National Technical University of Athens School of Rural and Surveying Engineering FORMALIZING REAL ESTATE MARKETS WITHIN EUROPE, STRUCTURAL REFORMS AND CHALLENGES   Prof Chryssy A Potsiou FIG President chryssy.potsiou@gmail.com Annual World Bank Conference on Land and Poverty 2017 March 20-24, 2017, Washington, DC

Content Background information & the scope of the research (FIG Task Force on Property Markets) Methodology to be followed First findings & examples of some case studies

Background Information ~39 WB funded LAM projects in countries in transition in Europe and Central Asia: Privatization of land, housing, business, enterprise Property registration, land management projects The largest program of land reform the world has ever seen! 30 countries involved - US$ 1.1 billion in loans and grants Population: ~900M Land area: 27,381,300 km2 Properties: ~300M

The need for coordination of policies Remaining inefficiencies in some countries: Some % of weak security of tenure Property restitution problems Missing legal framework / construction code, court inefficiency related to land aspects, bureaucratic administrative procedures NSDI, cadaster, planning systems Financing mechanisms, access to credit / NPLs / taxes Affordable housing / social housing Professional development issues / ethics / corruption Regularization of the private sector involved in RE Formalization of informal real estate; more than 50 M people live in informal housing Activating unused or underused assets /dead capital Although a stable and transparent transaction framework is essential,… various land policies have been adopted affecting transactions, access to finance and generally the markets.

Inadequate regulation of real estate markets The 2007 global financial crisis also affected the weaker European countries (inefficiently supervised mortgage lending, unclear credit risks) Recession, increase in unemployment, decrease in access to financing, growing affordability problems, rising property taxes, and increased numbers of non-performing loans More confusion in the land and real property regulatory framework as well as a change in consumer attitudes regarding real estate as an investment Is this a critical turn point in the history of real estate markets? and their role as a pillar on which to build a robust economic urban agenda of 2030, where the property assets of all players are secured, social safeguards are respected, and land and natural resources are sustainably governed?

Scope of the research Investigate the weaknesses and the level of informality in real estate markets in countries of the UNECE region and the current land management reforms with an impact on the property markets, with particular focus on foreign and domestic investment Assessment of these reforms in terms of compliance with the global trends and the basic principles for sustainable property markets recent examples, lessons-learnt and remaining challenges from various countries proposals

Methodology Literature research On-site research Translation of legal documents Interviews Workshops Analysis of data proposals

Examples: Greece, Kosovo, Romania Residential & commercial RE prices in Greece are in free fall (-10% / year), supply is increasing, but transactions/year decrease about 50%; No buyer interest. Residential transactions fell in number, volume, and value (4M buildings, ~15-1M parcels, 37 M property rights: within 2014, ~550,000 transactions, of them ~350,000 inheritances/donations) 33% NPLs (2015). 11% non-electrified, vacant residences. Prices of apartments in the city center: 300 Euro/m2 283 new laws 2012-2014 In Kosovo: 90% of new RE sales based on trust. Dynamic local market. Prices of rural land : 250 Euro/m2; new apartments 450-max 2000Euro/m2

First come, first served No foreign buyers in Kosovo, not possible to register. Dynamic local market: increased demand in urban areas; housing standards Factors that define the value of each property: location, quality and design of construction; now supply is rather sufficient, so buyers are able to choose Transaction tax is not yet applied; annual tax is low Εach investor cooperates with the same notary repeatably, to improve integrity and transparency; the buyer & the investor are NOT in a position to check- fraud cases noticed in the near past; notaries will establish a data base 38 notary offices; Local investors continue to exceed the permit 10%