Greek Real Estate Market Trends
Greek Real Estate Market and Financial Crisis: The economic crisis concerning Greece’s future in the Euro zone continues. Greece is struggling to pay back huge loans from European countries and the IMF that helped keep the nation afloat. Greece is in a difficult financial situation indeed. Real estate, for many decades the “stream engine” of the Greek economy, should at last, be profoundly re-energized. It needs a plethora of growth metrics and assistance to restart.
Both the governmental authorities, and developers/investors/property owners and shareholders, have to face this unpleasant reality. The country has a gigantic potential to exploit more of its real estate assets in a synergistic and professions interconnected structure. Each real estate side has to recognize its main objectives and implement improvements and intelligent modifications in real estate market mechanisms, standards, transactions legislation and business ethics.
Greek Real Estate Market: Analysis
While property price statistics for 2015 painted a fairly bleak picture for the real estate market as a whole, they did not fully reflect the devastation wreaked so rapidly. Residential property appraisals-transactions were 43% down on the previous year in 2015, dwelling permits fell 25% from January to November 2015 compared to the same period in 2014. However, Greek real estate market still poses a number of challenges for investors and stakeholders operating within.
TAX SYSTEM MODERNIZATION AS A PRIORITY
The crisis opens new windows of opportunities for the Greek real estate market. Tax collection policies need to be improved and modernized by fighting tax evasion as well as simplifying and widening the taxation provisions. Particularly the taxation system in relation to the property assets and transaction appears to be associated with obsolete, irrational and unfair mechanisms. None of Greece’s four neighbouring countries currently apply such a high level of property taxes with observable benefits for their societies and real estate market growth. Belgium, Italy and Greece also apply tax on property transactions at rates of more than 10 %.
To restore market productivity, growth and competitiveness it is vitally important to improve administration procedures, ensure tax stability, law simplicity, mitigate bureaucracy and establish transparency. A VAT tax of approximately 3-5% for all real estate transaction could be an effective initial step on a continuous improvement process. This in turn, will facilitate fiscal consolidation and real estate market dynamic reinforcement.
ZONING AND BUILDING REGULATIONS
According to a Business Partners article from Mr. Panagiotidis, Deputy CEO of PANHOL Developments, zoning and building regulations should be reliable, flexible and facilitate the implementation of successful concepts enhanced with clear and long-term incentives to real estate investors and developers. “Developers need to know clearly where and what they can develop. The state can provide tax incentives or better building coefficient ratios for concepts that bring real and constant inflows to the economy from foreign buyers who want to invest or live in Greece. Developers might have an incentive to create compounds designed primarily for foreigners. We can create projects for foreign students and baby boomers who adore Greece, non-EU citizens (Chinese), new practicing doctors or young scientists, in many locations near major cities or on islands. We can offer financial incentives to be more attractive than our competitors.”
MARKET TRENDS IN CRETE
Although many investors are extremely concerned about the out-look for Greece’s retail sector and fragile economy, the real estate market of Crete offers an intriguing mix of attractive possibilities. The luxury real estate market on Crete is starting to stabilize now that Greece’s future in the Euro seems secure (?), reports the international real estate consultancy Engel & Völkers. In the same mode Cushman & Wakefield reports that inquiries on high-end residential property should be increased by approximately 20% in 2016.
Demand is directed at luxury villas, homes and hotels, located on the north coast with direct sea access or exceptional views to the Aegean Sea. Properties with three or more bedrooms, exclusive quality fittings and substantial building plots are appealing and attractive assets to more and more investors. Buyers of luxury homes in a prime location (Apokoronas, Kissamos, Platanias) in Chania are procuring a stable asset investment with potential for high ROI, in addition to an investment in environmental quality, high living standards, security and life quality.
The market for luxury and exclusive second homes is an attractive option for foreign investors. A majority of holiday homes and luxury residence owners in Crete are wealthy foreigners or Greek expats who acquired their property with little or no borrowed capital. Under these circumstances they are not forced to sell their property on economic reasons and thus market stabilization is established. Moreover, additional impetus has emerged from the flourishing tourism industry and its potential.
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