2017 could be the turnaround year for Greek property, as overseas buyers begin to return to the country.
New research from TheMoveChannel.com reveals that interest in Greek real estate has risen steadily in the last nine months. In Q1 2017, enquiries doubled compared to the previous three months, and in Q2 2017, enquiries almost doubled again quarter-on-quarter. The rise in interest has been from a low base, but marks a notable, ongoing trend. Greece has ranked in TheMoveChannel.com’s Top 10 destinations three times this year, climbing into ninth place in July, with 0.69 per cent of all enquiries on the portal.
Riding a Tide of Tourism
The return of buyers to the country is being led by another returning group: tourists. Holidaymakers have become a major bright spot in a country that has been overshadowed by talks of bailouts, deficits and elections. Inbound tourism is now leading the country’s recovery, with 24.8 million arrivals in 2016, according to official data released by SETE. With airport traffic and cruise arrivals both climbing, tourism continues to build momentum, with arrivals expected to jump to 26 million in 2017. In the World Tourism Organisation’s rankings, Greece has risen to 14th, as of 2016, and the country has its sights on a top 10 position.
Spending by foreign visitors is also climbing, helping to boost confidence in the country’s economy. The result is a picture that has changed from several years ago, when the country’s debt crisis escalated to the point where it was feared Greece might leave the euro. The government, elected on an anti-austerity ticket, has had to reverse its stance and tighten its budget, hiking taxes, cutting pensions and introducing other measures to steady the ship.
This summer has seen the country offer its first proposed bond sale in years, a sign that it is making positive steps on the road to eventual recovery. The economy is forecast to grow by 2.7 per cent in 2017 and 3.1 per cent in 2018. Even then, though, the road back to normal is long, with another bailout package only recently agreed.
Bottoming Out Prices
The housing market, meanwhile, has reflected the slowly changing conditions, with transactions down over 70 per cent since 2008, according to PwC. As a result, there is now a notable oversupply, despite new build growth slowing by 0.1 per cent from 2008 to 2014. Existing dwelling stock is at 6.4 million homes.
Prices have plummeted by almost 41 per cent, especially in the urban centres. Some areas have seen prices fall even further, with values continuing to decline even in 2016, following the political uncertainty of 2014. According to Knight Frank, the country’s average house price fell 0.6 per cent in Q1 2017, while Athens ranks low among its index of international cities.
However, low prices are not enough to stimulate domestic demand, due to high living costs: property taxes have risen by 6 times compared to 2010, according to PwC, representing almost 2 per cent of the disposable income per capita. Between 2010 and 2015, real estate property taxes rose by €2.5 billion – €3 billion.
The country has therefore turned to overseas investors to help drive its real estate recovery, with the introducton of a Golden Visa scheme that offers residency to non-EU investors in exchange for a purchase of €250,000 or more. The price point is lower than many other EU schemes, while the residency is valid for five years and can be renewed.
This has helped attracted wealthy buyers from countries such as Russia and China, with €1 billion invested in real estate, according to Enterprise Greece. 1,725 permits have been issued between 2013 and 2017, buoyed by the allowance of multiple property purchases to collectively cross the €250,000 threshold. For those seeking free travel in the EU, an option for possible emigration, or other benefits from Greek residency, the affordability of the country’a real estate and the ability to build up a small portfolio are notable incentives to consider Greece over Europe’s other lifestyle destinations.
The Airbnb Effect
The ability to rent out those properties is a particular boost to Greece’s international appeal – and with Greece’s tourism industry enjoying significant growth, the rental market is now also going strong.
The rise of Airbnb has particularly fuelled the potential for buy-to-let in Greece, with Crete and Athens both enjoying a buzzing letting scene. According to data from Inside Airbnb, the number of short-term rentals listed in Athens has soared in the last year, with rentals listed in most neighbourhoods of the city, including those where hotels are not typically located.
Indeed, the Attica region, which is home to Athens, is one of the five most popular areas of Greece among international buyers, accounting for 1 in 12 enquires on TheMoveChannel.com. Demand is led by the South Aegean, with over a third of enquiries, and Crete, with 3 in 10, as buyers look to popular tourist destinations, from Crete hotspot Agios Nikolaos to the desirable beaches of Tinos, where developments such as the Aegeis Resort in Tripotamos Village are priced from just €65,000.
PwC predicts that house prices are going to start rising 0.6 per cent every year from now on. The bottoming out of prices, though, is only the first step back to the heights of Greece’s heyday. 2017 may not be the year of recovery, but if the trend of Greece’s growing popularity continues, this is certainly be the year the turnaround began.
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