Hello,
The war with Iran froze the Israeli real estate market for about two weeks and at the same time increased interest in real estate abroad, and developers and marketers of projects in the Mediterranean basin and Eastern European countries are feeling it clearly.
At the same time, rumors of an imminent end to the war in Ukraine are creating concern among European real estate developers about a rise in construction inputs once resources are directed toward the country's reconstruction, all the more so as the economic situation in quite a few countries requires fiscal measures that may also lead to a rise in real estate prices.
This month we would like to bring to your attention:
A. The report of the Central Bank of Greece: a positive growth forecast alongside global challenges.
B. Short-term rentals in Greece - continued market growth alongside an extension of rental restrictions.
C. A new government has set out in Romania with new economic austerity measures.
D. Apartment prices in Bulgaria continue to rise.
New! In our newsletter: our media publications, including opinion pieces, personal interviews, reviews and fresh insights.
Enjoyable reading,
Adv. Ilan Leibovitch and the office team
Greece
The Greek central bank: a positive growth forecast alongside global challenges
The Greek central bank forecasts economic growth of 2.3% for Greece this year. This growth rate is expected to be higher than the eurozone average, and will help Greece gradually converge toward the EU average real GDP per capita.
However, the forecast also points to a number of risks and uncertainties that could hinder this growth:
- Growing protectionism in international trade and a significantly sharper-than-expected slowdown in the eurozone economy.
- Stronger negative effects on the global economic environment, international financial conditions and the energy market due to general uncertainty and an escalation of geopolitical tensions.
- Potential challenges from a tighter labor market, higher wage pressures, natural disasters related to climate change, and slower-than-expected absorption of funds from the Recovery and Resilience Facility (RRF).
- The business environment in Greece still suffers from a complex and frequently changing regulatory framework, an inefficient legal system, regulatory barriers, an informal economy and limited access to financing for small and medium-sized companies.
- Skills mismatches and poor educational outcomes further harm innovation and employment.
To address these challenges, the Bank of Greece proposes policy reforms that include ensuring the sustainability of public debt, complying with European budget rules and implementing fiscal reforms that are more supportive of growth, such as improving the efficiency of the tax system and the quality of public spending. Rapid absorption of RRF funds is also considered essential for investment growth and for accelerating the green and digital transition.
Extending the restrictions on short-term rentals is being considered
The Greek Ministry of Finance is considering extending the existing restrictions on short-term rentals (such as Airbnb) until the end of 2026, and even expanding them to additional areas outside central Athens. The aim of the move is to address rising real estate prices and the high cost of housing, caused among other things by the conversion of regular residential apartments into short-term rental apartments.
The Greek central bank notes that despite various housing assistance programs, they do not address the root of the problem - the lack of sufficient housing supply. The bank stresses that converting apartments to tourist rentals puts pressure on market prices and rents, and that tax restrictions or bans on new rentals do not resolve the underlying imbalance between housing supply and demand.
Despite the restrictions already in place in central Athens for 2025, which include a ban on issuing new licenses in the first (Koukaki, Plaka, Kolonaki, Syntagma, Omonia, Monastiraki, Exarchia, Ilisia, Neapoli), second (Neos Kosmos, Agios Artemios, Pangrati) and third (Votanikos, Metaxourgeio, Gazi, Petralona, Rouf) municipal districts of Athens, which are popular tourist areas experiencing rising rents and great investor interest, the short-term rental market continues to flourish. The reason is that many property owners managed to obtain licenses in advance, before the restrictions took effect. In addition, the restrictions in central Athens led to an increase in short-term rentals in other areas of the city.
In summary, the Bank of Greece stresses that a more comprehensive strategy is needed to address the housing crisis, focusing on increasing supply and returning apartments to the long-term rental market.
The short-term rental market in Greece continues to grow in 2025
According to data from INSETE (the institute of the Greek tourism associations), the short-term rental market in Greece continues on a significant upward trajectory toward 2025. A notable milestone is that in April 2025 the threshold of one million beds available for short-term rental was crossed for the first time, an achievement reached significantly earlier than in the previous year (July 2024). This growth is accompanied by an increase in demand and occupancy rates, although the average length of stay has actually decreased.
The dominance of foreign visitors in the short-term rental market is strengthening, which indicates significant investment potential for international investors.
It is important to note that in response to this growth, the Greek Ministry of Tourism introduced new legislation, which took effect last January, in order to set quality and operational standards for these accommodations. The new regulations are intended to ensure the quality of hospitality and of the overall tourism offering, and include requirements such as use of properties as main residences with natural light and ventilation, air conditioning, civil liability insurance, and safety equipment such as fire extinguishers and smoke detectors. The Ministry of Tourism, together with joint inspection teams, will be responsible for enforcing these standards.
From the writer's desk:
The continued rise in the short-term rental market in Greece, alongside the new legislative regulation, provides a clearer framework and a stable yield potential for investors. However, it is essential to understand the nuances of local regulation and to carry out thorough due diligence - legal, financial and physical - before any investment.
The restrictions imposed by the Greek government, which require properties to meet certain operational and quality standards (such as main use, natural light, air conditioning, civil liability insurance and safety equipment), mean higher initial costs and ongoing maintenance requirements for investors. At the same time, they contribute to a more regulated and safer market, reduce operational risks over time and increase tenant confidence. For serious investors prepared to meet these requirements, this is an opportunity to establish higher-quality deals with potential for long-term stability and yield.
Our media coverage
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Romania
A new government sets out with new economic austerity measures
The incoming president appointed Ilie Bolojan, chairman of the Liberal Party (PNL), who had served as interim president since the resignation of the previous president, as prime minister, and the new government headed by him was sworn in and took office on 25/6. It is composed of a coalition with the PSD (the Social Democratic Party), the UDMR (the Hungarian minority party) and USR, and among other things it was determined that in April 2027 there will be a rotation and a PSD representative will be appointed prime minister. The new government has 16 ministers.
At the start of its term, the new government announced that it will deal mainly with economic issues, since it faces the difficult task of putting the economy back on track and avoiding a credit rating downgrade. The government's program outlines an ambitious agenda of fiscal and administrative reforms, and among the first decisions was a decision to raise VAT from 19% to 21% from 1/8/2025.
Prices continue to rise with small price corrections at the start of summer. How much do apartments cost in Romania?
Prices of new apartments continued to rise in June in Bucharest (4.1%) and Iași (3.8%). However, small price corrections were recorded in several large cities.
In Cluj a price decline of about 3% was observed in new apartments with no change in resale apartments; in Brașov the asking price for new apartments fell by about 1.5% compared with May, while here too the asking price for resale apartments remained unchanged; in Timișoara an increase in the asking price was recorded of 2.5% for new apartments and 1.5% for resale apartments.
At the same time, the National Institute of Statistics published that the number of building permits issued for residential construction is rising across the country.
In May, 3,364 building permits were issued in Romania, an increase of 10% compared with the corresponding period last year.
In Bucharest and its surroundings, a total of 354 building permits were issued for residential buildings. Almost 92% of them were for buildings in Ilfov County. Thus, only 29 permits were issued for residential buildings in Bucharest. For comparison, in May of last year, 23 building permits were issued in Bucharest.
Bulgaria
Real estate prices continue to rise
In the first quarter of 2025, Bulgaria recorded a significant rise in housing prices, ranking second in the European Union with a jump of 15.1% in residential property prices compared with the previous year. This figure places it immediately after Portugal, which experienced an increase of 16.3%. It is important to note that since 2010, housing prices in Bulgaria have jumped by about 125%.
For comparison, housing prices in the euro area and in the European Union as a whole rose by 5.4% and 5.7%, respectively, in the first quarter of 2025. Only Finland experienced a decline in housing prices in this period. Taking a broader view of the long-term trend between 2010 and the beginning of 2025, property prices across the entire European Union rose by 57.9%, while rents climbed by 27.8%. The sharpest jump in housing prices since 2010 was recorded in Hungary (260%) and Estonia (238%), with Bulgaria also among the countries where prices have doubled or more. Italy was the only country in which a decline in property prices was recorded, while Estonia and Lithuania led in rent increases
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