After about nearly a decade, which was more than bad for Greece’s real estate sector, there has been a very positive mood on the Greek real estate market for some time now. It seems that a variety of factors are currently working together in a positive way, and that there has been renewed strong activity in the Greek property sector for some time now.
Already at the end of 2017, a turnaround could be noted, because at that time, after a long time, a – albeit slight – price increase in real estate prices was diagnosed for the first time in relation to the previous year (2016). Of course, this concerned mainly the “interesting” real estate. The rising trend then continued in 2018. According to Remax Greece, the housing units were able to record an average price increase of 7.3% compared to 2017 (old building: 8.9%, new building: 6.9%).
The positive trend is now continuing this year. The continued strong demand in the “touristic” centers of large cities, such as Athens and Thessaloniki, for apartments, for example for AirBnB use, in combination with the “construction freeze” that took place in the crisis years, already caused a noticeable lack of housing. This shortcoming is then logically reflected in real estate prices. According to initial estimates by the Greek Central Bank, a further increase in prices of 6.3% was noted for the first half of 2019, while real estate agents report for certain regions, such as the center of Athens, increases of more than 30% compared to the previous year. In some cases complete residential buildings in the center were taken off the market for the purpose of future hotel or AirBNB use, thus minimizing the supply extremely. The “flight of the original inhabitants” due rising prices should be mentioned at this point as a side effect. Another investment model, which also absorbs part of the property portfolio, is student housing, which until now has rarely been represented in Greece. By the way, a good investment product seems to arise here.
Investors from abroad come to Greece
A large part of the transferred real estate was bought by foreign investors – in part funds – who have been looking around the Greek market for some time. This means that the Greek market is again interesting for international investors. The low prices in combination with the positive outlook for Greece after the crisis and the rising interest, but also the now stable political situation, have generated an absolutely positive momentum for international real estate investments in Greece. In addition to investors from China and Israel, many interested parties come from the German-speaking countries to find here in Greece a good – and most likely more profitable – alternative for their portfolio due to the low yields in their home country.In addition to foreign investors also Greek – both private, partly listed companies (here special corporate form: ΑΕΕΑΠ) – investment companies have arisen for real estate investment purposes.
Real Estate Greece – a big chance!
There is a consensus today among experts in Greece that the Greek real estate market is currently at the beginning of a new cycle. In addition to the factors mentioned above, which are driving the sails of this market, there will be a strong boost in the next few months, especially as the Greek government is planning to decide this October a new tax law to drop VAT on purchases of certain properties for the next three years (here we are waiting for the relevant law this month). This will create further incentives to invest in Greek real estate. Also, for the refurbishment/modernization of old buildings planned tax rebates are to create further incentives. The construction industry in Greece will ultimately benefit as well, which is why you can expect in the near future building price increases.
Great interest for greek properties
According to recent reports in the press, not only tourist properties but also office and logistics buildings are showing great interest. Due to the aforementioned investment freeze, very little has been produced in these real estate sectors in recent years, so that today there is a great shortage of corresponding – especially modern – real estate available. This goes so far that currently under construction buildings are largely reserved with leases before completion.
However, there is also great hope in real estate, which is deposited as collateral for so-called “non-performing loans”. In the next few months, there will certainly be in this fields further good investment real estate available on the market, which will primarily be of interest to institutional investors, although this certainly does not apply to all properties. Nevertheless, this type of property will provide another wave of investment from abroad.
Last but not least, according to current press releases the Hellinikon project will start in early 2020. This is a large-scale project development on the site of the former airport of Athens, which is to be revitalized after a long period of fallowing. Over the past few months, the new Greek government, which provides intensive support to private investments, has clarified the final licensing issues, and now it is set to begin infrastructural work in the spring. It is a construction project with an estimated total volume of 8 billion euros (estimated construction period: 5 years), which will certainly cause a “building boom” due to its size, and because of its fame Greece will for sure become a well-known real estate investment destination for international investors.
All the current factors are producing the anticipation of an exciting and promising year 2020. Let’s enjoy the Greek future.