How real estate markets are changing around the world: current trends and reasons for changes

Current situation in the real estate markets

The current situation in the main real estate markets is a consequence of the global upheavals that occurred in 2022-2023. The most significant impact on these markets was caused by the protracted military conflict between Russia and Ukraine, which led to the imposition of strict sanctions against Russia, an energy crisis in Europe, rising global inflation, increased interest rates on loans, and an influx of immigrants and refugees. By October 2023, new conflicts erupted in the Middle East, further exacerbating the already tense economic situation in the world.

Changes in international markets

In countries like the USA, Canada, the UK, Germany, Italy, France, Hungary, and the Czech Republic, where there has been a steady increase in real estate prices for over ten years, there has been a trend towards stabilization or even a decrease in prices in recent months. The reasons for this change include high mortgage rates and the overall rising cost of living.

• Despite the decline in sales volumes, property prices in many countries continue to rise. An example is the USA, where an increase is observed in3.9%per year.
• However, in some countries, such as Sweden (-11%), Hong Kong (-8.7%), Germany (-5.8%), United Kingdom (-5.3%) and China (-2.7%), a decrease in prices is noted.

The situation in the real estate market in Bulgaria

Against the backdrop of the ongoing cooling in the real estate market in Bulgaria, which was particularly evident in the third quarter of 2023 through a sharp decline in the number of transactions, housing prices have remained stable. However, Bulgaria's resorts continue to be popular among Russian-speaking buyers, maintaining the top position in inquiries on specialized portals, despite the difficulties with access from Russia.

Features of the Turkish real estate market

The Turkish real estate market is showcasing its unique characteristics. After a surge in interest in housing during 2021-2022 and a record increase in prices, this market has entered a phase of stagnation. The earthquake in February, which affected the Kahramanmaraş and Hatay regions, did not have a significant impact on the safer Mediterranean resorts, which remain attractive to international buyers.

• Nevertheless, the consequences of the disaster and changes in Turkish legislation regarding residence permits when purchasing property and conditions for short-term rentals have negatively affected foreign demand for apartments.
• As a result, interest in Turkey has decreased, and the country has moved to second place in terms of the number of inquiries.

Trends in European countries

Despite the global trend of decline, some European countries continue to show positive dynamics. For example, Montenegro experienced steady growth in real estate sales in 2023, allowing it to rank third in the number of inquiries on specialized platforms. Spain is also showing quite high sales figures, which, although lower than the record set in 2022, are among the most successful since 2015.

Thus, against the backdrop of global landscapes, each region showcases its unique picture of development in the real estate market.

Increase in housing prices

In recent months, there has been a significant increase in residential real estate prices, especially in the new construction sector, which has reached levels not seen since 2007. One of the key reasons for this sharp rise is the active interest of foreign investors, particularly from Russia and Belarus, in this segment of the real estate market.

Golden Visa program

The "golden visa" program offers foreigners, including Russians and Belarusians, the opportunity to obtain residency visas. According to 2022 data, Russian citizens ranked third in the number of visas obtained through these programs aimed at foreign entrepreneurs, investors, home buyers, and major businesspeople. We can confidently assume that in 2023, Russians will continue to be among the leading participants in this process.

Boom in the Cyprusreal estate market

The Cypriot real estate market is experiencing significant growth during the period of 2022-2023, which can be attributed to increased interest from foreign clients, including Russians, Ukrainians, as well as British and Israelis. Only by the end of 2023 did the first signs of a slowdown in this rapid growth begin to emerge, although Larnaca continues to attract a large number of Israeli buyers.

Experts in the field of Cypriot real estate note that the partial decline in demand is linked to the fact that some foreign investors have started showing interest in the market of the unrecognized Turkish Republic of Northern Cyprus. Despite the fact that housing prices in this republic have tripled over the past two years, they still remain significantly lower than those on official Cyprus.

The state of the market in the United Arab Emirates

The United Arab Emirates, and especially Dubai, continue to show excellent results in residential real estate sales since 2021. Characterizing the current achievements, it can be noted that Russians no longer hold their previous dominant position. At the same time, interest from foreign investors in other emirates has increased, particularly in Abu Dhabi and Ras Al Khaimah.

The situation with real estate in Georgia

Since the beginning of the second half of 2023, Georgia has been experiencing a noticeable decline in real estate sales after a period of rapid growth. The total number of transactions has significantly decreased, leading to slight price adjustments for both buyers and renters.

Dynamics of the real estate market in Greece

In Greece, there was a high demand for real estate from foreign citizens in 2023, who were eager to obtain a "golden visa" under the old conditions, meaning by investing in property worth 250,000 euros, as opposed to the current requirement of 500,000 euros. At the same time, Russians were not among the foreign buyers, as the investment residency program was closed to them.

At the same time, the program for digital nomads remains accessible and is becoming increasingly popular.

Changes in the legislation of Portugal

Throughout 2023, real estate market participants in Portugal closely monitored the development of the "More Housing" bill, which includes provisions that restrict the conditions of the "golden visa" program. As a result, the law was passed, and now the possibility of obtaining residency through real estate investment has been excluded. This change has attracted significant attention from potential investors and prompted a detailed analysis of the new conditions in the market.

Alternative options for residency in Portugal

In our time, there are many alternatives for wealthy citizens from other countries looking to become residents of Portugal. Among the most attractive countries are Egypt and Thailand.

Egypt: Attractive Conditions for Investors

Egypt in 2022 and especially in 2023 has shown significant growth thanks to attractive real estate prices. In Hurghada, the prices for apartments start from10,000 US dollars...while in Sharm El Sheikh they start with...30,000 dollarsObtaining a temporary visa for a year has become more accessible, but, like in any other matter, there are certain nuances.

Thailand: budget options

Thailand also offers attractive deals, especially in popular tourist destinations like Pattaya, while Phuket has significantly higher prices. This year, Russians have been actively purchasing both budget apartments in condominiums and luxury properties, including apartments and villas with private pools.

Republic of South Africa: new opportunities

In addition, a new market has emerged in the Republic of South Africa in 2023, opening up opportunities for investors from Russia and other CIS countries. We have prepared a detailed analysis of the South African real estate market that is worth a close look.

The situation in the Turkish real estate market

As for Turkey, according to Ksenia Balji, the CEO of Liga Real Estate, 2023 has been a period of stagnation in the residential real estate market. By the end of December 2022, the first signs of decline were already noticeable, and by June 2023, right after the second round of the presidential elections, this decline reached its peak.

• The year 2022 saw a sharp increase in demand for real estate.
• Many people have started buying homes, even if they hadn't planned to do so.
• Most Russians view real estate as a "backup airfield."

For many Russians, this has become an opportunity to secure a "backup airfield" abroad, which has also influenced the types of inquiries. Just recently, only a third of buyers were interested in obtaining residency permits, but now this has become a top priority for all ten, including those who had never considered moving to Turkey. After a rapid growth in this market, there was a sharp decline and stagnation in 2023.

Reasons for the cooling of the market

Reflecting on the reasons for such a deterioration in the situation, several factors can be identified, but the main ones are the actions of government policy. In 2022, when the country experienced active, sometimes even chaotic migration, the authorities began to take measures to limit it.

• Establishment of a minimum housing price for obtaining a residence permit starting from May 5, 2022 (75,000 USD in major cities).
• Increase in the investment threshold for the citizenship by investment program from $250,000 to $400,000 starting June 13 of the same year.

These measures did not yield the desired results, as they failed to stop foreign interest in Turkish real estate. However, later on, these measures began to take effect: in the summer of 2022, authorities restricted access to obtaining primary residence permits in the most popular areas among foreigners, such as Antalya, Alanya, and Istanbul. By the end of 2022, the issuance of tourist residence permits based on rental housing was also halted.

The exodus of people from Turkey

In recent months, there has been a noticeable exodus of people from Turkey who have expressed doubts about the current situation in the country. With the start of 2023, an active election campaign began, during which the two main candidates for the presidency — the incumbent president and his main competitor — started to actively communicate their demands to voters through various media outlets.

Accusations from the opposition

At that time, sharp accusations were coming from the opposition, claiming that the negative influence of foreign citizens was one of the main reasons for the sharp increase in rental and housing prices.

Real estate rental market

Many Turks live in rented apartments. In popular tourist regions, rental prices have significantly increased due to the influx of foreign tourists and buyers, sometimes rising by 3-4 times. As the election results showed, many citizens supported the opposition's initiative to impose a complete ban on the sale of real estate to foreigners, at least for a limited period.

The political situation after the elections

Despite the slight advantage with which the incumbent president won the elections and his party secured a majority in parliament, he should not let his guard down. Municipal elections are scheduled for 2024, in which his party suffered significant losses in the previous elections, losing control of major cities such as:

• Istanbul
• Ankara
• Antalya
• Mersin

The president's team understands the mood of the public and is trying to ease citizens' discontent amid ongoing inflation.

New restrictions on real estate sales

They are unable to fully implement a ban on the sale of real estate to foreigners, so the authorities are introducing new restrictions to reduce the influx of foreign buyers. In October 2023, the government increased the minimum property value required to obtain a residence permit to200,000 US dollarsConsidering the cadastral value of properties. This may mean that, in practice, the cost of apartments in regions with low cadastral value will be at least300,000 dollars...which is typical for most regions of the country.

Changes in citizenship acquisition rules

Starting from January 1, 2024, it is also planned to raise the investment threshold required for obtaining citizenship to600,000 US dollarsHowever, these are not all the initiatives that will be implemented. In order to improve the availability of rental housing for local residents, the authorities are introducing restrictions on short-term rentals. These new rules have not yet come into effect, but their practical application will begin at the start of next year.

Investor reaction

This decision has sharply cooled the market among investors looking to purchase apartments for short-term rentals.

Uncertainties in the actions of the authorities

Despite a wide range of restrictions, the authorities' behavior remains somewhat unclear, as they do not provide official explanations regarding the new laws and amendments. It seems that they are rapidly trying to halt negative processes to please the local population, and will later determine whether these measures have yielded the desired results.

Current situation in the real estate market

Currently, there is a noticeable decline in activity among buyers in the real estate market. The situation has developed in such a way that the market seems almost frozen, and it appears that the goal set by government authorities—to reduce migration flows—has been achieved.

Nevertheless, the feasibility of this measure raises many questions and discussions. Looking at the forecast for 2024, there is a need for clear explanations regarding new legislative initiatives and their practical application.

Market uncertainties

For example, the situation with rental rates remains uncertain, and there are also no clear guidelines regarding the minimum investment requirements in the context of cadastral value.

The fate of projects that have already received property ownership certificates (tapu) remains unclear, as they now face the issue of declining cadastral valuations. A question lingers in the air: how will experts determine the accuracy of aligning market value with cadastral value?

It turns out that many unresolved questions have arisen, and unfortunately, there are still few answers to them.

Prices for secondary housing

In these unstable times, there is a decrease in prices for secondary housing, while developers are offering quite attractive conditions. Some construction companies have reduced the down payment in installment programs to 10%, whereas under normal conditions it is at least 30%.

Moreover, many companies are extending the installment periods even after the construction is completed, which also indicates the new realities in the market.

Investors and expectations

Currently, there are so-called "wholesalers" who are looking to take advantage of the crisis situation to purchase real estate. Although the number of such investors is small, they can gain significantly when the demand for housing begins to recover.

It's difficult to predict whether this will happen before or after the elections; however, it's likely that the market situation will become clearer by the summer of 2024, which in turn may contribute to an increase in demand.

Spanish real estate market

As for Spain, the head of the agency Expert Agent, Ekaterina Okhilkova, notes that the profile of foreign buyers has changed. The year 2023 has been quite successful for the Spanish real estate market.

We can observe:

• market recovery;
• growth of interest;
• increase in the number of transactions;
• general increase in housing prices;
• significant increase in rental rates.

Housing construction

The construction of housing has entered a new stage of development: the market has seen a multitude of new projects, which vary in timelines—from medium-term projects expected to take 2-3 years, to large-scale ones that may take up to 10 years to complete.

There are even small properties that can be built in just 11 months. Real estate prices are steadily rising, and adjustments happen every six months.

For example, an apartment that was priced at 400,000 euros in 2022 may now be worth around 600,000 euros.

Interest of foreign buyers

It is worth noting that there is a real boom in interest from foreign buyers in Spanish real estate. Citizens of Poland, Belgium, and investors from other European countries are actively purchasing properties.

People are not looking to accumulate money; rather, they want to invest in assets, which certainly has a positive effect on the state of the market.

Spain, and in particular the Costa Blanca, is known for its mild climate, which makes the winter months truly comfortable here. This is one of the key reasons why many choose this country to buy a country house or an apartment for winter vacations.

Russian citizens are also actively participating in the Spanish real estate market. Despite a long period filled with challenges due to economic sanctions, many are seizing favorable moments, and the purchase of property remains popular.

Difficulties for Russian buyers

The most significant difficulties for Russians are:

• refusal to open bank accounts;
• Blocking existing accounts for those who do not have a residence permit in Spain or other EU countries;
• restrictions on financial transactions.

In this regard, many wealthy Russians prefer to invest their funds in real estate to avoid the risks associated with banking operations. We are seeing a strong interest in purchasing housing, which confirms this trend.

Changes in the real estate market

Over the past year and a half to two years, the structure of buyers in the Spanish real estate market has noticeably shifted. Currently, there has been an increase in the number of investors who are not citizens of EU countries.

They are considering buying an apartment or a house as a way to participate in the program.“golden visa”...which allows them to move freely without having to stay constantly in Spain.

In 2023, many people who arrived in Montenegro decided to leave the country. A significant number of Ukrainian citizens headed to the United States, Canada, or European Union countries. At the same time, Russians either returned to their homeland or sought opportunities for permanent residence in other countries. Clients seeking assistance this year have shown greater caution and calculation in their purchases compared to previous emotional decisions. Although housing prices remain stable, the real estate market continues to show a trend of growth. Europeans, particularly German citizens, play a key role in this growth.

Activity of German buyers

The year 2023 has been marked by an increase in the activity of German buyers in the real estate market of Montenegro. This country has attracted the attention of many German citizens, which, in turn, has led to an increase in the number of tourists and investors. A large community of German emigrants has formed along the coast of the Bar area. Interestingly, the overwhelming majority of Germans prefer to purchase individual houses rather than apartments, highlighting their desire for comfortable living.

Other market participants

However, the real estate market still includes citizens of Russia, Ukraine, Turkey, as well as representatives of the Montenegrin diaspora living abroad in countries like the USA and the European Union. One of the significant factors influencing the decisions of Russians and Ukrainians regarding purchases has been the complicated payment procedures. Russians found themselves in a situation where they could not make money transfers through banks as individuals. Ukrainians, on the other hand, traditionally prefer to make cash payments.

Changes in the calculation procedure

Previously, there was an option for partial payment to a notary's account — up to 9,000 euros, which allowed for accumulating amounts for subsequent transactions. However, with the arrival of summer 2023, this option was canceled. As an alternative, only financial transactions through foreign accounts, currency exchange (if it is convenient for both parties of the deal), or the purchase of new housing for Russian citizens remain. Available payments to developers, for example, are made through Raiffeisenbank.

Key events of the year

Among the key events that took place in Montenegro in 2023, the following can be highlighted:

• elections for a new president;
• formation of a new government;
• the adoption of a number of new laws.

The establishment of a minimum wage of 450 euros for local workers, along with the closing of the tax year considering this amount, may have a negative impact on the rental market. Relocators who have received temporary residence permits in Montenegro based on employment in local organizations are likely to start rethinking their financial prospects and may consider other countries as more attractive options.

New tax changes

It should also be noted that starting from 2024, a progressive tax rate will be introduced on the purchase of ready-made real estate objects valued over 150,000 euros. Some buyers have decided to finalize their transactions in advance to avoid potential inconveniences related to the new tax law. As a result, this innovation may temporarily affect a decrease in residential property prices next year, as the actual value of the properties may start to differ from the prices stated in the contracts.

Promising regions for investment in 2024

In 2024, there are several promising investment areas worth special attention. In particular, the coastal region of Barska and Ulsin are experiencing a booming construction industry, making them very attractive to potential investors. Northern Montenegro is also appealing to those looking for new investment opportunities; especially Kolasin, which is actively improving its infrastructure in an effort to become the new Courchevel.

Resorts and investment opportunities

• At ski resorts like Kolasin 1400 and Kolasin 1600, there is a wide selection of investment apartments available in the under-construction hotel complexes.
• All objects meet modern European standards.
• Žabljak confidently maintains its position as one of the most popular tourist destinations in northern Montenegro.

Investor interest in unique locations

In addition, there is a growing interest from foreign investors in the following locations:

• Nikšić
• Danilovgrad
• Skadar Lake

These unique areas attract buyers who are interested in large plots of land.

The real estate market in Dubai

Regarding the real estate market situation in Dubai, the sales director of Metropolitan Premium Properties, Aalin Adamko, notes a steady growth despite some fluctuations. According to data for 2023, investments in real estate have increased by25%.

• The overall market volume has increased by26%compared to 2022.
• The growth amounted to174%compared to 2021.
• November turned out to be particularly successful: sales volume increased by36%higher than last year.

The most expensive and popular areas of Dubai have even shown56%growth in sales.

Seasonal fluctuations and the interest of Russians

Despite some minor fluctuations in the Dubai real estate market, it is generally showing strong performance. The summer period is usually characterized by a decrease in demand, but there is a recovery in activity observed in the fourth quarter.

Interestingly, this year Russians have lost their leadership among foreign buyers, giving way to Chinese, Indian, and British investors. This is partly due to the fact that Russians have started to show interest not only in Dubai but also in other emirates like Abu Dhabi, as well as several Middle Eastern countries. It is worth noting that demand from Russians is gradually returning to normal levels after a recent sharp increase.

Factors influencing investor activity

One of the reasons for the decrease in the activity of Russians in international real estate markets is the unstable situation with the ruble. The increase in the dollar exchange rate affects the demand from Russian buyers.

Changes in the market

What are the main changes and trends in the real estate market?

• The growing interest in secondary housing is driven by rising prices in the primary market, prompting buyers to seek alternatives.
• The secondary real estate market has significantly grown and is almost on par with the primary market in terms of volume.
• The rental segment continues to grow.

A brief overview of the real estate market situation in 2023

In 2023, inflation had a noticeable impact on prices, including housing rent; however, this increase is less sharp compared to previous years. Additionally, there are changes in consumer preferences, as buyers are increasingly considering the possibility of investing in neighboring emirates and countries like Saudi Arabia and Oman.

Investing in Abu Dhabi

For example, interest in Abu Dhabi, the capital region of the UAE, has increased, leading to a rise in investment. Major developers like Aldar Properties are actively launching new projects in this emirate. Despite the fact that property prices in Abu Dhabi have risen over the past year,30%They still look more acceptable compared to similar objects in Dubai.

Trends in Ras Al Khaimah

Investor interest is also drawn to Ras Al Khaimah, where the construction of a casino is planned, which has already led to a significant increase in real estate transactions compared to 2022. Analyzing the economic situation, one can assume that the established trend of rising property prices in Dubai will continue into the next year, as a stable economy creates new jobs and increases demand for housing. I estimate that the average price increase for apartments and houses will be around5%.

The real estate market in Thailand

In other regions, such as Thailand, the situation is different. Svetlana Kasatkina, managing partner of Exotic Property, emphasizes: "While many countries are experiencing a decline in active demand, investors are increasingly turning their attention to the attractive offers that Thailand has to offer."

Market activity at the beginning of 2023

The beginning of 2023 was marked by high activity, as the peak season contributed to the rapid sale of finished apartments and villas from developers. There is also a swift increase in interest in properties under construction, which creates situations where developers sometimes struggle to provide showrooms to showcase their offerings.

Decrease in activity and subsequent recovery

By mid-year, there was a slight slowdown in economic activity in Thailand: the low season arrived, and interest in the remaining properties decreased. However, with the onset of autumn, demand is starting to pick up again thanks to the new season and the launch of interesting projects by developers. It is important to understand that the real estate market in Thailand is largely dependent on the state of tourist flow.

The attractiveness of Thailand for Russian investors

Considering these aspects, as well as the current trends of declining sales volumes in other countries, Thailand has become particularly attractive for investments for Russian investors. Additionally, since the fall of 2023, the Thai government has granted Russians the opportunity for visa-free entry for a period of up to90 daysThis, in turn, contributed to an increase in the flow of tourists and those spending the winter in this destination.

• Most tourists and "snowbirds" are interested in various options for real estate purchases.

Financial difficulties and their solutions

It is worth noting that at the beginning of this year, there were difficulties in conducting financial transactions for Russian citizens related to transactions through the Swift system. However, the situation is gradually returning to normal, and interest in the real estate markets in Dubai and Thailand is increasing, opening up new opportunities for both local and foreign investors.

Investment prospects

Considering the changes in the real estate market, investments in these regions could become a very profitable solution for many.

Conclusion

In conclusion of my analysis of the state of key real estate markets in 2022-2023, I would like to summarize some key points and highlight the most significant trends. Global upheavals, including military conflicts, economic sanctions, and the energy crisis, have directly impacted market dynamics. We are currently observing a noticeable correlation between the rising cost of living and the increase in mortgage rates, which is leading to stagnation and even decline in some countries.

Trends in the real estate market

Nevertheless, despite these global issues, a number of countries are demonstrating interesting trends. Spain and Montenegro, for example, continue to attract foreign investors thanks to their "golden visa" programs and high demand in the real estate market. This confirms that there are areas where crises do not always overshadow growth opportunities. At the same time, unique circumstances in markets like Turkey and Cyprus highlight the importance of considering local specifics and changes in legislation that affect demand.

Important points

• The rise in mortgage rates and the increase in the cost of living are overshadowing growth opportunities in the real estate market.
• Spain and Montenegro continue to attract foreign investors thanks to their programs.
• The unique features of local markets influence supply and demand.

Market prospects

I can't help but note that each of these changes has consequences for both investors and buyers. Moreover, despite the current cooling in some regions, I am confident that the real estate market remains attractive and has high potential for long-term investments. Interest in it continues to grow, especially in conditions where profitable sectors under pressure are becoming increasingly less accessible.

Conclusion

In order to successfully navigate today's situation, it is important not only to keep an eye on global trends but also to study local markets, their legislation, and economic characteristics. I hope that in the future we will have more opportunities for analysis and forecasting further changes, which will help many investors not only preserve but also increase their assets.