The main reason why real estate investors are considering Greece as a great chance is the low prices. Residential property in Athens is 40% cheaper now in comparison to 2008 when the economic crisis made its appearance. Now in 2018 that Greece is starting to recover from the crisis there is a huge possibility for price growth.
Although Greece's first steps to recovery, real estate market has not yet recovered. With the European Central Bank maintaining its monetary policy capital will continue hitting Greece. That is where foreign investors make their move. Greece is currently been in the eye of investors who are taking advantage of the Golden Visa. A Greek residence permit can be obtained through the purchase of a property of at least 250.000€. Other Mediterranean countries such as Portugal and Spain the thresholds are set at 500.000€. In Latvia where such a visa also costs 250.000€, you are only allowed to buy one property. In Greece, you can slip the amount of 250.000€ in more than one property.
Many of you may have already asked themselves: Why Athens? There are beautiful unique islands in Greece such as Mykonos, Rhodes, Santorin and actually all of them that are perfect. That is the absolute truth. Most of them though are already alive and kicking. Local hotel occupancy rates run at 80-90% in the summer season and property prices in popular districts exceed €10.000/m2. Athens is very likely to be the next city to witness another period of growth in the real estate segment. For this to happen there are some preconditions that are already being fulfilled.
Athens has a comfortable climate all year long and makes a great choice for vacations. It is the tourist capital of Greece thanks to its well-preserved cultural heritage. According to SETE, the number of international tourists visiting Athens almost doubled between 2012 and 2016, growing from 2.6 million to 4.5 million. Overall, despite the economic crisis, it is a good period for Greece's tourism industry. According to the preliminary data from UNWTO, tourist arrivals in Turkey fell by 29% in 2016, while the number of visitors to Greece increased by 5%. Last but not least, MasterCard has claimed that Athens is among the top 20 European cities in terms of number of international tourists spending a minimum of one night at their destinations.
Property prices are lower in Greece than any other European capitals. Real estate in Madrid, Lisbon, and Berlin are thrice more expensive than Athens and eight times in Paris. Needless to say that the local prices are well below pre-crisis levels. The percentage of price drop comes up to 44% since 2008 when real estate prices hit the ceiling. Today, residential properties sell almost at construction price in Athens. According to numbeo.com apartments in city center sell starting point is set at 1.562,88€ /m2 (last update July 2018). Lastly, according to Trading Economic forecasts prices across the country are starting to grow and by 2020 will have grown by 22%.
Athens is the economic center of Greece. It is generating about 20% of the country's GDP which is more than any other European capital. The recovery of the Greek economy will have a huge impact on the capital. The general decline in the national economy which started in 2008, is now slowing down. According to Trading Economics forecasts, the country’s economy will continue to grow by 1.2% per annum on average up to 2020.
A great idea for investment in Athens is rental residential and hotel real estate, since Greece will continue attracting tourists regardless of the economic recession that has been going through since 2008 and its GDP dynamics.
An easy way into the real estate market is to buy a flat in the center of Athens. You can put it for rent, when you are not in Athens, by yourself or at the Airbnb platform for extra protection and organization. One of the advantages of Athens is that, unlike Berlin or San Francisco, the Greek market for rental residential property is loosely regulated. Obtaining a tourist license is enough to have the right for short-term property lease. This document is issued for 5 years and usually costs €3,000-5,000, while extensions are significantly cheaper. Just so you can perceive the gross profit possibilities, there are flats in Athens listed on Airbnb, with yields of about 7-8%.
Another way, harder, but more profitable than the previous one is to participate in a redevelopment project. One can buy a cheap real estate, make repairs, and lease or sell at a higher price. The return on investment is 10–15% per annum, and the projects last 1–3 years. Keep in mind though, that in case of the Golden Visa «agreement» if the resident sells the property in which he has invested to apply for the Visa to another non-European citizen, the Greek residency transfers to the new investor.
Building new residential units is less profitable, as the demand for new-build properties is lower in Greece. Buyers of new-build flats pay 24% of the property’s cadastral value in VAT, while for projects for which permits were issued before 2006, buyers only have to pay a transfer tax, which amounts to about 3%.
What you could do though, is to buy a quite cheap real estate with the need of renovation, renovate it and then sell the apartment to foreign buyers seeking Golden Visa. Investors can expect yields of about 10% when keeping such a property, and profits of about 70% when selling it. (We) can manage the repairs and the subsequent short-term lease in situ, providing the investors with yields of about 15%. Lastly, investors can also take part in larger projects, such as the renovation of an apartment hotel (a hotel with serviced rental tourist apartments that can be bought separately, unlike conventional hotel rooms). In this case, the operator provides the building, while (we) and the investor finance the repairs.
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