Dec. 31, 2014
Residence permit in Latvia, mortgages in France, falling Russian ruble, restless Ukraine, "golden visa" in Portugal, tenants in Germany, Italy which is getting cheaper and Russians in London – the ee24.com tells about all the main events taking place on the European real estate markets in 2014.
Last year was difficult for the Russian economy, because the euro rose against the ruble by 1.5 times just during a few weeks. But realtors are not inclined to dramatize: wealthy buyers, who have foreign currency accounts, are still investing in real estate in London, Prague and other cities attractive in terms of investment; less rich clients also haven’t left the market, but lowered their appetites to the scale of small apartments in Bulgaria and Spain. But such options really exist and we found them for you!
At the beginning of the year, when Euromaidan was just gaining momentum, we noticed that the Ukrainians were increasingly interested in real estate in Poland and Germany. "How much is the property in Poland?" – they asked from Google. But these intentions slightly resulted in real transactions and number of purchases made in Ukraine and Europe declined. By mid-year, when the political situation in Kiev cleared up, and the crisis in the east of the country dragged on, the top of requests from the Ukrainians consisted of real estate in Poland, the Czech Republic, Bulgaria, Montenegro, Croatia and Turkey.
Since 1 January 2014, Latvia moved over to the euro, but new currency didn’t bring any significant changes in country’s real estate market. But the increase of costs for a residence permit from €72,150 and €142,300 to €250,000 – was more visible. Number of applicants for residence permit dropped significantly during the autumn.
The "golden visas" program succeeded much in Portugal than in Spain, although the price is the same – purchased real estate should cost €500,000.
Residence permit in Portugal on average, is given to two people per day, while in Spain only to one. Portuguese product is in demand from the Chinese, who form 80%, and the Brazilians and Russians, while the Spanish – is popular among people from the Middle East and Asia. However, in the end of the year, it became clear that the success of Portugal was exaggerated: corrupt officials issued "golden visa" not for investment, but for the bribes.
Real estate in London will always be in the price: wealthy Russians and wealthy Africans are those, who buy it. In this city are located the most expensive houses and the most prestigious streets in the world. A square meter in average apartment worth as much as splendid apartment in Bulgaria.
The locals cannot easily buy a house, and so when the developers offer inexpensive (by London standards) apartments, the citizens are ready to spend the night in line in front of their offices. Developers are strict: only one apartment per person!
What do the authorities do in order to increase the availability of housing? Since December, they changed the stamp duty – tax rate on real estate purchase. Now standard housing will cost less and objects worth up to £937,500 – will be even more expensive. In order to discourage foreigners desire to meddle in London and buy a house, the cost of residence permit for investors was increased from £1 million to £2 million.
Two neighboring countries, between which lays the EU’s border, approved liberal laws facilitating purchase and relocation procedures for non-EU residents in the past year.
Croatian and Russian authorities signed an agreement on reciprocity property rights: the Russians have the right to register property as individuals (earlier it was allowed only for legal entity).
The Montenegrin government has approved the Foreigners Act, which allows obtaining a residence permit for property purchase. However, the project has not yet entered into force.
The ee24.com also prepared a large-scale review of the most ambitious projects in Montenegro, most of which is located on the Adriatic Sea.
Property in Italy and France became even cheaper in the last year, including the elite one. In Italy increased the tax burden on homeowners and the mortgage has been recognized as the Europe’s most inaccessible. It is no wonder that prices fell everywhere, except for one very specific region – Alpine Valley D’Aosta.
In France, by contrast, the average mortgage rate fell to a record low level for the last 70 years (by the way, as in the Czech Republic over the past 11 years). The availability of credit hardly helps to maintain demand at the same level but cannot stimulate it because of financial possibilities of majority of French families. Property prices naturally declined almost everywhere, including Paris and the Côte d'Azur, and in the next year, FNAIM analysts expect another drawback within 2-3% from sellers.
A similar situation was observed in 2014 on the sunny Cyprus, where housing prices have declined. Banking crisis was followed by economic problems in the country and they had to stay afloat by loans from international organizations which required tightening the laws.
Classical nation of tenant ceases to be such. More and more Germans prefer to invest and save money in real estate. The percentage of the population living in their own homes and apartments has increased from 43% to 46%, over the past five years. This was caused by available mortgages, which are already cheaper than rent in most cities.
Meanwhile, foreign property buyers also actively support the market. Housing in Germany is getting expensive, but it is not enough, as the builders did not keep up in line with the influx of migrants, which means that buying of an apartment or a whole apartment building is turning to be a profitable investment.
Property prices in Bulgaria decreased during the last five years, but it seems that in 2014 they started five-year growth. Recovery is almost invisible (+1%). In parallel with the strengthening of prices the composition of buyers is also changing: the Ukrainians, the Belarusians and the Kazakhs came this summer to replace the Russians.
At the end of the year the demand for property in Turkey was on the rise. In August and November, the number of sales of houses and apartments increased by 15% if compared to the same period of the last year. In fairness, market activity was not the best during the first months of 2014, so at the end of the year, sales will likely not grow.
But the number of transactions involving foreigners has increased by more than 1.5 times. Currently in Turkey are 34,000 houses and apartments owned by the British and another 12,000 are in the hands of the Russians and 10,000 of the Germans. Foreigners prefer Antalya and Istanbul and almost completely ignoring other regions.
In average square meter in new London building cost €30,000, which makes the British capital to be the world’s first. In a year period such property increased by 7.4%. A similar housing in Paris worth €16,500 per sq.m, with prices steadily decreasing by a few percent per year. Wealthy buyers are also paying attention to Italian cities like Milan and Rome, where luxury apartments are sold for €9,000 per "square".
Most of all rose in price real estate in Dublin – by one fourth per year, but it still remains one of the most affordable in Europe: having €1 million one may buy as many as 142.9 sq.m of premium housing. Unlike Monaco, where the same amount is enough to purchase 20.6 sq.m only.
Germany has overtaken all other countries, investing $151 billion in commercial real estate around the world over the past decade. The top three also includes American and British companies, which invested $133 and $100 billion respectively. In the back of the head of the North Atlantic companies already breathes China, dramatically increasing foreign investment, from $600 million in 2008 to $15 billion in 2013.
The decision to purchase real estate and running business in any country is affected by the level of local market transparency: whether the reports of financial regulators are available in the English language, if there are pricing indices and yield scales of different types of real estate, whether the evaluators are enough competent there and so on. In 2014, among the transparent market rating leaders were Great Britain, France, the Netherlands, Ireland and Finland and its outsiders were Slovenia, Serbia and Bulgaria.
All 40 countries included in the geography of the ee24.com portal, saw plenty of interesting events in 2014. In Norway, for example, built a generator-house, Greece decided to issue a residence permit for grandparents, in Turkey ghost town entered the market, the Belgians proved to have the highest living standard, according to beer index, and the Estonians offered virtual citizenship worldwide.
New 2015 is coming and it might be even more surprising. Follow the news in ee24 Daily section!