This year has become very interesting in the foreign housing market: if 2020 presented an unexpected surprise in the form of a pandemic that completely canceled the plans for the lives of people in all countries, then the ending 2021 has demonstrated some stability. Based on its results, it is possible to predict what awaits us in the future if the pandemic continues to be the No. 1 newsmaker. Editorial Office HomesOverseas.ru I turned to experts who told me about the key trends of this year and gave forecasts for the next one.
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- What was the past year like for the foreign real estate market?
Yulia Titova, Director of RENTSALE
The outgoing year has become very busy and active. There was a deferred demand, which did not have time to be realized in full. Nevertheless, the results of activity in the market in 2021 have become outstanding not only against the background of the indicators of 2020, but also comparable with 2018, which can be considered very good. Despite the fact that there were difficulties with movement and restrictions related to covid, buyers became more active.
Sergey Volchenkov, Director of Development of Tolerance
The year 2021 has become very stressful for Turkey. There was a very high demand for real estate from Russian-speaking buyers – residents of Russia, Ukraine and Kazakhstan. Real estate prices have also increased significantly not only in Turkish lira, but also in currency equivalent, depending on the region. It is also worth noting that many objects were leaving the market and people who wanted to buy something specific had to act quickly.
Evgenia Prokazova,Sales Director of Bulgaria Avenue
In the Bulgarian real estate market, the outgoing year has become the most dynamic in the last ten years. Buyers from Germany and Israel showed themselves especially actively, Bulgarians, Russians, Ukrainians, Americans and Europeans also often bought housing in the country themselves.
Andrey Karachun, Managing Partner of Decart Property Partners
The past year will be remembered for all the return of life to the streets of cities, if it is compared with the previous one. In 2021, the flow of tourists increased in Spain and business in the country got a second wind after the arrival of the pandemic. It is worth noting that at the beginning of this year, a large number of commercial real estate objects at discounted prices went on sale in the country. Objects in the prime zone began to appear: first of all, these were street retail objects that had lost their tenants. This year, many investment funds have already managed to profitably purchase hotels affected by lockdown and lack of tourists, and the discount in some cases reached 30-40%. And, apparently, this is not the limit.
Evgeny Ratskevich, WithEOcompaniesMetropolitan CapitalRealEstate
2021 has become a truly breakthrough year for the UAE real estate market. Due to the fact that the government has taken a number of unprecedented measures to combat the pandemic, the Emirates has become one of the few countries that has been opened to foreign tourists, having all the necessary infrastructure for this. The gradual decline in real estate prices in the period from 2014 to 2020 and the simultaneous improvement in the quality of construction of new projects has made the market incredibly attractive for both investors and those buying housing for themselves.
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- How have real estate prices changed?
Yulia Titova, Director of RENTSALE
Prices for building materials have risen in price all over the world, the cost of construction has increased, so the collapse in prices expected by many has not happened. In addition, due to the delayed demand and the volume of supply that has not increased significantly, we can talk about an increase in prices in popular and promising regions and real estate segments.
Sergey Volchenkov, Director of Development of Tolerance
Over the past year, given the conditions of the pandemic and high demand, real estate prices in Turkey have changed very seriously and continue to increase not only in Turkish lira, but also in foreign currency. The cost of real estate has increased especially noticeably in such popular cities as Antalya, Alanya and Istanbul, where the purchase of a house or apartment has risen by 30-40% in dollar terms.
Evgenia Prokazova,Sales Director of Bulgaria Avenue
Real estate prices in Bulgaria have increased significantly – if compared with last year's figures, they have increased by 20% or more. In 2021, we witnessed the recovery of the rental market, which declined in the previous 2020. Currently, the number of rental transactions in Sofia is more than 30% higher than 12 months earlier. Despite the fact that demand is growing, in most cases tenants' budgets are lower than supply. However, the pandemic was able to force some landlords who offered their properties at market prices to equate them to the current level. Discounts are possible during negotiations, thanks to which the deal is concluded. Otherwise, the properties remain empty for a long time.
Andrey Karachun, Managing Partner of Decart Property Partners
In the first half of 2020, sales of commercial real estate in Spain collapsed by 60%. The recovery began in the second half of the year, but it was not enough to achieve the results of 2019. As a result, by the end of the year, sales of commercial real estate decreased by 33.8%. In 2021, prices continued to rise along with an increase in demand and by the end of the year almost reached pre-crisis levels. In November, in its report, the Bank of Spain said that it sees no signs of revaluation of real estate and warned that prices will continue to rise due to the increase in the cost of labor and construction materials. This is what happens in reality.
Evgeny Ratskevich, WithEOcompaniesMetropolitan CapitalRealEstate
From district to district and from project to project, the price level in Dubai has changed in different ways. We can only say unequivocally that the market pushed off from its bottom by 100% in January 2021 and is now in the growth phase. Prices in popular coastal areas increased by 20%-30%.
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- How has the demand for foreign real estate changed from Russian-speaking buyers?
Yulia Titova, Director of RENTSALE
Mass destinations of the democratic segment, due to the rise in the cost of air travel and difficulties with restricted movement, have largely lost their popularity, with the exception of Turkey, where both demand and real estate prices have increased. A lot of excitement was observed in the countries where citizenship programs work (Montenegro) and golden visas (Portugal, Latvia, Spain). The elite segment of most countries showed stability - demand and sales to Russian-speaking buyers were not below the level of the pre-crisis years, both in residential real estate (Cyprus, Italy, etc.) and in commercial (Germany, Switzerland).
Sergey Volchenkov, Director of Development of Tolerance
In Turkey, the demand among Russian-speaking buyers has grown even compared to the successful last year and continues to remain consistently high.
Evgenia Prokazova,Sales Director of Bulgaria Avenue
The demand from Russian-speaking buyers of real estate in Bulgaria has changed: due to inflation, money is depreciating, so many prefer to invest in local housing. And our compatriots actively bought real estate throughout the year, and not as before, when demand changed depending on a particular month and time of year. We have a lot of clients who have already purchased air tickets for January-February 20222 in order to come to Bulgaria to buy an apartment or a house.
Andrey Karachun, Managing Partner of Decart Property Partners
The demand for Spanish real estate among Russian-speaking buyers remains consistently high and there are many reasons for this. On the one hand, it is the popularity of Spain itself and the desire to live, work (including remotely), relax and teach children in a prosperous country with comfortable living conditions. On the other hand, the desire to get away from all kinds of risks: currency, inflation, geopolitical, etc.However, at the beginning of 2021, the number of transactions was small due to the inability to enter Spain on a tourist visa. Therefore, for non-residents of the European Union, the only opportunity for purchase was a remote transaction.
Evgeny Ratskevich, WithEO companiesMetropolitan Capital Real Estate
Due to the fact that the UAE, unlike many countries, is open to foreigners, the demand for local housing has increased many times.If we talk about sales from developers in popular coastal areas, then Russian-speaking buyers make up at least 30% of total sales against 5-10% a year earlier. If we evaluate Dubai as a whole, then the demand here has tripled. But he grew up not only among Russian speakers, literally the whole world is now focused on the UAE.
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- Has the market managed to adapt to the pandemic?
Yulia Titova, Director of RENTSALE
Globally, yes, but if we talk about specific areas, the situation is different everywhere. The same can be said about individual participants of the foreign real estate market: someone managed to adapt better, someone worse.
Sergey Volchenkov, Director of Development of Tolerance
The Turkish real estate market behaves as if there is no pandemic, we can even say that people have already forgotten about it. Everything is very active here, a lot of transactions are being made.
Evgenia Prokazova,Sales Director of Bulgaria Avenue
Demand continues to seriously exceed supply, despite active talks about the restoration of the capital. Buyers are knowledgeable and can quickly navigate. Almost half of capital transactions are carried out at the price initially stated by the seller. It can be said that throughout the pandemic, but especially over the past year, the profile of the buyer has changed. People of the generation over 50 years old, who have already experienced the devaluation of money, position themselves more clearly in the market. They proceed from their negative experience and prefer to bet on the safest step they know. At the same time, Bulgaria retains the lowest cost of housing in the EU.
Andrey Karachun, Managing Partner of Decart Property Partners
The real estate market has reacted differently to the pandemic. Due to the pandemic, the trends that began to take shape earlier accelerated: e-commerce received a powerful boost, new consumer models were formed associated with a sharp increase in online shopping. On the one hand, warehouses and logistics centers began to be actively built, and on the other hand, a rampant "remoteness", which led to a total decrease in demand for office space (minus 47% by the end of 2020).
There was a change of preferences in the choice of objects for living: buyers began to prefer detached country houses to urban apartments with patios. The number of transactions with them increased on average from 30 to 50% and reached a record level in 2021. Real estate, being a hedging tool, is not very volatile. Therefore, the market reaction to the negative factors caused by the coronavirus will continue in the future. We are sure that in 2022 we will still see good offers from owners who could not keep the rental business under restrictions. Most likely, these will not be such tasty prices as investors want to see. And, nevertheless, there will be high-quality offers.
Evgeny Ratskevich, WithEOcompaniesMetropolitan CapitalRealEstate
The UAE real estate market has managed to adapt perfectly to the pandemic. Moreover, our country turned out to be one of the main beneficiaries.
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- What events of this year were of the greatest importance for the foreign real estate market?
Sergey Volchenkov, Director of Development of Tolerance
These are events related to the strong fall of the Turkish lira and its strengthening during the last weeks of 2021. This is what made the Turkish real estate market a little unstable, because many sellers change prices from lira to dollars because of this, and then vice versa. That is, they cannot decide on the final price of the objects. Because of this, there are constant adjustments or even cancellations of transactions due to price changes. Everyone is waiting for the stabilization of the Turkish lira exchange rate so that the real estate market can function in a calm environment.
Evgenia Prokazova,Sales Director of Bulgaria Avenue
The global trend now is this: people do not understand what awaits them next, they are afraid of the depreciation of their savings, so they actively invest money in buying real estate. In Bulgaria, a lot of remote transactions were carried out, including because people bought housing for the purpose of further resale. For example, they buy at the excavation stage, and resell when the house is ready for delivery and earn on the difference.
Andrey Karachun, Managing Partner of Decart Property Partners
A serious trigger for Spanish real estate in 2021 was the European energy crisis.This year, energy prices in Europe have reached a historic high, and Spain has become the most affected country due to rising gas prices. Over the past year, the wholesale cost of electricity in the country has more than doubled, and for private consumers by 40%. This, in turn, led to an increase in the cost of metal production and construction work. Therefore, square meters have become more expensive.Evgeny Ratskevich, WithEOcompaniesMetropolitan CapitalRealEstate
It became important that the restoration of passenger traffic has almost reached the pre-pandemic level. Of course, the start of EXPO 2020 in Dubai was a big milestone for the UAE real estate market. New real estate projects have been launched in large numbers in the country.
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- What forecasts can you give for the next year?
JuliaTitova, Director of RENTSALE
The forecasts are quite optimistic. Even though, having learned from the bitter experience of 2020, we are now cautiously talking about the future and planning something, we can count on the fact that, while maintaining current realities, activity in the foreign real estate market in 2022 will exceed the results of 2021. We already have a good foundation in work and we are optimistic about the future, we sincerely hope that all buyers who had to postpone their plans due to the pandemic will be able to implement them in the coming year.
Sergey Volchenkov, Director of Development of Tolerance
It is obvious that there will be a high demand from buyers in Turkey. Real estate in Antalya and Alanya will continue to be in demand, and interest in affordable housing will increase, for example in Mersin. I don't think there will be a strong increase in prices for objects in the currency – this has already happened. Rather, the cost of objects in dollars or euros will stabilize or there will be a slight increase. But this, first of all, will depend on the general economic situation in the country and the world and the exchange rate of the Turkish lira to the dollar or euro.
Evgenia Prokazova,Sales Director of Bulgaria Avenue
The coming year will continue at the pace of 2021. There are three main factors to consider. Firstly, what will be the movement of mortgage interest rates. Apparently, the ECB will not risk the economy and increase it, on the contrary - there may be a further decline, which is a key prerequisite for an active housing market. In 2021, the growth in the number of such people led to the smallest share of mortgages in the number of transactions over the past five years. This factor is still taking place, and in 2022 the money put aside by people will continue to be invested in real estate. The third factor is rising inflation and concerns about the depreciation of money, which remain relevant and even more serious, at least until the beginning of 2022. This is likely to be reflected in the growing market activity and stable price levels with the potential for moderate growth.
Andrey Karachun, Managing Partner of Decart Property Partners
Any crisis always opens up opportunities. During the pandemic, commercial properties in exclusive locations and prime zones became available for purchase. At the same time, sellers have become more willing to make concessions to buyers. These trends will continue next year. Due to the high volatility in financial markets, high inflation in many countries and the reduction of incentive methods by central banks, many investors will increasingly go into protective assets. We predict a 20-25% price growth potential for some street retail properties in major Spanish cities over 2-3 years. Investments in the hotel business in Spain will increase significantly, due to the delayed demand after the pandemic. We are confident that investors who are planning a long-term investment in Spanish real estate will benefit from the current situation next year.
Evgeny Ratskevich, WithEO companiesMetropolitan Capital Real Estate
Judging by the way the situation is developing now, I think,that the growth phase of the market will continue in 2022. Most likely, the pace will decrease slightly, but the trend will remain upward. I believe that 2022 will break the records of the current year in terms of the number of transactions, as well as the volume of real estate sold. Real estate prices will also continue to rise for two reasons: due to the emergence of new high-end projects that simply did not exist in the UAE before, as well as due to increased demand, which inevitably pulls prices up.
