Hello,
The summer with its vacations is over and we are about to enter the New Year holiday season. On returning from vacation, developers and investors turn their eyes to new opportunities in the various markets.
This month too, Greece continues to stand out with rising prices and Israeli interest in real estate in the country, and developers are looking for loopholes for investors to overcome the restrictions the government is trying to impose on short-term rentals.
This month we would like to bring to your attention:
A. The jump in tourism revenue in Greece.
B. The mayor of Bucharest continues to battle real estate developers.
Wishing us all quiet and safe days, and enjoyable reading,
Ilan Leibovitch, Adv., and the office team
Greece
Greece's tourism revenue jumped 12.2% in the first half of 2024
According to the Greek central bank, tourism revenue reached 6.921 billion euros. This growth was driven by a 15.5% rise in incoming tourist arrivals to 11.625 million.
According to the data, tourists from Germany remained Greece's top source of revenue, followed by tourists from Britain and the United States with 540 million euros.
Commercial real estate investments totaled 800 million euros in the first half
Expectations in the Greek real estate market remained positive during the first half of 2024, with increased demand from users for Grade A spaces, across all types of commercial real estate. Investor activity is up by about 15% compared with the corresponding period last year, according to Cushman & Wakefield Proprius data, with commercial real estate transactions in this period estimated at about 800 million euros.
The office and hospitality real estate sectors are those in which the greatest activity was observed, and together absorbed over 70% of the transaction volume. Transactions approached 280 million euros for offices and 300 million euros in hospitality properties.
In commercial shops and shopping centers, transactions totaling 77 million euros were recorded, compared with 23 million euros in the corresponding period last year, and in the storage and industrial space market, transactions totaling 60 million euros were recorded, compared with 130 million euros in the corresponding period.
In this half there is still some caution in the market regarding geopolitical developments and the economy, but the downward trend in inflation appears to be taking shape, and an improvement in the climate is expected from the second half.
Niki Sympoura, head of Cushman & Wakefield Proprius in Greece, states: “The positive trend emerging in the commercial real estate market is confirmed by the first-half volumes, with investors who have been present in the market in recent years continuing their activity, while the number of transactions by companies aiming to buy real estate for their own use is increasing. The outlook for the second half of the year remains positive, with large transactions expected to close in the coming months.”
The housing crisis - despite the new restrictions, the short-term rental market has hardly been affected
According to data published in Greece, in the first half of 2024 the accommodation places offered for short-term rental grew by 20,000 more than in 2023 (232,000 in total). This is despite the fact that in this period the government's new measures began to be implemented, which have a dual purpose: on one hand, limiting the tax evasion of property owners and increasing state revenue, and on the other, creating incentives to limit short-term rentals in favor of long-term ones, thereby increasing the stock of apartments available to citizens looking for homes to rent, in the midst of a housing crisis.
The bill on the table imposing further restrictions places a tax burden and restrictions on short-term rentals at the center of the interventions.
The restrictions that took effect this year, whose effectiveness appears to be limited, are:
- People who own three or more properties for short-term rental were required to open a business by setting up a sole proprietorship, with parallel insurance contributions and 13% VAT on the gross short-term rental income received from all their operated properties.
- A climate resilience fee was imposed on all short-term rentals, ranging from 0.5 to 10 euros per day.
- The fine for failing to register in the land registry for short-term rental was increased; until 31-12-2023 it stood at 5,000 euros and was imposed on the property manager, whether the owner, the beneficiary or a third party. It is now up to 50% of the gross income of the last tax year and at least 5,000 euros.
- A 60-day limit was imposed on the length of the rental in order to be considered short-term.
- If all the apartments in an apartment building or residential complex are intended for short-term rental, they are considered tourist accommodation and must obtain the appropriate permit.
The new measures being considered by the authorities in Greece:
An owner of 2 properties (compared with owners of 3 properties today) would be considered and treated as a business operator liable for VAT and would pay insurance contributions and business tax.
The short-term rental of any property could not exceed 90 days per calendar year in general, while on islands with fewer than 10,000 residents it would be 60 days per calendar year.
Incentives are also being considered, such as an income tax deduction for those who abandon short-term rental and move to long-term rental.
Romania
AFI Europe acquired an office building in central Bucharest
AFI Europe acquired the Bucharest Financial Plaza office building, located on Calea Victoriei near the CEC Palace, from Immofinanz as part of its plan to expand its investment portfolio in Romania. With the new building, the company reached a total of over 300,000 sq.m. of office space for rent in Romania.
The building, with a total built area of 38,703 sq.m., is the first modern building built in the capital in the 1990s, and over time became a landmark of the city's historic center.
“Our goal is to turn this iconic property into a modern, Class A, mixed-use project that meets the highest quality standards. A sustainable building that meets ESG requirements,” said Doron Klein, Deputy CEO of AFI Europe and CEO of AFI Europe Romania and the Czech Republic.
Since 2023, the project has received a building permit allowing full conversion into a Class A development.
AFI Europe is part of Afi Properties, a leading real estate development, management and investment company operating in Central and Eastern Europe. AFI Europe Romania is the second most important office owner in the country, managing business projects totaling about 300,000 sq.m. and retail space of about 175,000 sq.m.
The mayor of Bucharest continues to battle real estate developers
The mayor of Bucharest, Nicușor Dan, accused the municipal Transport Commission of issuing unlawful permits for real estate projects and announced that from now on such permits will be issued by him alone, with the Commission having an advisory role.
“From today I will sign the traffic approvals for zonal and detailed urban planning documents (PUZ and PUD) and for building permits; the Transport Commission will have an advisory role,” he announced.
Where is the American real estate market heading? “After 30 years, there are declines in the value of multifamily housing”
The article presents a report by the Afire organization, which brings together large global real estate investors in the USA, on the state of the American real estate sectors following the COVID pandemic and interest rate rises. According to the report, in the multifamily rental sector, the demand that grew during the pandemic led to an increase in supply, but construction delays flooded the market when demand had already moderated, and alongside the rise in the federal interest rate from 0.5% to 5.5%, financial pressures were created on property owners; according to a member of the group, for the first time in three decades declines in the value of these properties are being recorded. In logistics, occupancy remained high (95%-96%), but in certain areas an oversupply formed, and new construction has fallen by 78% since 2022. In the office sector, which was hit by the move to hybrid work, the pace of new construction has fallen, and according to the report a return of demand for quality offices in the centers of the large cities is evident.
Source: TheMarker, Yosef Harash, 3.9.24
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