Why Are Slovenia’s Property Prices Rising During Epidemic?

By , 12 Nov 2020, 12:55 PM Business
Why Are Slovenia’s Property Prices Rising During Epidemic? JL Flanner

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STA, 12 November 2020 - The newspaper Delo examines the reasons for what it describes as "immunity of the safe property market" in the headline of Thursday's front-page commentary as prices of residential properties keep increasing in Slovenia and Europe against the expectations and despite the crisis.

Despite the 7.9% contraction in the country's GDP in the first half of the year and the economic crisis, demand for residential properties remains strong, while demand for hotel, hospitality and office properties is decreasing, the paper notes.

"Most on the demand side are those who spent the spring lockdown in small homes (...), while there are also individuals and businesses with a lot of capital who are looking for safe investment opportunities. An additional stimulus is negative interest rates that may drop further in the future."

The paper goes on to say that despite the demand being increased by some empty properties due to the crisis in the tourism sector, the shortage of real estate in Slovenia for the past 20 years has been such those empty properties do not make much difference.

"What is more, owners of empty properties are now even willing to wait for the country and international space to reopen before they return to rental business.

"Ownership is a major priority for Slovenians as it is, while now it appears to be supplemented with investments in real estate. These will certainly be driven by a chronic shortage thereof.

"It may be an indirect consequence of negative interest rates, or the trends may also be linked to the Europeans being culturally not in favour of venture investment and relying on conservative ways of personal and business finance management."

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