Hello,
We are in the midst of the Tishrei holidays and the New Year. This is an opportunity for our real estate soul-searching and for preparing plans for the new year.
Immediately after the holidays, discussions on the 2025 state budget will begin, with the Finance Ministry planning several significant steps that will affect the Israeli real estate market. The intention is to freeze the purchase tax brackets (including the temporary provision on the 8% purchase tax for investors), the ceiling of the capital-gains tax (mas shevach) exemption on the sale of a single apartment, the ceilings of the capital-gains tax exemption on the sale of two low-value apartments, the ceilings of the tax benefit on the sale of an apartment with building rights, and the linking of the rental-income exemption ceiling for a period of 3 years. If the measures pass, it should be assumed that the public will see this as an incentive to look for real estate investment channels abroad.
This month we would like to bring to your attention:
A. The upgrade of Greece's economic outlook.
B. Villa sales in Bucharest: opportunities and challenges in 2024.
C. How many salaries it takes to buy an apartment in Bulgaria.
D. For the first time in 4 years, the Federal Reserve cut interest rates in the USA by 0.5%
Wishing us all quiet and safe days, and enjoyable reading,
Ilan Leibovitch, Adv., and the office team
Greece
Moody's upgraded Greece's economic outlook but did not change its credit rating
While Israel's credit rating was downgraded by two notches this month by the credit rating agency Moody's, it upgraded the outlook for Greece's economy to positive from stable, while reaffirming its Ba1 credit rating.
Moody's explained that the move to a positive outlook reflects the increased likelihood of sustainable improvements in the resilience of Greece's banking sector, which reduces the risks of taking on government debt. In addition, with economic growth and fiscal performance that may exceed expectations, Greece's fiscal strength may improve faster than now expected.
Moody's affirmed Greece's Ba1 rating, noting significant progress in recent years in implementing structural reforms and achieving fiscal consolidation. However, challenges remain in areas such as improving judicial efficiency, addressing macroeconomic imbalances and managing the country's high public debt burden.
The EBRD (European Bank for Reconstruction and Development), in a report it published, also forecasts faster growth for Greece's economy of 2.4% this year and 2.6% in 2025.
“Greece's economic performance remained strong in 2024, with GDP growing by 2.1% in the first quarter year on year and by 2.3% in the second quarter, boosted by private consumption and fixed capital investment,” the EBRD notes.
The unemployment rate fell to 9.6% in June, a 15-year low.
Inflation weakened further in the first half of 2024 (to 3% on average year on year), but core inflation remained relatively high and persistent (3.3% in June 2024).
“Therefore, the overall short-term macroeconomic outlook remains positive, with a growth forecast of 2.4% in 2024 and 2.6% in 2025,” the EBRD report concludes.
Short-term rentals - a new bill
The government is making further moves that will affect owners of properties available for short-term rental, with the intervention, this time, coming not from the Ministry of Finance (YPOIK) but from the Ministry of the Interior (YPES). The reason is, as Greek government spokespeople have emphasized many times, rationalization of the market and the response to the housing crisis.
The bill submitted by the Ministry of the Interior to Parliament on September 25 plans an additional burden, since it expands the scope of owners of properties rented out as Airbnb who are required to pay the transient resident fee (visitor fee), while also setting the basis for increasing it.
Recall that the visitor fee is levied on hotels and other tourist businesses for hosting visitors. Until now it has been collected on every type of tourist lodging within the municipality's boundaries, such as hotels, rooms for rent and so on, while from January 1, 2024 it was extended to short-term rentals.
Romania
Villa sales in Bucharest: opportunities and challenges in 2024
In the real estate market of northern Bucharest, the house segment remains one of the most dynamic and attractive, especially in light of the continuing growth in demand for villas. Despite the challenges stemming from high construction costs and shrinking supply, demand for housing in this area is rising.
In Pipera, an area that attracts villa buyers, the price of land rose from 400 euros per sq.m. in 2022 to 1,000 euros per sq.m. in 2024.
“High construction costs, rising land prices and falling supply are putting pressure on apartment prices in northern Bucharest. Many of those who did not manage to buy a property before the price rises, and who have a budget of up to 300,000 euros, are now forced to move to the areas adjacent to Bucharest, such as Tunari, Otopeni or Corbeanca,” states Aurel Ungureanu, Customer Relations Manager at North Bucharest Investments.
In Tunari, Otopeni or Corbeanca, land prices have also seen a spectacular rise: from 100 euros per sq.m. in 2022 to 250 euros per sq.m. in 2024 - for plots with good access and good facilities.
Demand for gated residential complexes
Community housing developments and gated neighborhoods are an increasingly popular solution for home buyers because of their social and security benefits. They are becoming ideal living spaces and places for community development. “A project of this type is a good solution for developing social life for adults and their children. The security and comfort offered by such communities are strong arguments in the purchase decision,” states Aurel Ungureanu.
Premium developments in the real estate market
Despite the price rises, interest in premium-plus properties in northern Bucharest continues to grow. Demand for villas priced above 500,000 euros and above one million euros is growing. “The real estate market for premium and premium-plus properties is growing. The interest and the high number of sales of homes priced between 500,000 euros and over one million euros give us clear signals that the luxury and super-luxury segment is growing steadily, being one of the most stable niches in the residential sector,” adds Aurel Ungureanu.
The Pipera-Voluntari area remains one of the most attractive for villa buyers, especially because of its proximity to prestigious schools, convenient access to Bucharest's ring road and the A3 highway, and communities that have already formed. Areas such as Erou Iancu are especially popular because of their access to these facilities.
Increased sales in 2024
Since the beginning of 2024, a significant rise in home sales has been seen, more than double compared with the corresponding period in 2023. “This positive development reflects the growing interest in villas in the north of the capital despite economic challenges and rising prices. The real estate market in northern Bucharest continues to offer interesting investment opportunities, especially in the houses and villas segment,” explains Aurel Ungureanu.
In summary, although land prices and construction costs are rising, demand remains strong and the investment potential is promising, especially in areas such as Pipera-Voluntari and its surroundings.
Bulgaria
How many salaries does it take to buy an apartment in Bulgaria?
According to a BestBrokers.com study comparing real estate prices in 62 countries against the average local wage, it takes 199 monthly salaries to buy a 100 sq.m. apartment in Bulgaria. For comparison, in Denmark it takes 114 monthly salaries to buy an apartment of the same size, in Ireland 123 and in Sweden 129 net salaries. At the lower end of the ranking are the Czech Republic and Slovakia, with the latter needing 297 times the average wage to buy an average of 100 sq.m.
Bulgaria is positioned in the middle of the ranking, requiring 199 net salaries to buy a property. In North Macedonia the figure is 215 net salaries; in Greece - 228; and in Bosnia and Herzegovina - 255.
USA
For the first time in 4 years the Federal Reserve cut interest rates by 0.5%
In mid-September, for the first time in four years, the US Federal Reserve announced a 0.5% interest rate cut, to 4.8%, the lowest level since March 2023, in order to stimulate the American economy and deal with growth challenges in the markets. The expectation is that the interest rate will stand at 4.4% by the end of the year, with two further cuts of 0.25% each.
The significance for the real estate market
- Falling mortgage rates: which may encourage potential buyers to buy homes
- Rising demand for housing: lower payments will make home ownership more worthwhile, which will increase demand for housing across the USA and in high-demand areas in particular.
Where is the American real estate market heading? “After 30 years, there are declines in the value of multifamily housing”
The article surveys 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 since COVID. According to the report, in the multifamily rental sector, a wave of construction completed late led to oversupply, a decline in occupancy and a moderation in rents, and at the same time the Fed's interest rate hike from 0.5% to 5.5% made financing more expensive and increased the pressure on property owners, up to declines in property values for the first time in three decades. 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 some investors prefer to renovate existing buildings.
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