Hello,
More than 8 months have passed since October 7, and more than 125 hostages have still not returned to their homes and families. The heart is unbearably heavy.
The international real estate giant JLL published a report according to which Israeli investments in Europe in 2023 totaled 1.3 billion dollars. The report apparently does not cover purchases by private individuals, since this data is hard to track, but we have no doubt that in 2023, too, the number of private purchases of real estate overseas by Israelis kept growing.
This month we would like to bring to your attention:
A. The OECD expects the Greek economy to remain on an upward trend.
B. The Greek government is planning further steps against short-term rentals.
C. Romania's investment market recorded the highest rise in activity in Central and Eastern Europe.
D. Russian and Chinese investors are rushing into Hungarian real estate.
E. Quarterly stability in Cyprus real estate prices, but with an annual growth trend.
Wishing us all quiet and safe days, and enjoyable reading,
Ilan Leibovitch, Adv., and the office team
Greece
The OECD expects the Greek economy to remain on an upward trend
The Greek economy is expected to grow by 2% in 2024 and 2.5% in 2025, as rising employment, real wages and strong tourism boost consumption, according to the OECD's semi-annual report. Despite the slowdown in new jobs, the employment rate and the labor shortage remain at historically high levels, it noted.
According to the report, wage growth reached 5.5% in the fourth quarter of 2023 on an annual basis, with the minimum wage increasing by 9.4% in April 2023 and by a further 6.4% in April 2024. Inflation will continue to fall, but at a slower pace, and is expected to drop to 2.1% in the last quarter of 2025.
The OECD stressed that the main challenges facing the Greek economy are strengthening productivity and fiscal adjustment owing to high debt. The report also states that in order to keep reducing the debt, alongside the high spending required because of the low investment during the decade of the crisis, the aging of the population and the response to climate change, sustained and strong economic growth will be needed.
The Greek government is planning further steps against short-term rentals
During an interview with the Action24 channel, Greek Prime Minister Kyriakos Mitsotakis pointed to possible steps to tighten the regulations on Airbnb and other short-term rentals, including examining a cap on rental days.
“We have already enforced restrictions and requirements on those using Airbnb for commercial purposes. In addition, we will discuss the appropriate length of time for short-term rental of properties,” he said.
The explosive growth of Airbnb rentals has reduced the availability of homes for stable long-term leases and aggravated the rise in rents and property prices.
At the end of the month, the Greek government announced plans to consider tax incentives favoring long-term rentals and stricter fines for non-compliance. These changes are intended to be implemented in the autumn.
Data collected during this summer's tourist season will assess the impact of the January 1 regulations, which classified a large number of property rentals as business activity, requiring appropriate taxes and VAT.
The Greek tourism market - investments focus on 5-star hotels
Investments in tourism properties reached 5.1 billion euros, proving the strong confidence of Greek and foreign investors in this sector. With 5-star hotels a focal point for investors interested in capital gains. Meanwhile, the turnover of the short-term rental market showed an exceptional upward trend compared with previous years, accounting for about 30% of the sales turnover of the hotel industry in 2023.
According to a recent study by Delfi Partners, the hotel industry showed strong financial performance in 2023, with total revenues reaching 10.6 billion euros, an astonishing 22.5% increase over the turnover of 8.6 billion euros in 2022. A trend already visible in the first months of 2024. In fact, it is worth noting that this development trend is particularly strong in seasonal hotels and luxury units, mainly 4- and 5-star hotels.
More precisely, in the year-round hotel sector, revenues in 2023 reached 1.9 billion euros, a decent 9.4% increase from 1.8 billion euros in 2022. Seasonal hotels showed even more impressive performance, with a significant rise of 27.4%, as turnover reached 8.6 billion euros in 2023 compared with 6.8 billion euros the year before.
Delving deeper into the hotel categories, the analysis reveals promising growth trends. In the 4- and 5-star luxury segment, which accounts for 26% of the market, turnover reached 8.2 billion euros in 2023, an astonishing 23.6% rise over the 6.6 billion euros reported in 2022.
Correspondingly, mid-range and budget hotels, which make up 74% of the sector and include 3-, 2- and 1-star hotels, showed commendable growth, with turnover reaching 2.3 billion euros in 2023 compared with 1.9 billion euros in 2022, representing a steady increase of 18.8%.
These strong economic indicators underscore the resilience and vitality of the hotel industry in Greece, underpinned by increased consumer demand, which has attracted more investors and increased the supply of hotels. In addition, this positive performance has had a significant effect on the macroeconomic environment, boosting growth and lowering unemployment rates.
Across all hotel sectors, average occupancy stood at 57%, a notable 9% rise compared with last year. It is worth noting that in August, the peak season, overall occupancy rates jumped to an impressive 89%, with 4- and 5-star hotels achieving excellent occupancy of 90% to 91%.
The analysis also reveals differing performance between hotel categories, with luxury units in sought-after summer destinations leading both in occupancy and in overall performance. By contrast, lower-tier accommodations and those located in urban centers reported relatively low occupancy rates.
Finally, it is essential to acknowledge the significant increase in the number of rooms available across Greece, resulting from the sector's strategic investments, which significantly improve the sector's resilience and overall performance.
In the short-term rental sector, Greece is growing at a rate exceeding the average in the tourism industry, showing significant increases in both availability and revenues. In 2023, a record number of short-term rental apartments reached 212,199 units, providing a total of 939,000 beds.
From the writer's desk:
The restriction on owners of Airbnb apartments stems from the Greeks' claim that 20% of the apartments in central areas are used for short-term rental, and this limits local residents from finding an apartment to rent. Official bodies in Greece forecast that this will reduce the number of apartments rented out short-term by about 50%.
Romania
A Colliers report: the Romanian real estate investment market recorded the highest rise in transaction activity in Central and Eastern Europe
According to a Colliers report, the first quarter of 2024 ended with real estate investments in Romania totaling 202 million euros, a rise of 69% compared with the corresponding period in 2023, with transactions in the retail sector accounting for about 2/3 of all transactions.
Compared with the five other large economies (Bulgaria, the Czech Republic, Hungary, Poland and Slovakia) in Central and Eastern Europe (CEE), Romania had the best performance. Market activity in the region was relatively weak, and transaction volumes reached one of their lowest levels in a decade.
The Czech Republic became the new leader of the region, with investment volumes accounting for 46% of the total of the 6 large CEE countries, overtaking Poland, which has a cumulative share of 30% of the volumes traded in the first quarter of the year. However, performance varied significantly across the region, from a 94% drop in activity in Slovakia to a 69% rise in Romania.
Romania's performance is quite encouraging, especially compared with other developed markets such as Poland or the Czech Republic, considering the period before the pandemic. In the first quarter of the year, Romania accounted for 16% of the region's total investment volume, compared with 5-7% in the years before the pandemic.
The retail sector dominated the Romanian real estate market in the first quarter of 2024, representing about 66% of total commercial real estate investments. It was followed by the hospitality sector, accounting for about 21% of the total volume.
Bucharest stands out with one of the highest yields in the region for the industrial, office and retail sectors, boasting yields of 7.5% for prime industrial and office properties and 7.25% for retail properties.
Nicușor Dan will continue for another term as Mayor of Bucharest
According to preliminary results of the local elections held on June 9, the incumbent mayor, Nicușor Dan, who ran as an independent candidate, was elected to another term with more than 46% of the votes. Gabriela Firea, the Social Democratic Party candidate, came second by a wide margin with about 22% of the votes.
From the writer's desk:
The election of Nicușor Dan to another term as Mayor of Bucharest may on the one hand be a problem for real estate developers and investors, since in his first term he froze construction starts in the city and made it harder to obtain building permits. On the other hand, developers holding building permits and/or a project under construction and/or unsold apartments have enjoyed in recent years, and will most likely continue to enjoy, the rise in apartment prices resulting, among other things, from the reduced supply of new apartments, while demand remains constant and is even rising owing to internal migration to the city.
Hungary
Russian and Chinese investors are rushing into Hungary
Chinese and Russian investors were the most active buyers in 2023 in the Hungarian real estate market. The Hungarian government is launching a new initiative aimed at citizens of non-EU countries, due to take effect on July 1. This program grants a ten-year residence permit in exchange for purchasing real estate or making donations to trust funds.
Every spring, the Hungarian Prime Minister's Office publishes data on the number of non-EU foreigners who applied for permission to buy property in Hungary. According to these reports, the number of applications submitted by foreigners rose by 18% in 2023 compared with 2022. Last year 2,981 non-EU citizens applied, the highest number since the COVID pandemic, although it remains below pre-pandemic levels (almost 3,300 in 2018 and over 3,500 in 2019).
Chinese investors bought 17% fewer properties in 2023 compared with 2022, while purchases by Russian investors rose by 16%. For Russians, properties in the 6th district were the most popular, while the Chinese preferred the 13th and 10th districts. According to Károly Benedikt, a manager at Duna House, the strong interest from Russian buyers seen in the two or three years before the invasion of Ukraine has dropped significantly. This decline stems partly from sanctions and restrictions on Russians: only holders of Hungarian residence permits or those who buy through companies can purchase properties, and government approval is still required.
Financially, too, the process is complicated. Their bank accounts were closed for long-time Russian residents of Hungary when the war broke out. Selling existing properties is also difficult, and it is almost impossible for individual Russians to buy Hungarian real estate. Those who manage to buy properties and have sufficient capital usually invest in luxury properties, often as part of broader international investments.
Duna House data shows that the share of Chinese buyers purchasing homes has also fallen, with most now buying for investment purposes. They tend to buy properties with one or two bedrooms, usually worth 80-100 million forints. Foreign buyers generally rely on agents, and Duna House employs a number of Russian- and Chinese-speaking experts, with essential documents available in Russian and Chinese, alongside English and German.
In 2022, after the Chinese and Russians, the most active buyers were Israelis (182) and Ukrainians (166), followed by British citizens (132) and Turks (75). In 2023, the Prime Minister's Office included Vietnamese in the statistics, who were previously in the “other” category. As a result, last year, 340 Vietnamese, 154 Ukrainians, 108 Israelis and 108 Turkish citizens bought a property in Hungary.
Cyprus
Properties show quarterly stability but annual growth in prices and rents
Ask Wire, the real estate technology company that has tracked transactions, prices and construction activity across Cyprus since 2009, published the first-quarter 2024 edition of the Ask Wire Index for property sale and rental values.
Across Cyprus, on an annual basis, prices rose by 6.3% for apartments, 2.1% for houses, 3.0% for offices, 3.6% for holiday apartments and 1.0% for holiday homes. Overall, on a quarterly basis values rose by 0.8% for apartments, 0.4% for houses, 0.2% for offices and 0.5% for holiday apartments. Holiday home prices remained stable. In terms of prices, Limassol has the highest rise for both apartments and houses.
In terms of rental value, compared with the first quarter of 2023 there was a rise of 9.3% for apartments, 6.4% for houses, 8.2% for offices, 5.9% for holiday apartments and 3.4% for holiday homes. On a quarterly basis, rental values rose by 0.9% for apartments and remained stable for the other properties.
Israel ranks 8th in real estate investment in Europe
According to a report by the international real estate company JLL cited in the article, Israel ranked eighth in 2023 among the countries investing in European real estate, with investments of about 1.3 billion dollars, and tenth in real estate investment worldwide, with about 1.7 billion dollars. This is up from 12th place in Europe in 2022 and 16th place in 2021. According to the article, Britain replaced Germany as the leading destination of Israeli investors in Europe, and the data refers to transactions of at least about 5 million dollars each, carried out by bodies such as pension funds, insurance companies, real estate companies and private investors. At the top of the ranking of investors in European real estate is the United States, followed by Britain and France.
Source: Yedioth Ahronoth, Hila Zion, 23.5.24
Israelis' real estate favorites in Europe - who really succeeded and who disappointed
The article surveys a ranking by the Global Property Guide website, based on official government data, of the real change in home prices in European countries over the past 15 years: Portugal at the top of the ranking, and Greece and Bulgaria at the bottom. According to Eurostat data cited in the article, in 2023 home prices in the eurozone fell by 1.1% on average, while Bulgaria, Greece and Portugal recorded sharp rises and Germany recorded a significant decline. The article describes the political consequences of the price rises, including the scaling back of golden visa programs, among them raising the investment threshold in Greece to 800 thousand euros in the Athens area and on sought-after islands, as well as the expected delay in Bulgaria's accession to the eurozone. As for Germany, it is noted that after the sharp fall in prices in 2023, stabilization was recorded in the second half of the year.
Source: TheMarker, Dafna Maor, 20.5.24
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