Real estate opportunities in Greece

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Real estate opportunities in Greece

Greek properties attract many foreigners

High-end resorts and villas catering to needs of high-net-worth individuals put market on new footing

After a deep correction in the first half of the decade, the Greek real estate market has returned to stability, and tourism sector properties and office spaces are even seeing an appreciation. At the same time, investor interest is proliferating and sentiment is improving. Nevertheless the prospect of a further recovery of the real estate market hinges, inter alia, on the strengthening of the Greek economy’s outlook, improved business and household confidence, an easing of bank financing conditions, a reduction of red tape, the completion of the national cadaster and the consolidation of a stable tax framework, according to the Bank of Greece.

The decline of the Greek real estate market began in 2009, mainly driven by the contraction in GDP per capita, the drop in mortgage loans and the rise in taxation, dragging investments and residential property prices lower, PricewaterhouseCoopers calculates. A loss of approximately 18 billion euros (8.2 percent of GDP) in construction investments was observed within 2008-15, resulting in a further slowdown in economic activity. “For the rapid recovery of the real estate market, a new regulatory framework, along with measures to facilitate transactions (creation of a land bank) and reduce oversupply (massive redevelopment) are needed,” a relevant PWC paper stresses.

The special residence program for foreign investors has taken off, reflecting increasingly bright growth prospects as the country emerges from economic crisis, while it remains an important gateway to the European Union

However, prime properties in each sector are already staging a strong comeback, with five-star hospitality assets at the forefront.

In a clear sign of the improvement in investors’ perception of Greece, the number of investors willing to consider investing in real estate in Greece in 2017 was twice that recorded in 2016, according to a study by NAI Hellas, a leading firm of commercial property consultants, valuers and managers based in Athens, which provides a wide range of real estate consultancy services.

Greece property

Greece’s Golden Visa program grants a permanent residence permit – and access to 26 Schengen-area countries – to individuals and their families who invest a minimum of 250,000 euros in Greece, for example in real estate or other productive investment.

Investors’ prospects for Greece in the next five years are significantly higher now compared to 2016, with 48 percent of respondents in the NAI Hellas poll stating that the potential of the country’s RE market was good or very good. “The turning point of the Greek economy is the main driver for investors that is expected to consequently lead to capital appreciations. The high number of distressed properties remains one of the most important drivers although it still ranks lower than in 2016. The continuing growth of Greek tourism is again a main driver for participants, while, for the first time, the completion of the second review of the country’s program with the institutions [European Central Bank, European Stability Mechanism, International Monetary Fund, European Commission] appears to have impacted investors’ intentions. On the other hand, the county’s taxation on real estate remains the biggest barrier for the majority of respondents, followed by the lack of quality investment product. While the political risk factor has decreased since 2016, public sector intervention in the completion of transactions is a major concern from investors’ point of view.”

In the meantime Greece’s special residence program for foreign investors has taken off, reflecting increasingly bright growth prospects as the country emerges from economic crisis and its growing importance as a gateway to the European Union, according to Enterprise Greece. In the last year, the number of foreigners awarded a Greek Golden Visa has soared, rising by more than 40 percent from a year earlier.

Launched five years ago, at the height of the country’s economic crisis, the Golden Visa program is now coming of age amid a new wave of investor interest, particularly from countries such as China, Russia and Turkey. There are several reasons for this, from Greece’s sunny Mediterranean climate and high quality of life, to its low property prices. A budding economic recovery plays a role for some investors, while for others it’s political uncertainty abroad. And since the law was revised in 2015, Greece’s Golden Visa has become still more attractive to foreign investors, comparing favorably with similar programs in countries including Cyprus and Portugal. A stepped-up promotion program has also helped.

Greece’s Golden Visa program grants a permanent residence permit – and access to 26 Schengen-area countries – to individuals and their families who invest a minimum of 250,000 euros in Greece, for example in real estate or other productive investment. According to the latest data from end-November, a total of 2,170 Golden Visas have been issued directly to foreign investors – and more than 5,000 when family members are included – up from 1,522 at the end of 2016.

After falling by as much as 50 percent from their pre-crisis peak, and with booming summer tourism buoying short-term rentals, Greek property prices now offer a highly attractive yield on investment, industry experts say. That has drawn investors from China, who now account for almost half of all Golden Visa holders. But another reason is Greece’s EU membership. In the past year, nationals from several neighboring Mediterranean countries – most notably Turkey – have also been buying up Greek real estate, lured both by the access to the EU that a Golden Visa offers, as well as to diversify their holdings away from an uncertain climate in their home country.

In the meantime, the rapid growth of short-term rental websites such as Airbnb, Homeaway, Booking and others in Greece since 2010 has created a new player in the hospitality market. The rise in the number of world travelers in combination with high hotel rates and demand for low-cost travel has made these online platforms very popular and boosted apartment prices in prime locations and most certainly villas on Greece’s Aegean and Ionian islands and coasts.

Furthermore a new real estate market segment is emerging in Greece, targeting high-net-worth individuals. The leader in this field is TEMES, a premier developer of luxury mixed-use resorts. Its Navarino Residences at Costa Navarino in Messenia in the Peloponnese was awarded as the “Best International Residential Development” and “Best European Residential Development” for 2017-18. Such developments present a unique opportunity to acquire luxury freehold real estate in Greece in privileged Mediterranean beachfront locations.

More are following suit. Amanzoe and One & Only are creating luxury villas in Argolida and Kea respectively, while on the so-called Athens Riviera more high-end properties are being built by Astir Pallas at Vouliagmeni and Grivalia at Glyfada.

The wider market for Greek villas is concentrated in some of the most popular Greek tourist destinations, such as Myconos, Santorini, Rhodes, Corfu, Paros, Crete and the islands of the Saronic Gulf.

The villa rental market in Greece, which appeals to the buy-to-rent investors, is relatively new and still quite immature, but this also provides opportunities for the smart investor.


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