Monthly brief - July 2026

Hello everyone!

The further interest rate cut by the Bank of Israel Governor to 3.5% is an encouraging sign for the real estate market in Israel, arriving alongside reports of an inventory of about 86,000 unsold apartments. At the same time, attention was drawn to a statement by Uri Levin, CEO of Tidhar, at the EY real estate conference, that apartment prices have fallen by 20% and that we are entering a challenging period in real estate in Israel. All this while the Central Bureau of Statistics data indicate a minor decline of less than 2% in apartment prices.

This month we would like to draw your attention to:

A. The attractiveness report for foreign investment in Europe.

B. Greece: the “I Renovate” program took effect.

C. Romania: an ongoing political crisis.

D. Bulgaria: the largest quarterly rise in apartment prices in the European Union.

E. Portugal: according to Eurostat - the largest annual rise in apartment prices in the European Union.

F. Ukraine: the 2026 Recovery Conference.

G. USA: construction is far from demand.

Enjoy the read,

Adv. Ilan Leibovitch and the office team

May 2026 - inflation - the full picture

Eurostat data for May 2026 allow a full comparison between the six European countries we follow. Before we dive into the numbers, one essential distinction that comes up again and again in media coverage and confuses investors.

The European Union versus the eurozone - why it matters

The EU includes 27 countries. The eurozone, the countries that use the euro as their currency, currently includes 20 of them. Romania is a member of the EU but uses the leu; it is in the EU ranking but not in the eurozone ranking. Bulgaria, by contrast, joined the eurozone at the start of 2026, and so it appears in both rankings.

This is why two real and accurate headlines can say at the same time: “Romania - the highest inflation in the EU” and “Bulgaria - the highest inflation in the eurozone.” There is no contradiction here.

The data by country - May 2026

Ukraine is not an EU member and conducts a fully independent monetary policy (NBU rate: 15%), so it does not fit into this comparison.

What explains the gaps

Romania is an extreme case: inflation of 10.9% alongside a central bank rate of 6.5% that remains frozen, which means a deeply negative real interest rate. An unhealthy mix that investors need to price into every transaction.

Bulgaria faces a structural problem: it joined the eurozone with the highest inflation within it, and it has no independent monetary tools. It cannot raise interest rates, it cannot devalue its currency. A rise in prices in Bulgaria must be curbed through a fall in demand - a slow and painful process.

Greece at 5% is a negative surprise relative to what it was in 2024, mainly because of energy costs and tourism pulling prices up. This does not change the long-term investment picture, but it is worth monitoring.

Cyprus, Portugal and Italy move around the eurozone average - a relatively balanced and representative environment.

From the writer's desk:

The inflation environment is not uniform. This is not about “Europe” - it is about six countries with substantially different macro conditions. The gap between Romania (10.9%) and Italy (3.2%) is a difference of policy, stability and the meeting point of capital and risk. In every transaction in these countries, the question of local inflation and how it affects construction costs, real rent and buyers' expectations is a question that must be on the table.

The attractiveness report for foreign investment in Europe. The winners - not who we expected

The 25th EY report on Europe's attractiveness for foreign investment was published in June 2026, and with all due respect to the overall figures, 5,026 projects in 2025, a decline of 7%, the real story is in the detail. EY does not count money. It counts decisions: a factory that opened, an R&D center that was set up, a regional office that was decided on. This is a vote by entrepreneurs with money.

France remains first with 852 projects, but fell 17%. Britain is second (730, minus 14%), Germany third (548, minus 10%). The countries that led European FDI for generations show the largest falls in recent years. Not a fluctuation - a pattern.

The money follows the production chain

Turkey rose from 5th place to 4th with the highest growth in the Top 10. Poland and Spain keep rising. What connects them: competitive labor markets, geographic proximity to manufacturers, and stability that allows planning. This is not a fashion - it is nearshoring that has become a strategy.

Warsaw and Bucharest - two cities growing out of this trend

Poland (6th place, +10%) and Romania (11th place, +16%) are two of the few countries in CEE that grew in 2025 while Central and Eastern Europe as a whole slowed. Hungary, by comparison, fell 9%. The gap indicates something structural: investors choose stable governments and access to Union funds, and this rules out Budapest in favor of Warsaw and Bucharest.

Bucharest specifically supplied 45 of the 109 Romanian projects, most of them services, logistics and IT. But the number that really tells the story: 60% of the projects in 2025 were expansions by existing investors, not new entries. That is very different. An investor who is already on the ground, who knows the workforce, the suppliers and the bureaucracy, and chose to double the bet. This is an expression of trust after experience, not a promise. The value of the projects rose from 5.6 billion euros in 2024 to 8.1 billion in 2025, a rise of 44.6%.

For real estate this means that offices, warehouses and workforce housing are not built on speculative demand, they are built on companies that have already closed medium-term employment contracts.

Italy - the big market that missed out

Italy is in 7th place with 206 projects, but fell 8%. This is the third-largest economy in the European Union, and it still remains behind Spain, Poland, and even Belgium in the pace of projects. The reasons are known on the ground: regulatory complexity, energy costs, a rigid labor market. Not an emergency, but a market that international investors price cautiously. For anyone working with commercial tenants in northern Italy, it is worth being alert to the possibility that demand will arrive more slowly than assumed.

Greece: the productivity gaps

Greece is a unique case in this report. The latest EY figure available for Greece as a country speaks of 35 projects in 2024, down from 50 in 2023. A modest number relative to the size of the economy. And yet, EY notes again and again that the sense of Greece's attractiveness among investors continues to rise. This gap, between what investors say and what they actually do, is an interesting detail for anyone investing in Greece: the theory is positive, but the decisions land slowly.

Cyprus: a market playing on a different field

Cyprus is not included in the Top 20 rankings of the European report, not because it is weak, but because it is a small country playing in a different category. The Cypriot real estate story continues to be about who buys real estate as a product (for residence, tax, access to Europe), not who opens an R&D center. The EY report is less relevant for anyone examining Cyprus as a destination.

Greece

The “I Renovate” program in Greece

The submission platform for the “Renovate 2026” program opened on June 15, 2026. The program, with a budget of 500 million euros, offers owners of old, vacant apartments in Greece government funding of up to 95% of the cost of full renovation, as well as a tax exemption on rental income for three years. On paper, it sounds amazing. In practice, the picture is more complex.

Is it open to foreigners too?

Yes, but with important caveats.

The program is open to any individual (not a company) who holds at least 50% ownership of a qualifying property in Greece, whether or not he is a resident of Greece. The first practical condition is that the applicant must have an AFM number (Greek tax identification number) and access to Taxisnet, the government portal through which applications are submitted.

Regarding income: eligibility is determined by taxable income for 2025 according to the declaration made in Greece. For non-residents: global income may be taken into account, depending on your tax status.

What are the property conditions?

The property must meet all of the following conditions:

• A building permit issued before December 31, 1990
• Main area of up to 120 sq.m. (up to 150 sq.m. for families with three or more children)
• Energy rating C or lower
• The property was declared vacant on Form E2 (a rental declaration to the tax authority) in 2024 and 2025
• The property has had no government renovation funding since January 2020
• The property is not registered in the short-term rental register (that is, not registered as an Airbnb property)

The last point is very important: a property currently operating as an Airbnb is automatically disqualified. This is a deliberate step - Greece is trying to return properties to the long-term rental market.

How much money can be received?

The basic grant stands at 80% of the recognized cost. It rises by 5 percentage points for each of the following conditions that is met: the property is in a mountain town or on an island; the applicant is a single parent or a family with three or more children; the applicant, the spouse, or a dependent has a recognized disability.

The grant ceiling: 36,000 euros per property, in line with a ceiling of 300 euros per sq.m. The absolute maximum is 95% for income holders in Category I, and 85% for Category II.

The recognized works: full renovation - plumbing, electrical, flooring, kitchen, bathrooms, plastering, painting, structural repairs. In addition, a minimum energy upgrade is required (windows, solar water heater, heat pump) that improves the rating by at least one grade.

What is the commitment in return?

Here comes the clause that many miss: a property that received a grant must be let on a long-term lease (main-residence lease only) for at least five years. A violation, including short-term rental, requires full repayment of the grant. By contrast, the tax incentive is real: rental income from the property after renovation is eligible for a tax exemption for three years.

“World's Best Travel Destination” for 2026

The summer 2026 season opened with a series of data indicating that Greece continues to establish its standing as one of Europe's leading tourist destinations. Greece was chosen as “World's Best Travel Destination” at the Grand Travel Awards Finland 2026, for the second consecutive year. In this category Greece beat strong competitors such as Italy, Spain, Portugal and Norway. The recognition is based on an independent survey conducted by the research company Nordic Bench, which combines consumer and traveler ratings, opinions of tourism-industry professionals and the assessments of an expert panel, and it reflects the high satisfaction of visitors and Greece's strengthening position in the international tourism market.

Alongside the prestigious recognition, data recently published by the European Travel Commission (ETC) place Greece among the five most sought-after summer destinations in Europe for 2026. According to the “Monitoring Sentiment for Intra-European Travel” report, Greece accounts for 6% of Europeans' travel preferences for the April-September period, behind Spain (14%), Italy (11%) and France (8%), and at the same level as Portugal. The report points to stable demand from key markets including Britain, Germany, France and Poland, and comes against the background of another encouraging figure: Europeans' overall travel intention for summer 2026 reached its highest since 2020, with 82% of respondents planning to travel between April and September - an increase of 10% over last year.

The actual economic data also support the trend, and strongly. According to Bank of Greece data, in the first four months of 2026 (January-April) tourism revenues reached about 2.8 billion euros, an increase of 36.9% compared with the same period last year, an addition of about 753 million euros. At the same time, the number of foreign visitors rose 27.1%. The fact that revenues are growing faster than the number of visitors indicates a significant trend: a rise in average spending per tourist and a move to higher-value tourism, and not only a rise in quantity. In the first quarter alone, average spending per trip rose about 20%.

When high demand, international recognition, and the continued rise in revenues and spending per tourist are put together, the result is a picture of a strong and dynamic tourism sector, establishing 2025 as a record year (revenues of over 23 billion euros and 37.98 million international visitors) and continuing to support the development of the hotel and hospitality market in the country.

Our media coverage

A “front line to the sea” that was a symbol of luxury becomes a warning label - and in Israel, the collapse of the cliffs in Herzliya is not a local incident but a sign of the same process.

Why does it take an Oscar winner to sell an apartment for 2.7 million shekels? It sounds cool, but there is a marketing trick here that every apartment buyer needs to understand: when the bank does not let the contractor lower the price, and the market does not forgive a discount, what's left is to buy a star. And that star? You pay for it, not the contractor.

The strong shekel made an apartment in Europe 100,000 shekels cheaper than a year ago. The same apartment, the same address, less money. When in Israel the rental yield stands at 2%-3% and in Eastern Europe it reaches 7%-7.5%, the question is no longer “why go abroad”

When an apartment in Israel gives a yield of 2%-3% and it is hard to reach at all, and an apartment in Romania or Bulgaria gives 7%-7.5% - the question more and more Israelis are asking is no longer “why invest abroad”

Romania

An ongoing political crisis

For two months now Romania has been without a stable government, and it is not over yet.

The pro-European government fell in early May, after the largest party in parliament (the PSD, the Social Democrats) suddenly moved to the side of the far right and brought it down in a no-confidence vote. Since then, the president has tried to appoint two prime ministers - one withdrew himself, the other failed the confidence vote in parliament about two weeks ago. Now he is looking for a third candidate. If he too fails, Romanian law allows the president to dissolve parliament and call early elections, something that has never happened there.

Why this concerns you, even if you are only an investor and not engaged in politics:

• The leu (the Romanian currency) weakened against the euro to a historic low against the background of the uncertainty. This directly affects anyone planning cash flow in lei or comparing local construction costs against a sale in euros.
• Romania's budget deficit is the highest in the European Union, and rating agencies are already warning of a downgrade. A lower rating = higher interest on government debt, and this usually rolls over into financing costs in the private market too, including mortgages and project financing.
• Access to European Union funds (over 10 billion euros a year) depends on the government's ability to carry out reforms and reduce the deficit. A weak caretaker government has difficulty doing this, and that may slow infrastructure and development projects that are directly or indirectly affected by Union funds.
• The far right (AUR) is currently leading in the polls by a significant margin. If there are early elections, there is a reasonable chance they will win, and this could change Romania's general direction toward the European Union and foreign investors, even if not immediately.

We will continue to follow and update according to developments.

From the writer's desk:

This does not mean “don't invest in Romania” - the Romanian market has lived and breathed through political crises no less dramatic for a long time. But it does mean: check the timing of significant transactions, be alert to exchange-rate fluctuations, and do not assume that the stability that existed until a year ago will return at the same speed.

Bulgaria

6.2% the highest quarterly rise in the EU in the first quarter of 2026; and 14.8% annually - third place in the Union

According to Eurostat's housing price index for the first quarter of 2026, Bulgaria stands out in two categories: the highest quarterly rise among all 27 European Union countries, with 6.2% in the first three months of the year, and third place in annual growth with 14.8% compared with the corresponding quarter in 2025. Only Portugal and Slovakia are above it. The Union average stood at 5.1% annually and 1.2% quarterly.

The figure comes at a precise point in time: the first quarter of 2026 is the first full quarter in which Bulgaria operates as an official member of the eurozone, having adopted the common currency on January 1. The implication is not only symbolic: entry into the eurozone removes exchange-rate risk for investors from Europe, simplifies financing transactions for properties, and places the Bulgarian real estate market on the same comparison shelf as Spain, Greece and Portugal.

In the specific market, Q1 2026 data in Sofia show an average transaction price of €2,680 per sq.m., a minor decline from the end-2025 level (€2,790 per sq.m.), but still growth of about 29% from the levels of early 2025. On the Black Sea coast, average net rental yields of 6.7% were recorded last year, and up to 8.4% in premium properties with professional management, including the months of May and October, which began to strengthen in addition to the traditional summer.

From the writer's desk:

1. What is especially interesting is the gap between Bulgaria and the other Eastern European markets: it still offers prices significantly lower than Western Europe, but now with an identical currency framework. For an Israeli investor, who in any case works in dollars or euros, this simplifies the calculation.

2. Sofia versus the Black Sea coast - two entirely different markets in risk profile. Sofia is driven by local and business tenants and continuing demand; the Black Sea coast depends on the tourism season, with higher yield potential but higher seasonal exposure. Strategy, goal and investment horizon determine what is suitable.

3. Local due diligence - Bulgaria has improved its legal framework and registration transparency in recent years, but gaps between districts and between property types still exist. Local legal accompaniment is not a recommendation - it is a condition.

Portugal

Housing prices - an eighth consecutive monthly record: €3,156 per sq.m.; Eurostat confirms - the country with the highest rise in the EU at 17.8% annually

On July 1 the idealista platform published the price index for June: the national median rose to €3,156 per sq.m., the eighth consecutive month in which a record was broken. The annual growth rate moderated from 10.2% in May to 8.9% in June, but according to the platform, the slowdown in pace does not indicate a trend reversal, but a market that continues to rise, simply by a lower percentage. The highest increases came from interior and remote areas: Portalegre with 25.8%, Castelo Branco and Santarém with more than 24% each. In the big cities the rise was more moderate: Porto 6.9%, Lisbon 5.8%. Lisbon remains the most expensive at €6,107 per sq.m., and in the metropolitan area the average stands at €4,403 per sq.m.

On July 2 Eurostat published the housing price index for the first quarter of 2026, and Portugal is placed first among all 27 Union countries: an annual rise of 17.8% compared with the corresponding quarter in 2025, and a quarterly rise of 3.8%, the second highest in the EU. For comparison, the Union average stood at 5.1% annually and 1.2% quarterly. Only one country, Finland, recorded a decline. 25 of the 26 countries that reported recorded a rise.

The two indices, one local and based on asking prices, the other official and based on closed transactions, point in the same direction: consistent demand on one hand, and new supply that fails to catch up on the other. The Bank of Portugal already warned in its May stability report of a “risk of a sudden and unexpected fall in prices,” but as of recent months, the two indices continue to run in the opposite direction.

From the writer's desk:

The Eurostat figure is important not only as an index, it is an establishment. When Portugal leads the European Union over a whole year, this is what justifies institutional capital, what drives funds to examine deals, and what gets into Bloomberg. These are exactly the factors that strengthen international demand and make a quick correction harder.

What this means in practice for the Israeli investor:

• Whoever bought a year ago and is sitting on a property in Portugal - has gained. Not on paper: in the registry extract. A question to examine now: has the rent risen at a similar pace? If not, there is a gap that needs to be balanced.
• Whoever is considering entering - the data rule out the assumption that waiting will bring a lower price. Eight months of records and 17.8% annually is not a situation that tends to reverse without an external event at the level of a sharp interest rate move or a political crisis. The relevant risk right now is not a price fall, it is financing cost and mispricing of the property.
• The central bank's warning (from the May report, which we reported on here last month) should not be ignored. Portugal is at a point where both a rising market and senior regulators are sounding warnings, a combination that requires entering with a safety cushion and not with maximum leverage.

Ukraine

The Ukraine Recovery Conference 2026

On June 25-26, in the historic port of Gdańsk, Poland, more than 4,000 representatives from 102 countries gathered around one question: who pays for Ukraine's recovery, and how? The Ukraine Recovery Conference 2026 is the largest platform of its kind, and what was decided there will affect real estate and infrastructure markets in the coming years.

588 billion dollars for a decade

The World Bank estimates the total cost of Ukraine's recovery at about 588 billion dollars, spread over a decade. This is not one number, it is an investment map: the transport sector alone needs 96 billion dollars, energy 91 billion, and housing - almost 90 billion dollars.

Housing is the third-largest sector in recovery needs. The Gdańsk conference itself concluded a first round of financing commitments of over 10 billion euros from governments and financial institutions.

Two central mechanisms entered full operation in 2026:

The URIF fund (US-Ukraine Reconstruction Investment Fund) a joint fund between the US Treasury and Ukraine. The first investment was officially approved in 2026 in a technology company. The fund is expected to accumulate about 200 million dollars by the end of the year, and this is only a first stage.

Multi-layered institutional financing: the EBRD, the EIB, the IFC and other institutions finance projects under state guarantee mechanisms. A private investor who enters as a co-investor alongside these bodies enjoys a risk structure fundamentally different from a direct investment.

The situation on the ground

In the absence of a full peace agreement, the Ukrainian real estate market operates in unconventional conditions, but it operates. Average rental yields stood at 7.55% in March 2026 (Global Property Guide), with Dnipro leading at 9.76% and Lviv at 7.17%. Housing prices are expected to rise 8-10% this year in the primary market, because of high construction costs and a thin supply pipeline.

The Oxford Economics model points to 12.3 years for full reconstruction in a stable ceasefire scenario, compared with 27 years without an agreement. Anyone entering now, before the security picture has been clarified, receives a “courage premium,” as the American Chamber of Commerce in Ukraine defined it.

From the writer's desk:

The Gdańsk conference is not just another event on the calendar. It marks a structural change: the shift from “humanitarian support” to “economic recovery financing” has become official, with contractual frameworks that protect private investors.

Anyone examining exposure to Ukraine, in housing, in infrastructure, or in reconstruction companies, is now at the right point in time to examine an entry structure, not to wait for full clarity that may arrive too late.

USA

The dollar is far from its peak, construction is far from demand

June 2026. When we look at the American market today, we see two pictures that tell one story.

The first picture is the dollar. At the start of the month it touched 2.80 shekels, its low since 1993. Since then it has recovered slightly and returned to move around 2.98-2.99, but let's put this in proportion: at the end of last December the dollar stood at about 3.19 shekels. That is, even after the recovery, someone buying a property in the USA today does so in a currency that is still far from its peak. For the Israeli investor, this is not a passing headline - it is an entry point.

The second picture is far from the economic headlines, and it is the one that dictates reality on the ground: the housing shortage.

The gap that has not gone away

The American housing market carries on its back an accumulated gap of millions of units. Estimates range from 2 million to 8 million, depending on whom you ask, but the Realtor.com report for 2026 points to about 4 million missing homes. And behind that number stands one simple fact: more than a decade of under-building. Even in 2025, a year with relatively strong construction activity, the pace of building did not keep up with the pace of formation of new households. Construction of single-family homes even fell to its lowest level since 2019.

At the same time, a large part of the markets in the USA continue to attract population, internal migration, growth, new jobs. And this creates demand that does not go away, even when interest rates are high.

I have been saying this for years to my clients: residential real estate is not a luxury. A person can postpone buying a home. The need to live somewhere, he cannot postpone.

The demand waiting beneath the surface

The high interest rates of recent years sent millions of Americans to wait on the sidelines. They still need housing, they are simply waiting for the right moment. This is what is called pent-up demand: pressure that builds up and is not released. The Realtor.com report estimates that in 2025 alone about 1.82 million young households, millennials and Gen Z, were “missing,” who were unable to move into independent living because of prices. This is the highest level in four years.

And on the other side of the equation - the developers. High financing and construction costs caused many of them to scale back new projects. Put the two together, and you get a clear picture: once conditions improve and the pent-up demand is released, the supply simply will not be there to absorb it. And when demand meets limited supply - prices know where to go.

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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