Greek real estate market before the pandemic

by Jack Johnson Designer

The past 2019 for the Greek real estate market brought record figures over the past ten years, when the foreign investment sector in the country amounted to 35%. According to the Bank of Greece, capital inflows from abroad to buy real estate amounted to 1.45 billion euros, an increase of 30% compared to the data for 2018, when this figure was 1.128 billion euros. Thus, last year the volume of purchases of real estate in Greece by foreigners increased more than six times compared to 2016, when the amount invested in real estate by non-residents of the country amounted to 22.4 million euros.

Among the buyers, a significant part was made by Europeans and Chinese, citizens of the United States, Canada and the Middle East were no less interested in buying, and there were also many buyers from the Balkans. The number of Russian-speaking buyers from Russia, Ukraine and other CIS countries is still inferior to the market leaders. The Golden Visa program played an important role in increasing the volume of real estate sales to foreigners - more than 15,000 foreigners became holders of a residence permit in Greece for investments.

Prices in the property in Greece for sale in 2019 increased by 7%. The most demanded objects were real estate in Athens and in resorts. Domestic demand for resort real estate was small, mainly Greeks are interested in small apartments worth up to 70,000 euros. The largest increase (+ 28%) over the year was the increase in the value of residential real estate in Thessaloniki. Following Thessaloniki is the center of Athens (+ 27.8%), followed by the Piraeus region (+ 16.3%). Also last year there was an increase in the rental value of real estate throughout the country. Thanks to this trend, in some cities, housing prices have reached the pre-crisis period.

The rise in the cost of square meters in Athens and Thessaloniki is driven by strong demand from foreigners, with most investors motivated by potential future capital gains. An important role in this is played by the active development of short-term rental services in Greece (Airbnb, Booking, etc.) and the huge success of the Golden Visa investment program. More than 75% of "golden visas" in the period from 2013 to 2020. was issued to foreigners when buying real estate in the Greek capital (7200), respectively, this property will not be exhibited on the market for a long time, thereby contributing to the demand for Athenian square meters.

Property prices in popular regions of Greece

The average cost of residential real estate in Athens now exceeds 2,000 euros per sq.m, but can vary from 1,600 to 4,000 per sq.m. depending on the specific location. In Thessaloniki a square meter costs 1200-1500 euros, housing in Halkidiki can be purchased for 1500 euros per square meter. The average cost of real estate in Crete is 1680 euros per sq.m, and in Corfu - 1700 euros per sq.m. Thanks to the fact that Corfu has been chosen by wealthy Europeans - especially the British and Italians - their communities make up a good quarter of the island's population, which also contributes to the growth of property values and the quality of infrastructure on the island.

The coronavirus pandemic and the Greek real estate market

The demand for buying real estate in Greece during the coronavirus pandemic continued even with closed borders thanks to the possibility of remote buying - until mid-May, realtors noted a boom in attendance at all electronic sites. Many buyers, having familiarized themselves with the real estate market in the country, realized that it makes no sense to wait - in Greece there is a shortage of liquid offers in both the primary and secondary markets, since construction is not being actively carried out. Among the advantages that encourage the purchase of Greek housing now, one can name the absence of a large debt burden on developers and buyers, as well as relatively low prices against the background of other EU countries.

In addition, the largest real estate projects in Greece are implemented by international funds and are at the first stage of construction (Ellinikon project, Piraeus Project Cosco), and all the necessary funds for implementation, financed by the central European bank EBRD, have already been included in the budgets of 2018-2019.

Greece, like most coastal countries, is characterized by a direct dependence of the real estate market on the development of other sectors of the economy, especially tourism. According to Greek experts, domestic and foreign demand in the real estate market will fully recover as soon as the situation in international tourism stabilizes. It is known that the most popular investment object in Greece is rental housing, most often short-term. Now this market has temporarily stalled and is going through hard times due to the lack of tourists - Greece was one of the first countries in the European Union to close its borders to foreigners from March 15 to June 1. Therefore, the owners of such housing had to reorient themselves - to sell their properties or start renting them out for long-term rent.

Long-term rental yields are lower, but much more stable. As a result, the investor receives a guaranteed income in euros and is deprived of pressing problems in resolving issues that the owner of a short-term lease object constantly has to face - cleaning, constant search for tenants, etc. In general, long-term rental investments are of high quality and low-risk. Experts also note that now in many countries the younger generation is less and less inclined to buy real estate, become attached to a place, and get into loans and mortgages. For such people, long-term rent is the most current trend, so small investors will be interested in investing money in such objects.

If the buyer is nevertheless interested in the "short-term" format, then now it makes sense to pay attention to the hotel business: due to the almost three-month absence of foreign tourists in Greece, it is now possible to profitably purchase hotels. Hotels in Thessaloniki, Halkidiki, Kavala and the Cyclades are especially popular among investors.