Hello,
More than 7 months have passed since October 7, and more than 130 hostages have still not returned to their homes and families. The heart is unbearably heavy.
Passover is behind us and Independence Day is around the corner. I assume you have seen the interview in the newspaper Globes with Yigal Demri, the controlling shareholder of the real estate company Y.H. Dimri, regarded as one of Israel's senior real estate figures, who expects that “in a year we will be, in my view, in an even bigger catastrophe”, and explains his reasons in the interview. Perhaps this is the time to go out and look for new opportunities, as entrepreneurs, overseas.
This month we would like to bring to your attention:
A. Greece, the second-poorest country in the European Union.
B. Apartment prices in Romania continue to rise.
C. Hungary's real estate market is at a 10-year low.
D. Cyprus's housing price index fell by 0.6% in Q4/2023.
E. The golden visa in Malta.
Wishing us all quiet and safe days, and enjoyable reading,
Ilan Leibovitch, Adv., and the office team
Greece
Greece has become the second-poorest country in Europe
According to an analysis by the Financial Times of the latest Eurostat report, Greece has become the second-poorest country in the European Union, after Bulgaria. The economic damage is almost unprecedented in modern times, comparable only to the Great Depression in the United States in the 1930s.
Greece's economy is about 19% smaller today than in 2007, while the EU economy as a whole has grown by 17%. At the same time, economists are optimistic, as the Greek economy is expected to grow by almost 3% this year, bringing it closer to its pre-crisis size of 2009.
Real wages in Greece have been falling steadily and are down 30% from pre-financial-crisis levels, leaving the country with one of the lowest average salaries among developed economies.
Greece ranks last in the European Union in home renovation and purchase
At a rapid pace, the homes in which Greeks live appear to be “aging”, as the country sits at the “bottom” of Europe in real estate purchases and renovations.
According to Eurostat data, Greece has the worst performance in the household investment ratio, defined as the ratio between gross fixed capital formation, consisting mainly of housing, and the gross disposable income of households. Household investment consists mainly of buying and renovating real estate, while durable goods (such as passenger cars) are not counted as part of household investment.
On this measure Greece recorded the worst performance in the last quarter of 2023, below the European averages, with a negative figure of -0.7%. Belgium followed with -0.3%. Austria and Sweden come next with -0.2%, while Hungary and Germany recorded 0.1%.
The highest figures were recorded by Ireland with 0.4%, Italy with 0.2%, and Denmark and Portugal with 0.1%.
It should be noted that the average in the European Union came to 0.1% and in the eurozone to 0.2%.
The Greek real estate market - trends
The Greek real estate market is “moving” in different directions, with residential property in first place among the preferences of Greek and foreign investors alike. Offices also show particular momentum today, while demand for modern logistics in prime areas is at an all-time high. In residential real estate, the market saw nominal price increases, relative to 2023, of 14.3% to 8.8%, depending on the area.
Older properties rose in price by 12.4%, while prices of newer properties rose by 11%, and new homes now being built with green features can be 30% more expensive. In fact, real estate prices have risen in Athens and Thessaloniki due to several factors.
The main reason is undoubtedly the lack of renewal during the decade of the crisis. The move to the city is another reason prices have jumped, as Greece has a skewed development model in which 50% of its population is in Attica.
The price rise also stems from the large number of closed-up apartments held by funds, utility companies, banks and the public sector; from the inability of many owners to renovate many old properties, in the absence of dynamic government assistance through dedicated programs; and finally from short-term rentals.
In the office sector, demand is noted mainly in Athens and Thessaloniki, and especially for Grade A offices. Demolition of buildings is also a rare option, particularly in central Athens, because the old buildings were built with a higher building coefficient than is permitted today.
At the same time, the rent trend, mainly for older offices, is rising in the first quarter of 2024 compared with 2023. Over the course of a decade, asking rents appear to have risen by 40%. Shops also saw increases similar to those of offices, but this is mainly in the central commercial areas of the cities.
Available shops on the main shopping streets, being in very high demand, are disappearing, while rents have reached high levels.
In logistics, demand for modern construction (Grade A) is at an all-time high, with rents rising significantly, while yields average above 7%. Most of the new logistics space that was built is located in western Attica. In fact, ESG-certified logistics achieved higher rents, on the order of 5.50 euros per sq.m. per month, setting a record.
Finally, the hospitality sector, thanks to strong tourist traffic, has moved dynamically, with many developments and transfers. Hotels, both before and after the pandemic, especially 5-star and 4-star ones, have multiplied in Greece. The combination of a hotel complex with residences is a product that attracts the interest of many foreigners.
From the writer's desk:
The real estate market in Greece is recovering from a severe economic crisis. Greece has become the second-poorest country in the European Union, and its economy has contracted significantly since 2007. However, there are encouraging signs of recovery, with the economy expected to grow by almost 3% this year. The real estate sector is leading this recovery, with significant price increases in residential, office, logistics and hotel properties.
- Greece's economy is still recovering from a deep crisis, but there are encouraging signs of recovery.
- The real estate market is leading the recovery, with significant price increases in all sectors.
- The high demand stems from several factors, including a shortage of supply, economic growth and rising tourism.
The Greek economy is expected to grow in the coming years, but the growth rate is expected to be moderate.
- The World Bank: forecasts growth of 2.8% in 2024 and 2.7% in 2025.
- The International Monetary Fund (IMF): forecasts growth of 2.7% in 2024 and 2.5% in 2025.
- The National Bank of Greece: forecasts growth of 3.0% in 2024 and 2.9% in 2025.
Romania
Apartment prices in Romania continue to rise
According to the website imobiliare.ro, apartment prices in Romania rose in March 2024 by 2.5% compared with February 2024 prices and by 9.7% compared with March 2023 prices.
In Bucharest, March 2024 saw an 8.6% rise in the average price of new apartments, with the average price per sq.m. at 1,761 euros, while resale apartments rose in price by only 1.5%, with the average price per sq.m. at 1,691 euros.
In Brașov, where the price level is still higher than in Bucharest, March 2024 saw a 3.6% rise in the average price of new apartments, with the average price per sq.m. at 2,185 euros, while resale apartments rose in price by only 2.5%, with the average price per sq.m. at 1,805 euros.
In Cluj, where apartments are the most expensive in Romania, March 2024 saw a 2.9% rise in the average price of new apartments, with the average price per sq.m. at 2,857 euros, while resale apartments rose in price by only 1.3%, with the average price per sq.m. at 2,690 euros.
In Timișoara, on the Hungarian border, March 2024 saw a moderate 0.8% rise in the average price of new apartments, with the average price per sq.m. at 1,802 euros, while resale apartments rose in price by only 1.5%, with the average price per sq.m. at 1,540 euros.
Hungary
The real estate market at a 10-year low
The local real estate investment market had not been as low as it was in 2023 for ten years. Almost 600 million euros represents a 38% drop compared with previous years.
The local real estate market is at a ten-year low, according to the Hungarian website Portfolio. It notes that in addition to the decline, the share of Hungarian investors grew to 82 percent, and that yields also rose in the office market and the industrial-logistics sector, as high financing costs and moderate rental demand encourage investors to wait.
The latest commercial real estate market report of the MNB (the Hungarian central bank) forecasts a low investment turnover in this country as well as in other countries in the region. Investment turnover in 2023 was 54% lower than in the previous year in the region. The volume of transactions fell the most in Poland and Romania, and the least in the Czech Republic and Bulgaria. Real estate investments in Poland in 2023 were at the level seen in Hungary in 2017-2019. According to a survey by CBRE, market activity in the Central and Eastern Europe region may return to its pre-interest-rate-hike level by 2025.
Although demand in the Hungarian real estate market rose in the first months of the year, the “peak” is still far off, and the market is not yet ripe for price increases.
2023 was the hardest year in the last 15 years in the local real estate market, including in southern Buda, where the largest drop in the number of transactions occurred, according to the Balla Ingatlan database. During this period, experts noticed significant movement mainly only in the category of smaller apartments.
The reason for the recovery is clearly the renewal of lending, as the number of loans is twice that of last year, while the number of applications received has tripled.
At the same time, the rise in the market did not bring a rise in prices; at most, only the new-apartment market saw a marginal price increase. Estate agencies note that for now there is not much room for price increases, and moreover, very little time has passed since the real estate market experienced more movement than before.
The market is not there yet, even though some owners want to raise prices.
At present, on average, overpricing of between 5% and 10% can be found in the market for 2-3 room apartments, but at the same time sellers tend to overprice larger apartments less, and are also more flexible.
Selling times vary accordingly: for larger, older houses one can expect a selling time of between 6 months and two years, but the latter holds only if the owner is willing to compromise on price. If not, the property may even prove unsellable. At the same time, a selling time of 60-90 days can be relied on for small apartments.
Even now, the most sought-after category consists of 1-3 room apartments with a maximum area of 60-65 sq.m., in good condition and in a good location.
Despite the improving, though still moderate, enthusiasm in the for-sale real estate market, demand for rental apartments is still enormous, and prices are accordingly rising continuously. For a 1.5-2 room apartment in a good location, in average condition, the monthly rent is close to 200,000 HUF. Whether the rental apartment is furnished or unfurnished makes a difference of 5-10% in price.
Bulgaria
Data on the housing conditions of Bulgarians
According to new data from the National Statistical Institute (NSI), most Bulgarians live in old homes.
90.5% of households in Bulgaria were found to live in homes built before 1990, according to the latest NSI data. Of these, a significant share - 73.6% - was built between 1961 and 1990, which underscores the prevalence of aging infrastructure in the country. Only a small share, 9.5%, of households live in homes built after 1990, indicating a slower pace of new construction in recent decades.
The data also provides insights into the nature of housing in urban and rural areas. 87.9% of households in Bulgaria live in homes they own, while 7.8% use housing without paying rent. 4.3% of households live in rented housing, with variations. In addition, 8.8% of households own a second home.
As for the size of dwellings, most households - 68.4% - live in homes of two and three rooms. A significant share of households, 19.7% in cities and 48.0% in villages, live in larger dwellings of four rooms or more.
Gaps also exist in services and infrastructure, with notable differences between urban and rural areas. Access to central sewage is significantly higher in cities, where 96.2% of urban homes are connected to a sewage network compared with 45.6% in villages.
As for heating, 20.3% of the homes in the country have central heating, more common in cities (26.6%) than in villages (1.2%).
As the data reveals the reality of housing in Bulgaria, it raises considerations for future infrastructure development and urban planning initiatives to address the gaps and ensure equal access to quality housing for all citizens.
Cyprus
According to a preliminary estimate by the Cyprus Statistical Service, the housing price index for the fourth quarter of 2023 fell by 0.6%, whereas compared with the index of the corresponding quarter of 2022, the index rose by 1.6%.
The movement of the index for the period between Q4/2022 and Q4/2023, as well as the quarterly and annual percentage changes, is shown in the following table.
Turning 60 and opening its eyes? The golden visa gave Malta a lift
The article surveys the development of Malta, which joined the European Union 20 years ago and gained independence in 1964, into a growing economy and a financial center in which Israeli banking and finance companies now also operate. According to the article, Malta came through the 2008 crisis better than most EU countries thanks to a low debt-to-GDP ratio and a stable banking sector, and its growth rate, which fell to 2.5% in 2009, had already improved the following year. It further describes that the Maltese government set regulations allowing those who contributed to the country's economic development, and their family members, to obtain citizenship, usually after about 36 months and in exceptional cases after 12 months, subject to strict background checks.
Source: TheMarker, Dan Marconi, 24.4.24
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