easing of the central bank's monetary policy, expected to begin in mid-2024, together with strong wage growth, should support buying interest. For the most part, affordability relative to wages has deteriorated slightly in recent years, but from 2023 this trend reversed, and we expect this positive dynamic for consumers to continue.
In the land market, Colliers consultants noted a slight decline in investor appetite in 2023, as measured by new inquiries, and this trend is expected to continue in 2024 since many developers already have land for future development. However, a number of large transactions that have been in the pipeline for some time may close in 2024, which will bring a solid year. Land prices may start rising again more significantly.
Imobiliare.ro: apartment prices continued to rise in January 2024
In Bucharest a decrease of 6.6% in prices of new apartments was measured compared with December 2023, and the average price per sqm stands at 1,577 euros, while in second-hand apartments an increase of 2.15% was measured and the average price stands at 1,642 euros/sqm.
In Cluj-Napoca too a decrease in prices of new apartments of 4.1% was measured, and the average price stands at 2,713 euros/sqm, while in second-hand apartments there was an increase of 2.4% and the average price stands at 2,622 euros/sqm.
In Brașov an increase of 2% in prices of new apartments was recorded and the price stands at 2,084 euros/sqm, and in second-hand apartments an increase of 2.5% was measured and the average price stands at 1,704 euros/sqm.
Real estate experts - extra caution in the real estate market in 2024
The housing market in 2023 flipped because of the subsidies that could be used; the largest number of residential real estate transactions were not in Budapest but in villages where the state's benefits could be exploited. Discounts: the decline in the number of transactions stopped at the end of the year, and the prospects for this year are more encouraging than before.
The housing market has experienced ups and downs over the past twenty years, and the slowdown was characterized by a smaller rise, summed up Gábor Soóki-Tóth, head of analysis at Otthon Centrum (OC), regarding the real estate market trends of the last two decades, noting that this curve applies to the current period as well. According to him, in 2023 there were 100,000-110,000 fewer transactions than before. The decline can be explained mainly by the base interest rate that was raised in order to curb inflation, which made housing loans significantly more expensive. Although many buyers hoped for a price drop (unlike 2008, the market did not collapse this time), sellers preferred to wait, and the price correction was minimal, but at the same time the pace of price increases slowed or stopped.
Purchases for investment purposes decreased compared with previous years: buyers turned to government securities, which were much more liquid and promised a higher return than residential real estate.
But besides the number of sales, the geographic distribution also changed noticeably: in 2014 - 2015, the largest number of sales was still in Budapest, then sales grew in the other large cities, and afterwards - especially after the introduction of the village tax - the number of purchases rose in rural areas, mainly in settlements around the large cities. By contrast, in almost all the quarters of 2023, the largest number of residential property sales was mainly in the rural areas where state support was provided.
2024 has brought a decline in mortgage interest rates, with the rate at most banks in the country standing at 6% or lower. This fact encourages the market, and analysts expect an increase in the number of transactions in the coming months.
Analysts warn of a potential jump in property prices in Bulgaria amid entry into the eurozone
Petar Mastikov, chief analyst at the Bulgarian National Register of Construction and Reconstruction, sounded a note of warning, expressing concern about a possible speculative rise in property prices across Bulgaria once the country enters the eurozone. Mastikov expects a short-term rise, less intense than the notable peaks seen in the last two years, followed by a stabilization in the real estate market. For 2024, he expects a growth range of 2% to 5%, citing the upcoming entry into the eurozone and full Schengen membership as the driving factors.
While a slight decline in residential construction is expected, with an anticipated drop of up to 5% in 2024, office space appears set to maintain its momentum, with the 30% growth trend of 2023 expected to continue. The resort construction sector is expected to see a significant increase, with forecasts exceeding 20%, an increase attributed to the expected positive effects of Bulgaria's Schengen membership, with expected contributions from the Romanian market.
Mastikov stresses that 2023 marked a significant milestone, recording the highest volume of new construction in all functional sectors since 2008, with a total of 7,650 million sqm of usable floor area. Despite a 6.56% decline in residential construction compared with the previous year, other sectors, including public buildings, hotels and leisure spaces, experienced growth, which effectively compensated for the slight decline in the residential sector.
The analysts highlight the rapid recovery in the office building segment, driven by the widespread return of employees to offices, which leads to increased demand for quality workspaces. Resort construction, especially along the southern Black Sea coast, recovered in 2023, with positive growth expectations for 2024, as a result of Bulgaria joining Schengen as well as support from the Romanian market.
In 2023, special-purpose buildings such as hospitals, kindergartens and schools recorded significant investment activity, marked by the launch of 16 hospital projects, mainly in the private sector but also including state and municipal initiatives. The hotel construction sector experienced an impressive rise of almost 100% in 2023, growing from 70,000 to more than 140,000 sqm of usable floor area, with optimistic forecasts for continued positive trends in 2024.
Commercial space saw a 4% increase in 2023, marked by the launch of construction projects totaling 400,000 sqm, concentrated mainly in retail parks. While Sofia remains first in new construction, Plovdiv and Burgas emerged as dynamic areas, with Ruse and Pleven experiencing notable growth. The analysts expect that the development of the motorways linking Sofia, Pleven and Ruse will contribute to a clear trend in industrial construction.
Changes in the residential real estate market in Ukraine
The war has affected the perception of housing in Ukraine in both the primary and secondary markets, and with regard to both buying and renting. Factors such as physical security and mass migration have become decisive elements.
In addition, real estate investors have almost completely disappeared from the market. Today, no one invests in a building that has not yet been built (pre-sale or purchase at the planning stage), although two or three years ago, this willingness significantly stimulated the construction business in the country. The key criteria for choosing apartments were a high level of project readiness and stable construction dynamics. Today real estate buyers are not investors but only Ukrainians (internal migrants).
In the secondary (second-hand) market, people buy and rent ready-to-occupy, renovated apartments. Buyers also pay attention to amenities such as a parking lot and schools and kindergartens that should be within walking distance. At the same time, the demand is for housing located as far as possible from critical infrastructure facilities that could be a target for attacks. There is no trust in old buildings from the Soviet period because they tend to collapse during shelling, and older basements are not suitable as shelters. In the second half of 2023 people began returning to Ukraine. At the same time, market conditions are now dictated by buyers, who are looking for the most favorable terms. In light of the risks, priority is given to apartments in buildings that are in the final stages of construction.
Construction costs in 2023 rose by about 20%, which will lead to higher real estate prices in 2024. For example, the cost per sqm in a completed building in the Greenville residential complex, located in central Kyiv, is on average 2,400 dollars, and the price in a building under construction is 2,000 dollars.
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