Monthly brief - August 2025

Hello,

July and August are usually the summer vacation months in Europe, with a slower pace, but July ended with a tariff agreement between the European Union and the US that may also affect real estate prices on the continent, and at the same time a VAT increase on apartments in Romania, a move that may also affect demand in the country.

This month we would like to bring to your attention:

A. Real estate prices in Greece continue to rise.

B. The student housing crisis in Greece is worsening.

C. Wage levels in Romania in July 2025.

D. Romania is buying an “Iron Dome” from Israel.

E. Bulgaria on the way to the euro - what does it mean for real estate prices?

F. Cyprus attracts investors: Limassol tops the table of luxury property rental prices.

G. A “Trump Tower” will be built in Bucharest.

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 trend continues - prices are surging, supply is shrinking

Prices in most of the Athens metropolitan areas continue to rise, with the average price in the first half of 2025 standing at 2,591 euros/sq.m. (an increase of 8.3% compared with the corresponding period in 2024):

• The northern areas Chalandri, Kifissia, Maroussi, Melissia, Agia Paraskevi and Cholargos show moderate price increases of up to 4%.
• In the southern suburbs, Alimos recorded a significant increase of almost 9%, Voula, Glyfada and Paleo Faliro recorded increases of 4-5%, while Elliniko recorded a spectacular increase of 12.1% - a development attributed directly to significant urban regeneration and the anticipated upgrading of the area.
• In the western suburbs, areas that were previously undervalued show strong momentum, mainly due to accessibility, new infrastructure and rising prices: Peristeri recorded an increase of 11.9%, Korydallos showed an even larger increase, of 13.1%, and Nikaia also recorded an increase of 3.4%.
• Piraeus attracts investors thanks to convenient transport, an active port and urban regeneration plans - and shows growth in the number of new transactions.

According to recently published data, Greece is in the midst of a shortage of properties available for purchase - at the same time as prices continue to rise:

• The supply of apartments on the free market has shrunk by about 12% over the past two years, mainly because properties have been diverted to the tourism market.
• The pace of new construction is not keeping up with the pace of demand, among other reasons because construction costs have risen by double digits since 2022.

The implication is twofold: on one hand - it is harder to find good properties at an attractive price. On the other hand - a quality property purchased now is expected to show a clear rise in value in the coming years.

The student housing crisis in Greece is worsening - and becoming a hot opportunity for investors

While the Greek real estate market continues to soar, one market, small but stable, is sending strong signals to smart developers: student housing.

A report recently published on the news site Newsit reveals a worrying picture, mainly in the cities of Athens, Piraeus and Thessaloniki - the country's major study centers. Thousands of Greek and international students are struggling to find a roof over their heads at a reasonable price, as rents surge and supply keeps shrinking.

The key data:

• In Athens, rents for a one-room apartment (a studio or one-bedroom apartment of 30-40 sq.m.) range from 400 to 600 euros per month - a price that does not allow most students to live near their educational institutions.
• In Piraeus, the central port city near Athens, as well as in the city of Thessaloniki - the capital of the north - prices are similar, but the supply of apartments is significantly smaller.
• Students are forced to move to distant suburbs or compromise on poor living conditions - and sometimes even give up independent living entirely.

Why is this happening?

• Competition from the tourism market: owners of apartments in student areas prefer to turn the property into an Airbnb apartment, which generates higher income - even 30% or more - than a regular rental.
• A shortage of new construction: unlike city centers in Europe, in Greece there are almost no dedicated student projects. Government programs on the subject have also been stuck for years.
• Growing international demand: Greece has become a desirable destination for foreign students from European Union countries (the Erasmus program), and their number is rising consistently.

From the writer's desk:

The student housing market in Greece is in crisis - but for the smart investor, this is an excellent opportunity to build a yielding, stable and quality property portfolio. While the public and the media focus on rising apartment prices in prime areas, those who look one step ahead identify here a niche with firm demand, steady monthly cash flow, and potential for appreciation.

Investing in small properties in areas with constant demand from students makes it possible to enjoy both consistent monthly cash flow and appreciation as the market grows.

What can be done?

• Buying small apartments or the legal division of large apartments in high-demand areas (for example near the University of Athens, the University of Piraeus, or the Aristotle University of Thessaloniki).
• Developing shared living projects (Co-Living) intended for students, with complementary services (WIFI, laundry, shared kitchen, transport accessibility).
• Smart renting through dedicated platforms - digital management solutions that streamline the process of renting to students and lower costs.

Where to look?

• Athens: neighborhoods such as Kypseli, Zografou, Goudi or Ampelokipoi - close to the main universities and with continuous demand.
• Piraeus: areas near the port, the maritime school and the local university.
• Thessaloniki: the area of the Aristotle University, Egnatia Street and its surroundings - where demand is rising but prices are still relatively accessible.

Our media coverage

“No developer will embark on an economic adventure in Beit She'an or Safed without a real incentive!”

“Building a ‘Trump Tower’ in Bucharest is not just a deal, but a statement of prestige that will attract international capital and send real estate prices soaring.”

“In a situation of widespread destruction, the ability to rebuild quickly is critical.”

Romania

Price increases in Romania as a result of the VAT increase

Prices of a variety of goods and services will rise in August after the Romanian government raised VAT and excise duties. Train tickets, telecommunications, retail products and health payments for categories that were previously exempt are expected to take effect.

To deal with a deficit that has spiraled out of control, the government decided to raise the standard VAT rate from 19% to 21%, and to reduce the reduced VAT rates from the two current rates of 5% and 9% to a single 11%. On the other hand, a number of retailers announced that they are freezing prices for a variety of products or applying discounts to offset the VAT increase.

CFR Călători announced that raising the VAT rate from 19% to 21% will increase train ticket prices by up to 4.5 lei (0.9 euros), and the tariff update will apply to all six train operators. Second-class ticket prices will rise by 3 lei at most, and first-class tickets by 4.5 lei at most, the national passenger railway company announced. The last time train ticket prices rose was on 15 December 2024, by 4.6%.

Because of the same price increase, Romania's main telecommunications company, Digi, announced that from 1 August it will adjust the tariffs for the services and goods it supplies, applying the new VAT rate of 21%.

Also, in response to the price increases, retailers such as Carrefour, Mega Image and Lidl announced discounts or price freezes on a variety of products during August, according to Agerpres.

Rise in prices

According to a PwC document, the reduced VAT rate will rise from 9% to 11% for the following goods/services: medicines for human use; food, including beverages for human and animal consumption, and live pets and birds. VAT at a rate of 11% will also apply to the supply of water and sewage, irrigation water for agriculture, the supply of fertilizers and pesticides, including chemicals, seeds and other agricultural products for sowing or planting, and services commonly used in agricultural production.

The same tax will also apply to housing used as nursing homes or care homes, children's homes and rehabilitation centers for minors with disabilities, accommodation in the hotel sector or similar sectors, including the rental of campsites and restaurant/catering services.

The 5% VAT rate will rise to 11% for textbooks, books, newspapers and magazines; access to castles, museums, memorial houses, historical, architectural and archaeological monuments, zoos and botanical gardens; firewood; and thermal energy during the cold season for specific regulated categories of consumers.

By contrast, VAT will rise to the standard rate of 21% (from 9%) for medicines for veterinary use, plants and ingredients used to prepare food, seeds and bee feed.

VAT at a rate of 21% will also apply to homes of all sizes and prices, without the previous distinction under which homes with a maximum usable area of 120 sq.m. and a value not exceeding 600,000 lei paid VAT at a rate of 9%. The move will significantly raise home prices.

Furthermore, VAT at a rate of 21% will apply to the installation of photovoltaic panels, solar thermal panels, heat pumps and other efficient low-emission heating systems, including installation kits and all components purchased separately intended for public or residential buildings.

Taxes will rise in two stages

On alcohol and alcoholic beverages, by 10% from 1 August 2025, and by another 10% from 1 January 2026;

On processed tobacco, by 3% from 1 August 2025, and by 3% again from 1 January 2026;

On gasoline and diesel, by 10% on both dates. Furthermore, from 1 August 2025, excise duties will be imposed on mineral wines, apple and pear cider and mulled wine. From 1 January 2026, these duties will rise by 10%.

Wage levels in Romania in July 2025: Bucharest continues to lead

The labor market in Romania continues to show signs of strengthening, with an official update from the National Institute of Statistics (INS) indicating a clear trend:

The average net wage in Romania in July 2025 stood at 5,217 lei (about 1,050 euros) - a real increase of 13% compared with July 2024.

But beyond the average, the data reveal an interesting geographic and economic picture - with sharp gaps between regions, and fields where wages are up to 3 times the average.

Average wage by field of activity:

The data indicate that the Romanian high-tech market pays more than double the national average, while traditional sectors still lag behind.

Wages by geographic region:

Western Romania shows wages similar to Bucharest - a phenomenon that reinforces the trends of economic development and investment in the western periphery.

From the writer's desk:

What does this mean for real estate investors?

• Bucharest and the west are the markets with growth potential in rental yields, mainly because of higher disposable income.
• Rising wages make it possible to raise rents in the local market - not only against international tenants, but also among the local population.
• Cities with high wages generate demand for higher-quality apartments, which is an opportunity for developers with high-level projects.
• By contrast, investing in low-wage areas requires a precise pricing strategy, and a focus on small apartments or tenants with government assistance.

Whoever understands the wage map understands the demand map.

An investor who relies on economic data knows how to focus activity on areas with employment stability and rising wages - two components that ensure firm demand, high yield and reduced risk.

Construction of the A0 ring road around Bucharest has been completed

On 1 July the last 18 km (the southern half-ring) of the A0 road were opened to traffic, allowing drivers to avoid Bucharest's ring road entirely, which is a road with one lane in each direction, very congested, especially with trucks.

The A0 is 51 km long, with another 4 km remaining to be completed in the northern part in the Cernica area, expected to open to traffic by the end of 2025 and connect the DN1 with the A2.

The entire project was outsourced to foreign companies from Greece and China.

Romania is buying Israel's “Iron Dome” - a historic defense deal

On 21 July 2025 the Romanian government announced the signing of a framework agreement worth about 2.3 billion euros with the Israeli company Rafael, centered on the purchase of 6 advanced SHORAD/VSHORAD air defense systems - all the result of Israeli technology, including the “Iron Dome” and its derivatives.

This is the first time a European country has purchased outright this type of Rafael system, which until now has been used mainly in Israel and in selected countries in Asia and Africa.

The deal includes three additional contracts to be signed over the next seven years, under which logistics, ammunition, training and related services will also be supplied. The first two systems are expected to arrive within three years of the signing of the first contract.

Why did Romania choose the Israeli system?

• Romania is close to the Ukrainian border and took into account its concerns about Russia's military buildup in the region. Over recent years, parts of drones and cruise missiles from the Russia-Ukraine war have fallen on Romanian territory.
• Romanian Defense Minister Liviu-Ionuț Moșteanu said that the Iron Dome proved itself in defending Tel Aviv against Iranian attacks - and now it will also protect Romania's cities, airports and military bases.
• Competing European systems were eliminated in the tender in favor of Rafael's Israeli solution, out of a clear preference for technology, effectiveness and integration with systems such as Patriot and NATO.

Significance and future possibilities

• The deal is the largest export deal in Rafael's history, and gave a seal of approval to the competitiveness of the Israeli defense industry in the global market.
• This is a strategic cooperation between Israel and Romania in the defense field, which strengthens Rafael's standing as one of the major suppliers of advanced air defense systems in the world.
• The agreement may serve as a model for similar cooperation with other European countries - especially countries that are raising their defense budgets in light of growing threats from the Eastern European region.

Bulgaria

Bulgaria on the way to the euro: what does it mean for real estate prices?

As Bulgaria prepares for the transition to the euro currency - expected at this stage for 1 January 2026 or shortly after - local and international real estate market professionals are beginning to outline the possible effects on apartment prices, demand and foreign investors.

A temporary rise in prices - mainly in the big cities

According to several analyses recently published on the Novinite website, a moderate but noticeable price rise of 5%-12% is expected during the year following the transition to the euro.

The effect is expected to be more significant in cities such as:

• Sofia - an economic, technological and academic center.
• Plovdiv - a preferred destination for industrial investment and international events.
• Varna and Burgas - tourism and resort hubs, especially in the summer.

In the periphery and in less sought-after areas, the increases are expected to be moderate or not to occur at all.

Why are apartment prices rising with the transition to the euro?

• Increased investor confidence: international investors see the transition to the euro as a signal of economic and regulatory stability, which leads to an inflow of foreign capital.
• Public inflation expectations: local buyers fear that apartment prices will soar after the transition - and therefore rush to buy apartments even before the date, which increases demand in the short term.
• Rising prices of raw materials and services: some suppliers and contractors anticipate the price rise and build it into prices in advance.

Real estate in Bulgaria: price rises at a European pace

The Bulgarian real estate market is experiencing one of the most dynamic periods in its history - with sharp price rises, high economic expectations, and growing attention from international investors. Recent reports point to a clear trend: Bulgaria is currently the real estate market with the second-highest growth rate in the European Union, as of the first quarter of 2025 - with an annual increase of 16.5% in apartment prices.

The forecast: a rise of 18% in 2025 - followed by stabilization

According to a recent report published on Novinite, market professionals expect that by the expected transition to the euro currency (January 2026 or shortly after), apartment prices will jump by about another 18% - mainly because of public expectations of “post-euro price rises”, the inflow of foreign capital, and a shortage of supply.

However, after the transition - stabilization is expected to be gradual, and even some slowing of the pace of increases, with a return to a moderate annual rise of 4%-6%.

Where are prices rising fastest?

• Sofia - remains the most expensive city in Bulgaria, with an average of about 1,500 euros/sq.m. for new apartments (and even more in prime areas).
• Varna - Bulgaria's coastal capital shows some of the best yields, with consistent growth in apartment prices and in rental demand (from both tourists and students).
• Plovdiv - the country's second-largest city still offers relatively low prices (about 1,000 euros/sq.m.), but has recorded increases of about 10% this year.
• Ruse - the surprise of the year: the pace of price increases in this city on the Bulgaria-Romania border is among the fastest, mainly because of infrastructure investment, the relocation of industry to the area, and the arrival of a young population.

What is behind the increases?

• The expected transition to the euro - brings waves of early purchases by locals and foreigners alike, out of fear of price rises after the transition.
• A shortage of quality new construction - mainly in city centers, because of rising raw material costs and slow regulation.
• High yields relative to EU markets - it is still possible to find properties with a net yield of 5%-7%, a rare figure in Europe in 2025.
• The arrival of foreign buyers - mainly from Germany, Israel, Austria and the United Kingdom - following the removal of regulatory restrictions and the expectation of monetary stability.

But - not everything is rosy

Market analysts warn of a price rise that does not necessarily reflect a real increase in economic value - but stems from a temporary hype around the euro. In other words, buying at a peak price right now may deliver a low yield or a price correction within a year or two.

Cyprus

Cyprus attracts investors: Limassol tops the table of luxury property rental prices

A new report published this month by the real estate platform Ask Wire reveals:

Limassol continues to lead the rental market in Cyprus - especially with regard to luxury properties and premium apartments, and holds the title of the most expensive city for renting in Cyprus, while Larnaca remains the most affordable city for tenants and investors alike.

In recent years Limassol has become a focal point of new construction, foreign residents and international capital - which pushes its rents above the rest of the island.

Key data from the report:

• Average monthly rent for luxury apartments in Limassol: €1,683 per month (the highest of all the cities in Cyprus)
• Luxury villas and garden apartments: in Limassol the average price stands at €3,000 per month - three times higher than in cities such as Paphos and Larnaca.
• Average monthly rent: €1,064
• Annual increase of 5.3%
• The only city with an average monthly rent above €1,000
• Larnaca and Paphos: maintained a noticeably lower average rent - around €500-600 per month for regular apartments.
• Paphos: continues to enjoy demand from investors and tourists alike
• Average monthly rent: €754
• Larnaca - the cheapest city: continues to attract tenants thanks to its proximity to the airport and lower living costs.
• Average monthly rent: €707
• Nicosia, the capital, ranked second after Limassol for luxury apartment rents - with an average of €1,200 per month.
• Average monthly rent: €792
• Relative price stability but growing demand in business areas.

From the writer's desk:

The data sharpen a clear trend: Limassol has become a city with an attractive but expensive rental market, mainly for investors seeking a quick return on luxury properties for medium-to-short-term rental. International investors continue to prefer Limassol thanks to accelerated development, modern infrastructure, a new port and a prestigious image

However, the price gap between Limassol and cities such as Paphos and Larnaca also points to alternative investment opportunities for patient investors, who will consider future appreciation and entry at a lower price.

A tycoon's gamble on Romania: a “Trump Tower” will be built in central Bucharest

The Trump Organization, the business corporation of the family of the US president, will join the Romanian real estate company SDC Imobiliare to build a luxury residential tower in central Bucharest to be called “Trump Tower Bucharest”, according to a CNBC report. The companies did not disclose the location of the tower or the date work will begin. The article notes that the Romanian economy stagnated in the first quarter against the backdrop of a political crisis, after the Constitutional Court annulled the presidential election in December on suspicion of Russian interference; the election was held again in May, and was won by the mayor of Bucharest, Nicușor Dan.

Source: ynet, news agencies, 13.07.25

No longer attractive: the giant city Americans are fleeing

According to US Census Bureau data, the Atlanta metropolitan area (about 6.3 million residents) lost more residents through domestic migration than it gained in the year ending in mid-2024, a net decrease of about 1,330 people, for the first time since the data began to be published three decades ago. According to the article, behind the trend are high housing prices (the value of homes in the area tripled since 2012 to about 390 thousand dollars), traffic congestion and a slowdown in construction, with the growth of the housing stock falling to 0.6% between 2020 and 2023. It is also noted that about a quarter of the city's office space stands empty, and that smaller cities in the southern US, such as Huntsville, Wilmington, Knoxville and Chattanooga, are absorbing a considerable share of those leaving.

Source: ynet, news agencies, 21.07.25

A US multifamily deal worth 625 million dollars

The American investment firm Harbor Group and Meitav Gemel & Pension purchased 11 rental apartment complexes (multifamily) comprising about 3,600 apartments in South Carolina, Georgia and Louisiana, for about 625 million dollars. According to the article, Meitav's share in the deal is about 175 million dollars out of an equity component of 250 million dollars, and the seller chose to sell after a loan it had taken on the properties came to its end. The article sees the deal as a sign of a revival in the American real estate market, after about two years in which high financing costs made deals of this type difficult.

Source: TheMarker, Yosef Horesh, 20.07.25

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

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