2015 was a rough year for Greece. The country was on the edge of economic collapse and was days away from leaving the EU. 2015 was a very uncertain time for the real estate market in Greece. Keeping this in mind, let’s look at the Property Trends in Greece 2016.
2016 begins on a steady note for Greece. Greece is on a recovery mode. While it will probably take years before things get back to how they were before, at least, the situation is fairly stable today. There’s no fear of an immediate economic collapse any more.
Tourism is the biggest industry in Greece and in spite of the crisis that hit Greece in 2015; we still had a record number of foreign tourists visiting the country – as many as 26 million. The overseas property market is always linked to tourism; so while properties were deflated across the country, there were still a plenty of buyers looking for villas in Greece.
Indeed, foreigners have been closely watching the situation in Greece and many have been buying as well. There are amazing bargains available all over Greece, especially in the Greek islands of Mykonos, Rhodes, etc., which were fairly insulated from whatever was happening in Athens.
In fact, one can buy a seaside mansion in Mykonos, which used to cost 25 million EUR before the crisis broke out, for under 5 million EUR now. Not much has changed, the quality of life on the beautiful Greek islands are the same as they have always been – only, the homes available for sale are a lot cheaper.
Among foreign buyers, cash rich Russian buyers have been enthusiastically snapping up Greek properties. With prices of luxury real estate falling by over 50% since the break out of the crisis, this presents an excellent opportunity for Russian investors, who are looking for places to park their sizeable savings away from Russia’s declining economy.
Emmanouil Zervos of the German real-estate company Engel & Volkers says, “The demand has increased, for many reasons. The most important one, you could say, is that people all over Europe are looking for somewhere to put their money. And of course the prices in Greece, at the moment, are attractive to them. So, a lot of people are watching Greece. They are coming to visit properties. The thing is that they are still waiting to do the final move. Requests [to see properties] are higher, but not the sales.”
It also helps that the relations between Greece and Russia are as strong as ever and have actually been strengthened by the crisis. A massive pipeline worth $2.27 billion was built to supply Greece with gas from Russia. A lot of Russian investors are looking at Greece with great interest for this reason. Russian investors are also very optimistic about Greece’s future and are looking at their investments from a long term perspective.
What’s holding the property market back, however, is that the Greek government has raised property taxes in the country by a considerable extent, to make up for the shortfall in the budget. So apartment prices in Greece have fallen by 5.6% in 2015 as many homeowners found themselves unable to pay the property taxes on time and put their apartments for sale. This led to a glut of properties for sale in Greece, which led to the drop in apartment prices across the country, especially in Athens.
Mr. Paradias of the Greece Property Owners Federation explains why this is such a big issue: “There is a sky-high annual taxation upon real-estate property, which has been imposed, an unbelievably and unacceptably high level which is unsustainable. The market is not actually functioning at this moment because of this unbearable taxation.”
Regardless, the real estate situation in Greece is today much more stable than in 2016. One can expect residential investment in Greece to recover gradually from early 2016, in line with much easier lending conditions for mortgages. Greece will, however, continue to be a buyers’ market for the foreseeable future.