March 3, 2024

CDP Center: Report on property markets of South Europe and Balkans (2024-2025)

You can read the full report in our Analytics section.

In recent years, due to high inflation rates, many of us are looking for opportunities to protect savings and assess. Investing in residential real estate is one of the possible options.

Investments in residential real estate become profitable only if the price of property increases higher than inflation or there is sufficient rental income higher than interest rate on bank deposits. Thus, growing markets provide unique opportunity for investments.

Center for City Development Policy have selected several fast-growing real estate markets with great growth potential. We present the first overview of the growing residential real estate markets – “City property markets at the glance: South Europe and Balkans”. We included four countries in the review: Bulgaria, Croatia, Greece and Romania.

In the last period they have managed to enter the trajectory of economic growth above average of EU countries. And their real estate market has great growth potential. The report includes current situation and forecasting the potential growth in prices for residential real estate from the point of view of macroeconomic trends.

At the first stage, we compiled a list of the most promising cities in terms of the growth potential of the residential real estate market. The criteria were: population size (at least 300 thousand people) and the presence of an airport (number of passengers at least 1 million per year). The high concentration of permanent population and large flow of people are exactly the base for the development of the residential real estate market from the point of view of macroeconomic conditions for growth. The list of cities included: Athens, Thessaloniki, Sofia, Plovdiv, Burgas, Varna, Bucharest, Cluj, Zagreb, Iasi, Timis.

Our monitoring and forecasting used modern macroeconomic and mathematical models and used both retrospective data and official forecasts of economic development. The main sources of data were official statistics, official forecasts on socio-economic development and, in some cases, data from the largest aggregators of the residential real estate market. In our Report the key forecast indicator is the House price index (HPI). It is considered as an average for the country or city in accordance with the Eurostat methodology.

- in Bulgaria in the forecast for 2024-2025, for a total of 2 years – our model showed the expected average increase in the residential house price index (HPI) in Sofia (+17.5%), in Varna (+14.7%), in Plovdiv (+13.6%) and in Burgas (+12.5%).

- in Croatia, which entered the Eurozone since 2023, we predict that by the end of 2024-2025, the total average increase in the house price index (HPI) in Zagreb can reach (+22.6%), in the cities of the Adriatic coast - (+11.6% ).

- in Greece, we have seen an increase in economic indicators over the past 2 years. The house price index forecast for 2 years gives Athens (+6.4%), and Thessaloniki area – (+17.6%).

- according to our forecasts, the largest increase in the average house price index in Romanian cities in 2024-2025 may be reached in total over 2 years by Cluj (+20.2%) and Iasi (+17.8%). The forecast for Bucharest shows an increase of up to (+12.7%), for Timis (+5.1%) in total over 2 years.

The report presents historical data by each country and city, describes the trends and key factors influencing the forecast.

The following indicators were taken into account: the GDP growth rate (the higher the rate of economic growth, the more profitable the investor’s investment), labor costs in the economy and wage growth (they directly affect demand- which means profitability for suppliers and investors increases ), the unemployment rate (it is also important from the point of view of demand), the number of permits issued for construction of residential real estate (number and volume in square meters this allows buyers to choose real estate of the desired quality and optimal price, both on country and city level) and etc. For some cities we took into account the demand from non-residents.

It is important that the forecasts are sensitive to many factors and every six months we will update the forecast based on adjustments to current and forecasted indicators of economic and real estate market development.

Since the market of each country and each city is complex and the situation for all properties is individual, the research team doesn’t offer any individual investment solutions and doesn’t make any recommendations. In case you are planning to purchase/invest in real estate you should contact local real estate market specialists, who may provide you competent consultation.

The next updates on the Southern Europe – Balkans cities are planned for October 2024 and February 2025.

You can read the full report in our Analytics section.

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