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.
Please note: every month we make great efforts to bring you the main real estate news in the countries where we operate, and this month we added something new: at the end of each review there is a summary of a professional opinion from the desk of the writer, Adv. Ilan Leibovitch.
This month we would like to draw your attention to:
A. Greece is planning a further increase in the investment threshold for a Golden Visa.
B. Investment in building hotels in Mykonos is resuming.
C. A record in apartment sales in Bucharest and Ilfov in January.
D. A moderate economic recovery is expected in Romania in 2024-5.
E. Hungary - the Golden Visa law has come into force.
F. A rise in the rent trend in Hungary.
G. Bulgaria - 2024 is expected to be a stable year with price rises in the residential real estate market.
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
European Commission: a decline in Greek GDP growth in 2023
Greece achieved the lowest growth in 2023, according to the Commission's forecasts, recording a 2.2% rise in output, although it kept its forecast for 2024 and 2025 steady at 2.3%. As the Commission's report notes, after the strong recovery in 2022, consumption remained the main driver of GDP growth last year. In a difficult financing environment due to high interest rates, investment made a significant contribution thanks to strong construction activity and the implementation of the Recovery and Resilience Plan. Net exports also made a positive contribution to growth, according to the Commission.
In 2024, real consumption is expected to expand at the same pace as in 2023, and as a result its contribution to real GDP expansion will be slightly lower. Investment is expected to grow significantly as the implementation of the Greece 2.0 plan accelerates and as financing conditions are expected to ease.
Annual inflation measured by the harmonized index of consumer prices fell to 4.2% in 2023. Together with the recently announced minimum wage increase (from April 2024), they are expected to put upward pressure on prices, which will partially offset the effect of lower energy prices on inflation.
Mykonos - investment in building hotels is slowly resuming
Despite the significant delays encountered so far by the large tourism investments in Mykonos, it seems that the obstacles are gradually being overcome one after another and the projects are getting on track. The most recent example for Mykonos is the 154 million euro tourism project that was put to public consultation in order to be licensed by Enterprise Greece as a strategic investment.
This is the first complex project to be built on the island by Southrock, a fund that is a partnership between Yiannis Delikanakis and the Otto group. It involves building a 5-star tourist accommodation complex with a capacity of 40 rooms and 12 furnished tourist houses in Agrari, Mykonos.
A similar investment is the one planned by the Mitsis hotel group, on an area of about 150 dunams (roughly 15 hectares) in the Elia area. It is a project with a total budget of 61 million euros, including the development of a 5-star hotel with a capacity of about 194 beds.
The brake was “released” for another especially problematic project, called “Blue Iris” by AGC Equity Partners in the Karapetis area of Mykonos. This development came after the Council of Ministers decided to cancel the construction of a marina that had been planned in the original plan, following an appeal by the municipality of Mykonos. The investment is estimated at about 79 million euros and includes building a 5-star hotel unit with 192 beds, with accompanying sports facilities, a health center (spa), a multipurpose events complex and shops. The investment also includes building 65 residential houses, a restaurant, a spa, an events and conference space, a church and swimming pools.
Another large investment, which has nevertheless remained stalled for many months, is Grivalia's Project Blue in Kalo Livadi, Mykonos. The Council of State did not approve the original development plan, with a total area of 92.5 dunams (roughly 9.25 hectares). Grivalia is forced to proceed to prepare a new plan, with a smaller capacity, from 150 beds to 80 beds, of which 20 are in villas. The investment amount is now estimated at 120 million euros and the works are expected to take three years in total.
The Mykonos by White Mulberry Development resort is also on its way to implementation with no obstacles so far. The project is being developed on an area of 218.9 dunams (roughly 21.9 hectares) in the Kalafatis area. The tourist complex will include 5-star hotel facilities, 14 furnished tourist houses, a conference center as a special tourism infrastructure (STI), catering facilities, sports facilities, a spa, commercial facilities, a helipad and accompanying infrastructure projects (water supply facilities, irrigation-drainage, paving internal roads and so on).
Greek prime minister: “a further increase in the investment threshold for a Golden Visa is planned”
Greek prime minister Kyriakos Mitsotakis announced that the government is considering raising the threshold for a Golden Visa to 800,000 euros, including in areas where there is not yet pressure from a housing shortage, and that “owners of Golden Visa properties should be required only to rent them out long-term”.
The Golden Visa program has channeled money into Greece, but it has distorted the real estate market. According to the media, a total of 2.6 billion euros has flowed into Greece through the “Golden Visa” program over the last three years.
Buying real estate through the Golden Visa program has enabled non-European Union citizens to invest in real estate in exchange for residence permits and free movement in the Schengen countries.
About 15,000 applications were approved, opening the way for 31,000 foreign investors and their family members to live in Greece and move freely, without restrictions, to the countries where the agreement is valid. 56% of the approved applications relate to Chinese nationals, followed by Turks with about 10%.
The increased interest in Greece's “Golden Visa” may have brought foreign money into the country, but it has also created problems, mainly the great demand for real estate and, as a result, the “explosion” of prices and a housing shortage for Greeks. According to data from the real estate market and the banks, the market is currently short of 212 thousand apartments. At the same time, data from the Bank of Greece showed continuing double-digit rises (from 11% to 15% in the first three quarters) of 2023.
In an attempt to “fix” the situation that has arisen, the Ministry of Economy and Finance is preparing a set of measures to deal with the housing problem, and is introducing changes to the Golden Visa regime. Today the 500,000 euro threshold applies to the areas of Penteli, Kifissia, Metamorfosi, Chalandri, Agia Paraskevi, Vrilissia, Nea Ionia, Heraklion, Cholargos, Papagou, Pefki, Lykovrysi and Marousi. In the remaining areas the threshold of 250,000 euros remains, which will be doubled, as was done in parts of greater Athens, Thessaloniki and the islands of Mykonos and Santorini.
From the writer's desk:
1. Greece is expected to face economic challenges in 2024, but there are also opportunities for growth. Success depends on the successful implementation of structural reforms and government programs.
“The Greek economy: challenges and opportunities” (CEPS, 2023):
- “Greece needs to focus on structural reforms in order to boost growth and reduce unemployment.”
- “Investments in infrastructure and education are essential for improving productivity.”
“The impact of the Recovery and Resilience Plan on the Greek economy” (Bruegel, 2023):
- “The Recovery and Resilience Plan is expected to lead to higher economic growth in the coming years.”
- “It is important to implement the plan efficiently and in a targeted way.”
2. The tourism industry in Mykonos is starting to show signs of recovery, with several new projects receiving approval. However, challenges still exist, such as delays and bureaucratic difficulties
- “We are seeing growing interest from foreign investors in Mykonos,” said Yiannis Delikanakis, co-founder of the Southrock fund.
- “We believe Mykonos will continue to be a major tourist destination in the coming years,” said Katerina Tsigarida, CEO of the Mitsis group.
- “It is important to find a balance between tourism development and preserving Mykonos's unique character,” said Panagiotis Koukoulis, mayor of Mykonos.
3. The Greek government is taking significant steps to deal with the negative effects of the “Golden Visa” program on the housing market. Raising the investment threshold and requiring properties to be rented out long-term are two examples of these steps. These steps are expected to reduce demand for properties and increase the supply of apartments, thereby contributing to correcting distortions in the housing market.
“The impact of ‘Golden Visa’ programs on housing markets” (Journal of Housing Economics, 2023):
- “‘Golden Visa’ programs can lead to higher housing prices and harm local residents.”
- “It is important for governments to balance the economic benefits of these programs against the social effects.”
“The challenges of the Greek housing market” (Bruegel, 2023):
- “Greece needs more affordable housing for its residents.”
- “The government needs to take significant steps to deal with the housing problem.”
The real estate market is starting to wake up: record January sales in Bucharest and Ilfov
January 2024 was the strongest January in the last 4 years for real estate transactions in Bucharest and the strongest January in the last 3 years for sales in Ilfov.
Despite the VAT increase and global economic uncertainty, apartment sales, both new and old, recorded a 9% rise in the capital in January 2024 compared with the same month last year, reaching almost 3,100 units sold.
In Ilfov, the official data provided by the National Agency for Cadastre and Land Registration (ANCPI) show a surge in transactions for the same period, with 75% more real estate transactions in January 2024 compared with the first month of last year, and a total of 510 apartments sold.
The positive sales trend since the start of the year is also reflected in ANCPI data at the national level. In January 2024, 10,215 homes were sold across the country, 25.8% more than in the corresponding period last year. Annual increases were observed in all the large regional markets, from Constanța (15.6%) and Brașov (17.1%) to Cluj (44.7%).
Vlad Musteață, CEO of North Bucharest Investments, said in an interview with the media that “we are seeing a decline in the supply of new properties on the market due to a decline in the number of building permits issued. This reduction in permits is increasing demand for existing properties. The VAT increase has proven not to have had the expected negative effect, and real estate continues to be attractive both for investment and for housing”.
In the Bucharest-Ilfov area, 3,600 units were sold in one month, according to ANCPI, that is, almost 30% of all national sales, which reached 10,215 units in January.
New homes now account for about 25% of all homes offered for sale in Bucharest and Ilfov. The limited availability of new real estate on the market was one of the reasons that raising the VAT rate from 5% to 9% for homes under 120,000 euros did not lead to a significant decline in transactions in 2024.
“Romania real estate market forecast for 2024” (PwC, 2024):
- “Demand for properties is expected to remain high in 2024, mainly from foreign investors.”
- “The supply of new properties is expected to remain limited, which may lead to price rises.”
“Romania's real estate market is heating up: a rise in apartment sales in January 2024” (Reuters, 2024):
- “The rise in apartment sales surprises many, in light of global economic uncertainty.”
- “Professionals note that the high demand stems from a limited supply of new properties.”
“VAT went up, but Romania's housing market continues to grow” (Bloomberg, 2024):
- “The VAT increase did not harm demand for properties, as many feared.”
- “Foreign investors continue to see Romania as an attractive investment destination.”
The European Union expects a moderate economic recovery in Romania in 2024 and 2025
The European Union Commission, in its winter forecast of February 15, revised downward Romania's economic growth forecast to 2.9% for 2024 and 3.2% for 2025, a drop of 0.2 points for each of the two years compared with the autumn forecast in November. The downward revision is milder than the average deterioration in the EU's expectations for the eurozone (0.8 points), and the country is still expected to make stronger economic progress in the Union this year. Romania's economy slowed to growth of 2% in 2023 from 4.1% in 2022, according to flash estimates by the European statistics office, compared with a more pessimistic estimate of 1.8% by the European Commission.
The economy regained momentum in the last months of 2023, and this bodes well for economic activity in 2024. The Commission says that the economic recovery in 2024 will be driven by higher private credit growth and a continued rise in real disposable income. While private consumption is expected to accelerate, investment will also remain the main contributor to GDP growth this year. Monetary policy is expected to remain tight in 2024 and to ease only gradually as inflationary pressures subside.
On February 12, the Romanian government updated its macroeconomic forecast, projecting growth rates of 3.4% and 4.0% for this year and for 2025, respectively.
Regarding prices, the Union expects a steady decline in inflation starting from January 2024. The figures are generally in line with the central bank's targets.
From the writer's desk:
1. Romania's real estate market is showing signs of strong recovery, with a significant rise in apartment sales at the beginning of 2024. Factors such as the decline in the supply of new properties and the VAT increase did not manage to curb the high demand for properties. The positive trend is expected to continue in the coming months as well, which may lead to price rises in the market.
2. The European Union expects a moderate economic recovery in Romania in 2024 and 2025. The growth forecast was revised downward, but Romania is still expected to show stronger growth than the European Union average. The main growth factors will be higher growth in credit to individuals, a rise in real disposable income and continued investment in infrastructure.
A new era for investors: the Golden Visa law has come into force in Hungary
Since January, Hungary has been entering the international competition for investors from third-world countries with renewed vigor, with the Golden Visa law coming into force. In this way, Hungary wants to attract investors who are not from the European Union. According to a legal professional interviewed by Economx, Hungary is trying to create as favorable an economic and legal environment as possible for the investments concerned.
The Golden Visa law came into force in January 2024. Its beneficiaries are citizens of third countries, particularly citizens who are neither from European Union countries nor from EEA countries. For them, new rules and opportunities for visas and residence permits have opened up, said Gergely Gábor Szabó, of Bán, S. Szabó, Rausch & Partners. Hungary has thus created a new regulatory environment that is more favorable than before.
The Golden Visa is granted when the investment conditions set out in the law are met, and an application for a residence permit in Hungary can be submitted upon presenting this visa.
What is a Golden Visa for?
The Golden Visa entitles its holder to stay for more than 90 days within a period of 180 days, as well as to multiple entry and to apply for an investor residence permit. After obtaining the latter, the person concerned may move freely throughout the Schengen area. The maximum validity period of an investor residence permit is 10 years. It can be extended for another 10 years. In fact, the Hungarian legal system also allows family reunification if the investor holds the Golden Visa. Gergely Gábor Szabó noted that because the investment conditions are strict, anyone who makes such a financial investment in Hungary is certainly not looking for a few days of tourism in Hungary, but has serious intentions.
Investment conditions: after receiving Hungary's Golden Visa, the person concerned must make one of the following investments within three months of entering Hungary:
- Purchase of investment units worth 250,000 euros issued by a real estate fund registered by the National Bank of Hungary. Meeting the other conditions set out in the law.
- Purchase of ownership of an unencumbered residential property located in Hungary worth at least 500,000 euros, subject to registration of a ban on sale and encumbrance for a period of 5 years from the date of sale.
- Making a financial donation of at least one million euros to a higher education institution managed by a public foundation with a public service mission to support teaching, scientific research or artistic creation.
A change of trend - rents are rising in Hungary
The price decline at the end of last year in the Hungarian rental market has stopped, and the trend of the new year is completely the opposite: rents have started rising again. In January the national average rise in rents reached 1.5%. In Budapest a rise of 1.9% was recorded compared with last December. On an annual basis, the national price rise stood at 13%, while in Budapest it was lower, “only” 12%.
Real estate professionals expect price rises in early 2024 following last year's fall. This is because of the rise in wages and growing real wages. This enabled apartment owners to ask for more for their property.
The Hungarian rent price index has exceeded the 2015 level by 23%. In Budapest it was 17% higher. The professionals say that rising rents may attract investors to the real estate market. As a result, even property prices may start rising again in Hungary. In Budapest, the average rent reached 250,000 HUF (EUR 642) per month in February. In the big cities, the average rent level rose above 200,000 HUF in Debrecen and Székesfehérvár. Both are important industrial centers. In Debrecen the new BMW plant is to be built. The cheapest Hungarian city is Békéscsaba, with rent of only 95,000 HUF (EUR 244) per month. Debrecen, Győr and Székesfehérvár are also centers of higher education, which pushes rents up. In February a new semester began at the universities, which increased demand.
From the writer's desk:
Rents in Hungary have started rising again after a decline last year. Contributing factors include a rise in wages, the earlier fall in rents and high demand for apartments. This rise is expected to affect both real estate investors and tenants.
- “We expect a continued rise in rents throughout 2024,” said András Horváth, a real estate professional at Erste Bank Hungary. “The high demand for apartments, combined with a rise in wages, will continue to put pressure on rents.
2. Hungary's Golden Visa program offers new opportunities for foreign investors. This program may attract many investors and lead to economic growth in Hungary.
Bulgarian housing market forecasts for 2024: a stable year and price rises
In an interview with the website novinite.com, Yavor Peychev, CEO of “Imoteka” of “Realto Group”, said that Bulgaria can expect a stable year, with the number of real estate transactions remaining similar to that of 2023, and a gradual rise in prices of quality new properties expected.
The professional expressed confidently his belief that new construction and quality properties will continue to experience moderate growth, and that this growth will be maintained at 2-6%, or at least be noticeable in the first half of the year. He noted that mortgage financing will remain a key factor in buyers' motivation, as he does not expect a sharp rise in interest rates.
Peychev acknowledged that some people may prefer renting, which could stimulate that segment of the market. However, he stressed that the number of transactions and buyer activity will remain stable, despite expectations of the adoption of the euro and Bulgaria's entry into the Schengen area, which in his view is a positive factor encouraging Bulgarians in their decision to buy a property. In addition, with inflation in the country under control and a slight rise in demand relative to supply, the professional expects a stable year ahead of us.
From the writer's desk:
2024 is expected to be a stable year for the Bulgarian housing market, with a moderate rise in prices of quality new properties. Factors such as mortgage financing, the adoption of the euro and Bulgaria's entry into the Schengen area are expected to affect the market favorably.
According to an analysis of the report “The Bulgarian market: analysis and forecast for 2024” (PwC, 2023):
- “A moderate rise in housing prices is expected in 2024, mainly in the big cities.”
- “Demand for quality properties will remain high, and mortgage financing will continue to be available.”
According to an analysis of the report “The impact of euro adoption on the Bulgarian housing market” (Journal of Balkan and Near Eastern Studies, 2023):
- “The adoption of the euro is expected to lead to increased demand for properties from foreign investors.”
- “Increased economic stability may contribute to a rise in housing prices.”
Not waiting for a ceasefire: Israelis are returning to Greece
According to the article, after a halt in Israelis' real estate investments in Greece in the first days of the war, Israeli investors have returned to the Greek market, despite the raising of the investment threshold for the Golden Visa. The threshold, which originally stood at 250 thousand euros, was raised last July to 500 thousand euros in high-demand areas such as Athens, and about two weeks before the article's publication it was reported that the government intends to raise it to 800 thousand euros. According to the Spitogatos index, prices rose at an annual pace of 14.8% in central Athens, 18.8% in Thessaloniki and 23.2% in Piraeus, while the Bank of Greece reported in December the first signs of a slowdown in the housing market. The article also notes that the average price per sqm in Tel Aviv is more than four and a half times the price in the expensive areas of Athens.
Source: N12, Carmel Liebman, 22.2.24
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