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Real Estate Investment in Europe

Gurcan Partners F 24 December, 2020
real estate investment in europe

In this article, we will cover the legal processes for countries in European real estate investment and the changes brought by the Covid-19 pandemic in the real estate market in Europe.

Covid-19 Effect On European Real Estate Market

Before the outbreak people would prefer the city centers as a living place. After the pandemic, they started to create their own spaces as far away as everything. Also, outbreaks affected living places. They would prefer the countrysides rather than the city centers because social distancing became the new normal. This reflection affects supply and demand in the real estate field.

What Are The Changes In The European Real Estate Market?

In the past times, real estate investments have generated firm cash flow and returns. After Covid-19 the reality has changed and the real estate market has been affected badly in Europe. The Covid-19 outbreak, the decline in GDP unseen since 1945 is a real challenge for European real estate markets.

Countries created their own policies to deal with the effects of Covid-19. In Europe, some countries, including Germany they have suspended evictions.

Still, it is not certain to give information about which European countries will have a better real estate market in post-Covid-19. But according to some reports, Germany has a resilient market during Covid-19 times as it has accounted for more than half of all transactions in Europe. However, except for Germany most of the European stock markets have a threat. Therefore, the Real Estate Market should be ready for all the unexpected upcoming possible situations.

Hungary

The covid-19 effect has been realized, in Budapest the ratio of purchases for investment was 27% in March and 35% in April – compared to the year-on-year level of 40-50% – which indicates that investors’ interest has not disappeared in full, but has declined. After the outbreak experts think the real estate market will gain value again.
The average price of residential property in Hungary is 2515 € (Budapest) per m2 which is low compared to major European countries, as of June 2020. The easiest way is to search the web. In Hungary, the biggest real estate site is the realestatehungary. It is important that in Hungary you must have a lawyer to buy real estate that they can help you in all legal processes. Purchase process:

➤ Choose the property and deal with the seller

➤ Consult about the details and make a draft agreement

➤ Sign the contract and pay

➤ Turn the contract into the land registry

➤ Acquire the ownership by getting registered

➤ Pay taxes and other fees

➤ Lawyer fee (needs prior consultation)

➤ Registration fee (6.600 Ft)

➤ Property acquisition duty (4% of the price of the property)

➤ Property tax (depends on where you buy the property)

Germany

In Germany, it is a good opportunity to buy old houses (1890 – 1950) and make a complete reconstruction and restoration. In the end, there are two possible ways:

  • Hold and gather the higher rental yield 5% (normal) up to 8% (furnished living)
  • Reselling after reconstruction. > 20% yield within 2-3 years.

Either way, your money is well invested in Germany.

➤ Decide how you will finance your investment

➤ Find a proper property

➤ Sign the purchase agreement in front of notary

➤ Preparation of the Purchase Agreement

➤ Make an offer to the seller

➤ Get the notary register the sale

➤ Payment of the property tax between 3,5% to 6%

Serbia

Once the buyer decided to buy property, give an offer, and perform due diligence in order to check whether there is an encumbrance, mortgage, annotations on the property. After the buyer pays the purchase price the final contract is signed in the presence of a public notary and the certified contract establishes the legal ownership of the property.

➤ Decide on the property and perform due diligence

➤ Draft a Purchase Agreement

➤ Book a certification before the Notery Public

➤ Payment of the purchase price and transfer of the property

➤ Pay taxes and communal expenses

Turkey

Expenses

  • Property acquisition duty: 4% of the price of the property (It pays %2 by buyer %2 by the seller. However, in May 2018, the Turkish government published new supports for real estate selling in Turkey. By October 31st, 2018, property acquisition duty will be %3) The price of the flat cannot be less than Real Estate Value Statement in this tax)
  • Regional Revenue Asset Fee (Apprx 103,5 x 2.5 TL )
  • Deed Fee( 483,5 TL )

➤ Choose the property (Check the services of Gurcan Consultancy)

➤ Deal with the seller

➤ We consult about the details and make a draft agreement

➤ Sign the contract and pay

➤ Turn the contract into the land registry

➤ Eligibility check from the Military

➤ Acquire the ownership by getting registered

Czech Republic

  • The process of buying a property in the Czech Republic is relatively simple in terms of its administration before the Land Register and it lasts usually around one month to process it from the day of filing an application to the Cadastral Office.
  • Pursuant to the Czech Civil Code, the acquisition title (e.g. a purchase agreement) for the transfer of real estate requires a written form
  • Registration of the transfer of ownership in the Land Register is performed on the basis of filing an application to the relevant Cadastral Office and paying an administrative fee.
  • In addition to the aforementioned written form requirement, the acquisition title (such as the purchase agreement) must also comply with other statutory requirements

The proceedings before the Cadastral Office usually last for approximately 1 month, mainly because the authorities must inform the current owners that the property is affected by an ownership change prior to performing the transfer and provide for a sufficient period of time before the transfer can be performed. This statutory period is set by the law for 21 days.
Following are some of the important points why online selling/buying of the property is better.
It saves their money as there is no third party involved.
It’s safe since you don’t go out and expose yourself to people during the pandemic.
Saves time as otherwise, meetings can take hours.
Online Virtual (3D) tours, drone videos, and pictures can help people to make better choices.
While mentioning the ways to deal with your property, it’s also pertinent to mention here changes to the European real estate investments. Keeping in view all the analyses and reports, the overall market environment remains highly uncertain. Currently, according to some expert reports the residential market remains to be more resilient with the order of magnitude of the decline in the valuation of 5%, followed by offices 10% to 20% and retail real estate up to 30%. With different governments now relaxing the lockdown and restrictions getting loosen down, Europe’s housing market may show signs of life.

Due Diligence of the property is quite important to proceed to buy property in Europe. Gurcan Partners International Law Firm’s professional team is ready to assist you during all process to secure your investment.

Please contact us:

info@gurcanpartners.com

Our Services

Choose Your Real Estate

Decide property or

We can help to find the suitable one for you

Handle All Paper Works

We handle purchase agreement and other paper works professionally besides property legal status check

Manage Your Property

If you do not buy to live, we offer property management. You can make more profit without spending time.

All rights reserved. All rights of the Real Estate Investment In Europe article belong to Gurcan Partners. The author has no responsibilities for the information of this article. This article is prepared just to inform. 

Att. Bedrettin Gürcan

Seyla Gümüş

Gurcan Partners Europe

References:

https://www.finance-monthly.com/2020/06/the-european-real-estate-industry-in-a-post-covid-19-environment/

https://gurcanpartners.com/en/real-estate-investment-in-hungary/

https://gurcanpartners.com/en/real-estate-investments-in-germany/

https://gurcanpartners.com/en/buying-property-in-turkey/

https://gurcanpartners.com/en/purchasing-property-in-serbia/

https://gurcanpartners.com/en/buying-property-in-czechia/

https://www.globalpropertyguide.com/news-covid-19-effects-on-the-european-real-estate-market-4097

https://www.natixis.com/natixis/jcms/lpaz5_83078/en/covid-19-what-impact-on-european-real-estate-valuations

https://www.globalpropertyguide.com/Europe/Turkey/Price-History

https://www.savills.com/research_articles/255800/301358-0/covid-19–impact-on-european-real-estate—vol-5

https://www.finance-monthly.com/2020/06/the-european-real-estate-industry-in-a-post-covid-19-environment/ 

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To read our other articles:
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    • Purchasing Property in Serbia
    • Real Estate Investment in Hungary
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    • Buying Property in Hungary

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