By Maria Zougra
Price inflation phenomena are observed in the housing market in the Greek market. According to the data published by the Bank of Greece (BoG), during the fourth quarter of 2022 the average increase in house sales prices was 12.2% compared to the corresponding quarter of 2021. In more detail, for 2022 the prices of apartments saw an annual increase of 11.1% compared to an increase of 7.6% in 2021.
In Athens, in fact, the increases are more evident, as during the fourth quarter prices increased at an average annual rate of 15.2%, which is also the highest performance of the last decades. Thessaloniki follows with the increase reaching 14.5%, while in the rest of the country the price increase reached 6.3%. The rally in property prices clearly states that the property market is now operating by its own rules, ignoring the wider macroeconomic environment, and the surge in investment interest from abroad is a major reason why this is happening.
The well-known Greek real estate investor George Giannakis, whom many call Mr. Goldman Sachs, as he has six years of successful career at Goldman Sachs under his belt, observes regarding the increase in property prices that “the Greek market is and will remain very strong in the coming years in the European markets, if the Greek property owner manages to withstand the financial hardships due to the general crisis – especially in the banking system both on the European and the Western front (America, Switzerland, etc.) and if he realizes that Greece is a top destination, with a stable political system and in addition is an active and strong member within the European community.
The achievement of the government is that it simplified the bureaucratic difficulties and memorable is the fact that we have the weather as an ally in our country. Therefore, with the right marketing, Greece can attract investors, who I have noticed in recent years are studying the aforementioned economic components a lot and are not investing, for example, in an island to live there, as pensioners used to do, who took the lump sum and with the money in their pocket they decided to go live on a beautiful island for the last years of their lives, drinking their coffee and going fishing. Now the scene has changed. Greece as a destination is attracting a lot of interest from investors worldwide, who want to get their money back in the next three to seven years, that is, for their investment to pay off and to amortize expenses. In parallel with the rental of real estate, the Greek property owner can invest and have significant receipts due to the yield of the rental. What does this mean: if today we put 100,000 euros in the bank, this amount will give us zero money in interest, and in addition, the bank may charge us for some services, while, if the property is rented out, there will be income” .
– You said that it is an achievement of the current government. Why do you say that?
“I don’t want to color our conversation politically. I speak to you as a real estate investor, and I can tell you that during SYRIZA governance almost nothing was moving in the area of real estate. The corona virus clearly put a brake on investments, but in the economic setting, bureaucratic actions were observed to be anchored. The current government, through a series of legislations, unlocked many bureaucratic barriers, accelerating the pace of development.
For example, the draft law of the Ministry of Environment and Energy, which was submitted for a vote in the Parliament on 25/11/2020, in the context of the “Modernization of Spatial and Urban Planning Legislation” enriched the categories of tourist accommodation, establishing Mixed Small Scale Tourist Accommodation, making it possible to build a hotel in combination with tourist furnished houses (as defined in law 4276/2014), under conditions one of which allows building on an area of 50 and up to 150 acres.
More specifically, the maximum building factor for Small Scale Mixed Tourist Accommodations located in non-planned areas is set at 0.2 (and 0.12 on inhabited islands except Crete, Corfu, Rhodes and Evia), in contrast to the cases of individual hotels, in which the building factor cannot exceed – now, based on the same draft law – 0.18. Regarding the possibilities of utilizing the tourist furnished houses, the sale or long-term lease of a percentage of up to 10% of the total built-up area of the Mixed Tourist accommodation is allowed. We therefore see that with the introduction of this new type of accommodation in the regulatory framework, an attempt is made to attract investment interest, which is expressed through the multiple economic activities that can be developed in a hotel and at the same time the exploitation of independent residences by giving incentives, in the form of favorable building conditions”.
– However, with the established prices, the average Greek cannot invest, and Greece will no longer belong to the Greeks, but to those who have money to buy and invest. Do you agree?
“Very good question that finds me morally agreeable. As a real estate investor, I can tell you that I bet on Greeks and the marketing that takes place from my office is primarily aimed at Greeks. Greeks who are in Greece either permanently or have returned to their homeland after years, like me, but also to Greeks abroad, who love their country.
I primarily target these investors. The Greeks who have excelled abroad are my partners-investors and they come strongly bet on investing in Greece. There are too many Greeks who, motivated by a simplified bureaucratic framework, want to invest in our cities and islands. But they are not the only ones. The interest from foreign investors is real and intense. What I recommend to the Greeks, who are property owners, is to withstand these price increases and preserve their property.
In the future the benefit will be greater. Greece must adapt to modern conditions, it must align with the requirements of the time, not owe the tax office, invest and use this money somewhere else. I don’t want to caress the ears of the Greeks. They must invest properly and if they themselves do not have the know-how, they are old maybe, their children or grandchildren can help them. They don’t have to wait for the next crisis when they might find themselves at a disadvantage and might be forced to sell. Greece has modernized, Europeanized, it has entered the world community with modern standards that attract foreign investors, and Greeks must take advantage of this at this time”.
– Do you think the Russia-Ukraine war played an important role in the jump in real estate prices?
“No, the war has not affected at all in my opinion this increase, as some like to say, by misdirecting public opinion. The coronavirus was the biggest blow. A blow that still affects the world economy today. We see what is happening to the banks in America and Switzerland. The banking system is going through a crisis, and we are only at the beginning. Let’s not forget that for many years people were getting loads of money from banks at low interest rates. The quarantine came and all businesses around the world stopped. The EU also agreed.
Investment and production stopped everywhere, and we waited two years to start the machines again. The whole mechanism that was working until then stopped, thus launching inflation on the way. The salary of the average Greek, however, did not increase as did the values of products and real estate. It is difficult for a Greek to buy, for example, a first home, unless he/she already owns property. So here, I would like to advise those who have it to endure the next three to five years, to hold on to their wealth, because the cost will shoot up even more in the coming years and an eventual investment will give them maximum returns. Do not leave real estate unexploited, because when you leave a property to its fate, it loses its value. In closing, I would like to say to Greeks everywhere who want to invest in Greece or wish to make use of their properties, that they can contact me and with a first free appointment I can pass on part of my experience and know-how”.
