Hello,
A new year has begun. Welcome, 2025.
Before we get into the 2024 summaries, we draw your attention to reports published last month about 2 events in the USA and Britain in which Israeli investors lost their investment, which underscores the importance of careful and safe investment.
And on an optimistic note, the “blow” dealt to us through the enactment of the so-called “Trapped Profits Law” (Israeli legislation on profits retained in companies), which passed in the Knesset at the end of December, may in fact be a ray of hope for Israeli developers operating abroad, since following the law funds will be released whose owners will look for yield-bearing investment channels, having already paid the tax on them in Israel. Investment in real estate abroad, where the current yield is higher than that obtained from investment in real estate in Israel, may be a channel for routing these funds.
This month we would like to bring to your attention:
A. Tourism in Greece continues to grow and creates opportunities for real estate investors.
B. A new government won the confidence of Parliament in Romania, and began to operate.
C. Entry into Schengen and the move to the euro will cause real estate prices in Bulgaria to rise.
D. What are the areas of demand for apartments and houses in Cyprus.
Wishing us all quiet and safe days, and enjoyable reading,
Ilan Leibovitch, Adv., and the office team
Greece
Athens 2024 heading into 2025
It is no secret that tourism is one of the most important sectors of the Greek economy, so you will not be surprised to learn that according to Greek Ministry of Tourism data, 2024 was a record year for tourism, with about 33 million visitors and revenues estimated at about 22 billion euros, making Greece one of the leading countries in tourism revenue in the Mediterranean basin, with Athens recording growth of about 8% in the number of tourists arriving in the city compared with 2023. Athens has become a significant tourist attraction in recent years, with a marked rise in demand for hotels, holiday apartments and cultural activities. Athens entered the OECD's list of the ten most popular cities in the world, and according to the data published, the hotel room occupancy rate in the city stood at about 85% on average throughout the whole year, while during the winter, room occupancy reached 70%-75%. At the peak of the summer season, room occupancy crossed the 90% threshold, which indicates stability of demand throughout the year. Forecasts for 2025 point to continued growth in tourism (the Greek Ministry of Tourism expects 5-7% growth in tourism to Athens alone).
From the writer's desk:
Athens's entry into the prestigious ranking of the world's sought-after cities, together with cities such as Paris, London, Dubai and Tokyo, creates not only tourist interest but also significant economic opportunities.
Greece will continue to be a central destination for real estate investors. The Greek economy, its tourism engine, and impressive growth in the real estate market will continue to create opportunities for investors in 2025 as well.
In 2025 we will witness a continuation of the growth trend in the Greek real estate market, mainly thanks to demand for tourism and the potential for investment in tourism projects. At the same time, attention should be paid to the regulatory changes in short-term rentals, and the investment and the manner of investing should be adapted to developments in this area.
How long does it take to sell an apartment in Greece?
Spitogatos Insights published a comprehensive analysis of the absorption rate of residential properties for 2024, based on the Spitogatos Price Index (SPI), which tracks price trends across the Greek property market using millions of actual listings on the Spitogatos platform.
The Greek real estate market is undergoing significant changes, especially with regard to the speed at which available properties sell. The combination of limited supply and rising apartment prices has produced interesting findings about how long it takes to sell a residential property in different areas across the country.
According to the report, the Thessaloniki prefecture stands out with the fastest pace of property sales, compared with Athens and its surrounding suburbs. In the first three quarters of 2024, homes in the Athens area have a selling period of about 6 months. This indicates stable demand for properties in the capital, even though supply continues to lag. In the third quarter of 2024, homes in the Thessaloniki prefecture sold in a little over 5.5 months, two weeks faster than the Athens area. This is consistent with the general trend of rising demand for homes in Thessaloniki. The suburbs of Thessaloniki are among the most popular areas in Greece for apartment buyers, according to the Spitogatos Demand Index (SDI), which tracks property search trends. The data reveals that these suburbs are the top choice for local buyers, making them one of the most sought-after locations in the country.
Romania
The minimum wage rises from 1/1/2025
From 1/1/2025 the gross minimum wage for a full-time employee in Romania will stand at 4,050 lei (about 810 euros) compared with 3,700 lei until now. Correspondingly, the gross hourly wage also rises and will stand at 24.49 lei per hour (about 4.9 euros).
Fiscal changes in 2025
Micro company - the income threshold for a micro company was reduced from 500,000 euros to 250,000 euros.
Dividend - the tax on dividend withdrawal rose from 8% to 10% (regardless of when the profit in the company was generated).
Real estate investors and developers are optimistic heading into 2025
The Romania Real Estate Investor Sentiment Barometer report, carried out by Cushman & Wakefield Echinox, reveals that investors are optimistic about the development of their investments over the next 12 months, showing a clear improvement compared with the previous year, with 64% of respondents expecting a rise in the value of their portfolios and 30% expecting stagnation.
Bucharest and the secondary markets strengthened their standing as the main investment destinations, so that about 80% of respondents (compared with 66% in 2023 and 63% in 2022) cite Bucharest as the main location for new investments.
In addition, the tertiary markets (cities with fewer than 200,000 residents) increased their attractiveness, with 31% of investors now focusing on them (compared with 24% in 2023 and 20% in 2022).
Secondary cities continue to be an attractive destination for more than 65% of respondents.
This development highlights the diversification of investment portfolios and the increased interest in emerging markets outside the capital. The attractiveness of these areas is supported by growth opportunities, lower costs and positive market dynamics.
“Investors are looking with optimism, but also with a degree of caution, at the real estate market in Romania in 2025, supported by access to bank financing, attention to sustainability and compliance with ESG requirements. The development of the market reflects a balance between existing opportunities and macroeconomic challenges, in the context of growing confidence in economic stability and consumption at the national level,” commented Vlad Săftoiu, head of research at Cushman & Wakefield Echinox.
Regarding the development of rents over the next 12 months, most respondents expect an increase in office space rental costs. After a series of concerns in 2023 about possible declines, optimism returns in 2024, which points to a long-term upward trend.
Inflation remains the main factor that can affect occupancy costs in the real estate market; construction and financing costs are also flagged as key risks to the development of rents.
When asked about the market segments that will attract new investments over the next 12 months, investors are optimistic about the logistics sector and, to a lesser extent, retail as well. Sentiment toward offices remains cautious, but is slightly improved compared with earlier editions of the barometer.
In this context, a clear majority of investors intend to expand their portfolios over the next three years, with 21% of them planning to maintain the current level of activity and only 9% estimating a reduction. The main source of financing is represented by banks, with 49% of respondents citing the accessibility of loan terms. Another important source is represented by shareholder loans (19%).
The main negative factors for the real estate market cited by respondents remained inflation and high interest rates. The geopolitical situation and financial stability were also highlighted as important risks. However, investors' perception of macroeconomic stability, taxation and the labor market has improved compared with previous years.
At the same time, sustainability is becoming a central component of investment decisions, perceived as a way to ensure long-term success.
In addition, effective management of operating costs is the central challenge for 39% of respondents, while 24% identify the complexity of legislative regulations as a major problem in managing real estate portfolios. Trends that will affect property management more than any others include tenant experience and behavior, as well as the adoption of innovative data-driven solutions.
Romania and Bulgaria joined Schengen in full from 1/1/2025
From today (1/1/25), Bulgaria and Romania are part of the Schengen countries at land crossings as well. They had been part of Schengen at air crossings since 31/3/24.
This means that the land crossings between them and the neighboring Schengen countries (Greece and Hungary), and between the two of them, will be fully open. In practice it will be possible to travel by car continuously and without checks from Greece to Norway. However, random checks will be carried out at some of the crossings in the coming months.
From the writer's desk:
The formation of the new government is a source of optimism among investors, and together with the opening of borders with Romania's full entry into Schengen there is optimism regarding the real estate market heading into 2025, with the shadow hanging over everything stemming from the insistence of the mayor of Bucharest on approving new construction projects in the city.
This means that supply will not grow in Bucharest and we expect continued price rises in 2025, the entry of new investors from Europe to make investments in Romania, and an increase in purchases by Romanians on the outskirts of Bucharest.
Cyprus
Areas of demand for apartments in Cyprus
Landbank Analytics mapped the areas with the highest residential demand by district for the period of January to September 2024. This analysis is based on the sale contracts filed with the Department of Lands and Surveys during the first nine months of the year, the company's announcement states.
Nicosia
In the Nicosia district, 161 house sales with a total value of 49.8 million euros and 1,194 apartments worth 236.9 million euros were recorded in the first nine months of 2024.
Lakatamia leads in house sales with a total value of 15.6 million euros, while Nicosia City dominates apartment sales, reaching 53.8 million euros.
Limassol
In Limassol, 237 house sales totaling 165 million euros and 1,469 apartments worth 820 million euros were recorded in the first nine months of the year.
Cherkezoi led house sales with a total value of 28.6 million euros, while Limassol City led apartment sales, reaching 262.4 million euros.
Larnaca
In Larnaca, 191 house sales worth 64.35 million euros and 1,113 apartments totaling 218.8 million euros were recorded in the same period.
Aradippou led house sales with a total value of 15.4 million euros, while Larnaca City dominated apartment sales, reaching 88.5 million euros.
Paphos
In Paphos, 243 house sales worth 149.6 million euros and 416 apartments with a total volume of 138.4 million euros were recorded.
Bulgaria
The minimum wage rises from 1/1/2025
From 1/1/2025 the minimum wage is due to rise to 1,077 leva (550 euros), an increase of 15.4% compared with 933 leva in 2024, continuing a pattern of increases over the last 5 years.
Price rises expected to continue in Bulgaria in 2025 as well
If Bulgaria adopts the euro in July 2025, property prices are expected to rise even further, according to Yavor Peychev, CEO of the real estate agency “Imoteka”. He expects that finding buyers for properties priced above market value will become more challenging. While sellers dominated the market in recent years, exploiting a general sense of optimism and higher prices, this dynamic may change in 2025.
Peychev expects a balance between buyers and sellers in 2025. Buyers will no longer feel pressured by constantly rising prices and will become more selective in choosing their property. They will be especially wary of homes priced above their true value. As a result, sellers, especially those in the secondary market, will need to stay competitive, with accurate property valuations being critical to securing deals.
The agency expects a stable market in 2025, with stability in the number of transactions. In the regional centers, property prices are expected to rise by a moderate single-digit figure. However, in areas experiencing higher demand from both buyers and construction developers, the price increase may reach double digits.
Hungary
Price rises expected to continue in Hungary in 2025 as well
Although the real estate market performed better in 2024 than in 2023, the bar was not especially high because of the low base. However, there is nothing new under the sun: in 2024, prices per sq.m. and rents continued to be high, the interest rate environment is just as high, and although according to the Central Statistical Office they are constantly rising, low wage levels have made it difficult to buy a home in Hungary, so a significant housing crisis is felt in the country. Recently the government too acknowledged this and committed to taking various measures to ease it. The new action plan of economic policy, with 21 points, also includes several housing conditions and measures that will help people buy homes.
Growth has slowed
“2024 brought a moderate improvement in the real estate market compared with the previous period, but it still falls short of the pre-COVID level. So the market is currently operating at a level of roughly 80-81 percent below the pre-COVID level,” noted Ákos Balla, founder and owner of Balla Ingatlan.
“The real estate market this year followed the pattern of previous years, starting with a significant rise after the more restrained year of 2023. In the first half of the year, sales that had been postponed from last year were completed, while the second half was characterized by transactions brought forward from 2025. The annual number of transactions is expected to be around 130-150 thousand, representing a 20-30 percent rise compared with the previous year,” summed up László Balogh, chief economic analyst at ingatlan.com.
Accessibility problems in the rental market
The rental market, which is also targeted by government measures, showed strong growth in the first half of 2024, partly due to the accumulation of inflation and partly due to the weakening of the sales market. Many people are dropping out of the sales market because of rising prices per sq.m. and mortgage interest rates, and are forced to turn to subletting. However, the excess demand created in the rental market brings a rise in rents.
At the beginning of the year the rental market experienced an annual price rise of 9-10 percent, which fell to 7-8 percent by the end of the year. In Budapest, the median rent was around 250,000 forints, while the national average stands at about 200 thousand forints. However, these average values can be misleading, since there are significant differences by district and property type. In the outer districts of the capital, apartments can be rented from 140-160 thousand forints, while in the premium category rents of up to 300 thousand forints can be found.
New construction, expensive as it is, may become even more expensive
The new housing market continues to struggle with a low number of transactions. One of the main reasons for this is that the sector is slow to respond to changes in the market, since a long time passes from the launch of a project to its delivery (planning, permit, construction). What is being built today is in fact the result of decisions made 1-2 years ago.
Growth in real estate prices accelerated gradually during the year: in January the annual growth rate stood at only 2-3 percent, but by the end of the year it rose to 9-10 percent, noted László Balogh. Average prices per sq.m. in the new apartment market in Budapest already stand at about 1.4 million forints, and in several localities in the county they have passed the threshold of one million forints. The median price of new apartments in the capital reached 100 million forints, which means this is the average price of a new apartment built in Budapest, regardless of size, technical specification or location.
According to Ákos Balla, three main price categories can be distinguished in the new apartment market:
- 1. Apartments built in suburban areas, but easily accessible by public transport, with an average price per sq.m. of about 1.1 million forints (1-1.2 million forints). This segment is expected to see the most transactions, a few thousand a year. It is important to stress that the low price does not mean a compromise in quality - these properties have the appropriate technical specification.
- 2. Apartments priced at 1.5-1.7 million forints per sq.m. Here 500-800 transactions a year can be expected.
- 3. The upper premium category, where prices per sq.m. can reach up to 3-4 million forints. In this sector fewer than 100 transactions a year are expected.
However, Ákos Balla expects a shortage of inventory in the new apartment market over the next two years, since many projects have not even started construction because of the high interest rates and high energy prices in the recent period. This may bring a significant rise in demand for properties that were delivered only a few years ago, which will lead to a further rise in prices. He recommends that potential buyers who want to move into a new apartment in 2026 start searching and buy in the spring of 2025, since prices are expected to keep rising owing to the shrinking supply.
Prices may rise, waiting may not be a good tactic
In the case of second-hand apartments, prices in Budapest usually range between 800,000 and 1.2 million forints per sq.m. This price gap is much smaller than in the case of new apartments, where there can be a difference of up to 300% between the cheapest and most expensive properties.
In the city center we can find higher prices, where prices of 1-2 million forints per sq.m. are not rare. At the same time, these are affected to a considerable extent by the possibility of tourist use. If we took tourist properties out of the market, the price gaps between the different districts would be even smaller, noted Ákos Balla.
Similar to new construction, prices in the second-hand market are expected to rise in 2025, among other things because of increased demand and partly because of a shortage of new housing inventory.
And prices, once they rise, do not fall. Therefore, a waiting tactic may not be profitable for buyers.
The movement of the second-hand housing market is closely linked both to the new construction market and to the rental housing market. If the new housing market performs well, it also raises second-hand apartment prices, so there is always a natural gap between the two categories. Similarly, if the rental market is strong, it also encourages the purchase of second-hand homes for investment purposes.
“Sellers are currently very optimistic and attentive to positive news in the market. As a result of the government's announcements, many are already offering their properties at higher prices. In fact, there are those who prefer to wait in the hope of even higher prices. Sellers are generally not open to bargaining, especially now, when they expect significant capital to flow from the government securities market into the real estate market from February 2025. The opportunity for bargaining opens up only if a property does not find a buyer for several months.”
The ability to take out loans to buy apartments is the key
According to experts, the 5% cap is essential for the credit market and is a positive development, but its effect will be limited, since it will apply only to a narrow segment of new apartments. Therefore, the housing loan market in 2025 will be greatly influenced by the development of interest rates in the market. A further reduction is needed in the attractiveness of the credit market.
It is a positive development that the MNB (the Hungarian central bank) amended the green loan regulations for financing energy-efficient properties. Under the new rules, consumer-adapted housing loans must provide an interest advantage of at least half a percent for green properties with a favorable energy rating. This is an advantage mainly for financing newly built homes.
The replacement of the central bank governor in the spring of 2025 will be decisive for the future development of the credit market. The monetary policy of the new leadership, especially the balance between fighting inflation and supporting the government's economic policy, may substantially affect the development of credit rates.
At the same time, the local credit market is also greatly affected by international processes. Geopolitical conflicts have a direct effect on the financial markets, and through them on local interbank interest rates and ultimately on the level of interest on housing loans.
A decline in loan rates is expected only if both the international environment and the local economic indicators develop positively, including economic growth and wage rises.
Experts unanimously stress that the affordability of housing loans will be the key to the development of real estate market processes in the period 2025-2026, since this substantially affects the population's ability and willingness to buy an apartment.
Sellers have already priced in the growth
Regarding the forecast for 2025, experts expect a growing number of transactions and rising prices. This is influenced by several factors: on one hand, the capital released from the government securities market, and on the other, government measures too may have a positive effect on the market. The pace and scale of the price rise will depend largely on the development of the population's income and wealth situation, as well as on credit market conditions. However, the rise in housing prices affects society in a distinct way: while it means an increase in wealth for those who already hold real estate, it makes things harder for those who intend to enter the market. Improving young people's opportunities to access housing remains a critical issue, since buying their first home is becoming more and more challenging for them, in light of the price rises.
Some buyers are trying to make a decision as soon as possible, for fear of further price rises. According to experts' estimates, the price rise may be 10-15 percent and is expected to be permanent.
According to László Balogh, the prominent government measures are the introduction of a tax-free housing subsidy for employers (150,000 forints per month) and the housing fund program of 200 billion forints. The tightening of the Airbnb regulations and the introduction of a moratorium are intended to steer investors' intentions toward the long-term rental market.
Ákos Balla noted that there has been a positive change with regard to government measures: unlike earlier measures, which were less well thought out (such as the abolition of the housing savings fund system), the current programs - such as rent subsidies, encouraging low-cost developments through housing funds, or expanding dormitory space - appear more professional. He expects additional support as the 2026 elections approach. “In my view, one or two ‘treats’ are expected at the end of the year,” he said.
The real estate market processes of 2025 may also determine the development directions of the next two years. The processes of 2026-2027 will highlight the combined effect of the government's measures in the previous period, the changes in the credit market and the development of the economic environment in the housing market.
The real estate company collapsed and hundreds of reservists may lose savings
The investment company Vision and Beyond of Herzliya, which invested in multifamily properties in the USA and raised from hundreds of investors an amount estimated at 50 to 100 million dollars, fell into difficulties, and some of its properties were foreclosed on by the lenders. According to the article, the rise in US interest rates since 2022 and the increase in operating costs eroded the profitability of the properties, the company breached the terms of the loans, and from the beginning of 2024 the quarterly payments to investors were gradually halted. In December the company informed investors, through the law firm representing it, that it would hand over the management of its US properties to them. The controlling shareholder of the company Rme, which marketed the company's funds, filed a complaint with the fraud investigations unit on suspicion of forging transactions and obtaining something by deceit.
Source: Calcalist, Almog Ezer, 22.12.24
The British real estate developer collapsed and the Israeli investors were thrown into turmoil
The London real estate developer BYM Capital, a partner of the Israeli investment company SDB, applied for insolvency proceedings in October 2023. According to the article, of the 16 properties in London in which SDB operated, 11 were controlled by the developer, and the scale of investment in its properties reached about 60 million pounds sterling; its collapse led to a breach of the loan terms and to debts being called for immediate repayment. SDB stopped the quarterly payments to investors, took over some of the properties and is in contact with the banks about the others, and according to the article at least 10 million pounds sterling of investors' money is still at risk.
Source: Calcalist, Almog Ezer, 26.12.24
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