Real Estate Market News for Greece

Real Estate in Greece: Why It's Attractive to Investors?

In the European real estate market, Greece stands out for its low prices and steadily growing demand for housing. Experts argue that property in this country is significantly undervalued, which is a rare exception for Europe. Property owners in Greece find themselves in a favorable position today, with promising business prospects. What led to this situation? Analysts at the Immigration Center "Garant.in" delve into the matter.

Events That Shaped the Current Greek Real Estate Market

The saying, "Every cloud has a silver lining," comes to mind when examining the situation in the Greek real estate market. It's well known that from 2010 to 2012, Greece experienced a deep financial crisis, with the country on the brink of default. A massive financial intervention by the European Union and the IMF, providing the state with approximately $270 billion in loans over eight years, helped to avert disaster.

At the beginning of the crisis, among other things, property prices in Greece plummeted. Property owners, particularly foreign ones, rushed to offload their troubled assets. At one point, properties in central Athens were valued at no more than €1,500 per square meter. By comparison, this figure has now exceeded €3,500 in popular areas.

Brussels' efforts to save the Greek economy paid off. Last year, EU officials confirmed that Greece had fully emerged from the crisis and no longer required external financial assistance. The Greek government reports positive trends across all sectors of the economy, naturally impacting the local real estate market.

Statistics Offer Optimism

To avoid being vague, let's look at some striking examples. As mentioned earlier, we compared the average price of capital city housing during the crisis with today's prices. Last year alone, property prices rose by 15%. Everything suggests that this trend will continue for at least the next 4-5 years. Despite such a significant increase, property prices in the country still lag far behind neighboring countries. For example, in Barcelona, housing is sold at €6,000 per square meter.

Thus, the main reason for the strengthening of Greek property prices is the end of the crisis and the positive trends in the entire country's economy. But this basic factor is made up of several smaller, more specific elements.

Factors Contributing to the Rise in Greek Property Prices

Effective Actions of the New Government. As soon as it became clear that Greece's economy was recovering, its undervalued real estate immediately began attracting local and especially foreign investors. They were particularly interested in the new Greek government's measures. It reduced property ownership taxes, abolished VAT on the sale of primary residences, and plans to cut corporate income taxes by a quarter by 2022. Foreign developers are eagerly looking at new construction projects in Greece, anticipating a boom in this sector.

The influx of Foreign Investment through the "Golden Visa" Program. The Greek government also took effective steps in this area. The minimum threshold for obtaining a Golden Visa was lowered to €250,000, leading to an 8% increase in investment in this area in the first year. Moreover, a new program offering Greek citizenship for a minimum investment of €2.5 million is being launched. The Greek government reasonably expects to attract significant additional funds through this program, which are planned to be directed toward construction. Given that real estate in neighboring Cyprus, which also sells citizenship, is more than twice as expensive, Greece has good reason to expect to "poach" some of those investors.

The influx of Foreign Tourists. This is also an important factor, considering that Greece has traditionally profited well from tourism. Since 2015, the flow of tourists to the country has only increased, with revenues from tourism growing by 30%. The cost of renting housing is rising, with some residential properties being transformed to offer short-term rentals.

The Impact of Greek Banks

After recovering from the financial crisis, Greek banks are also contributing to the real estate market's growth. For the first time in many years, they have resumed issuing mortgage loans to the population. This timely move revitalized the market, as the absence of mortgages over the years had created pent-up demand for bank financing.

The influence of cheap mortgages is even more significant considering that, even without them, the well-known price-to-income ratio (the ratio of property prices to income), according to Numbeo, stands at 20-23 in Athens, compared to 19 in Moscow and around 30 in Berlin. The higher this figure, the harder it is to sell property. In simple terms, Greek real estate is currently highly liquid and easy to sell.

Drawing Conclusions

From an investment perspective, real estate in the "land of ancient Hellenes" is one of the most attractive in the European Union. Low current prices, dynamic growth, and significant undervaluation make investments in this sector almost a foolproof business project. For example, it is estimated that investing in new development projects guarantees at least a 10% annual return while renovating residential properties in the capital, Athens, and subsequently selling them can yield up to 15% annually.

The only potential concern might be the anticipated global economic crisis. However, if investors rely on their funds rather than mortgages, their finances, in the worst-case scenario, will simply be frozen for a while. Even then, they will generate rental income of about 5% per year.

The Greek Real Estate Market During Lockdown Remains Open to Foreign Investors

The quarantine measures aimed at preventing the spread of COVID-19 have extended into 2021. Despite the start of vaccinations, many countries, including Greece, are still under anti-COVID lockdowns. Let's see how the Greek real estate market operates in these conditions.

Lockdown in Greece

It's worth noting that Greece is the only European Union country that hasn't closed its borders to foreign citizens holding a tourist visa. The general requirement is to comply with sanitary regulations, present a PCR test, and undergo a two-week quarantine upon arrival.

On February 21, the entry permit for Russians under a quota of 500 people per week was once again extended.

The second wave of lockdown in Greece began in November. On January 18, retail stores, beauty salons, and car service stations opened for the first time during this period, bringing nearly 150,000 people back to work. These easing measures bring optimism, though they don't apply to all regions. In cities with high epidemiological loads, it's possible to pick up goods purchased online directly from stores by appointment. The country continues to enforce curfews and restrictions on inter-regional travel.

How the Greek Real Estate Market Operates During Quarantine

The experience of the first lockdown (March-May 2010) demonstrated that this segment of the domestic market shouldn't suffer from restrictions. The impact of suspending real estate agents, agencies, and construction companies was too great for all parties involved, as well as for Greece as a whole. Therefore, the Greek government has now created the most favorable conditions for transactions:

• Potential property buyers can freely view properties accompanied by a real estate agent without needing special permits.
• Government organizations continue to operate, with appointments available at financial institutions, notaries, and lawyers.
• Construction of new projects continues, with remote selection of materials and architectural design development.

The Possibility of Remote Transactions

The COVID-19 pandemic has changed the world forever. What once caused concern and distrust has now become the norm. This directly applies to the remote conclusion of real estate purchase agreements. More and more people prefer online property viewings, with purchases and even applications for residence permits being made through a trusted representative.

The Greek government has improved the mechanisms for conducting remote transactions, learning from past shortcomings, and has simplified the process of obtaining a power of attorney:

• Temporary restrictions on the validity of powers of attorney have been lifted.
• Powers of attorney can be issued at notary offices in the country of residence or Greek embassies.

To summarize, there are no obstacles to purchasing real estate in Greece, even during a lockdown. GARANT estate can help you realize your plans, as our experience in this field can guarantee a positive result, even in such unusual conditions.