Greek phoenix: how tourists revive the real estate market in Athens
The decline in the Greek economy, which began in 2009, is slowing. The IMF predicts GDP growth already this year, and the unemployment rate has been slowly but surely falling for the last couple of years. In a survey conducted by PwC, today’s Greece is called “more modern” and they note interest in Athens by international investors: the Middle East consortium bought Astir Palace Hotel in Athens, businessmen from Qatar and Dubai are planning a project for the redevelopment of the former Ellinikon Airport.
How does the real estate market of the Greek capital feel eight years after the beginning of the crisis? Experts of the international real estate broker Tranio found out what prospects Athens opens for foreign investors.
A square meter in the center of Athens costs about 1,265 euros – this is several times less than in many European capitals: for example, it is about three times cheaper than in Lisbon, Madrid and Berlin, in five – than in Vienna and almost eight – than in Paris.
Average property prices in central European capitals
Since 2008, real estate prices in Athens have fallen by about 44%. But the fall is at least slowing down: according to the Bank of Greece, in 2016, the cost per square meter decreased by 1.8%, which is 3.5 points less than in 2015, and according to more optimistic estimates of the Global Property Guide portal, taking into account inflation, it even rose by 0.15%.
Athens House Price Index
Demand is also developing: according to the National Statistical Agency of Greece (ELSTAT), on an annualized basis, the number of real estate transactions in Athens in 2015 increased by 28%. Areas in the center of Athens and southern suburbs are especially popular: for example, in 2015 the number of travelers who booked accommodation in the Kukaki area through Airbnb increased by 800%.
Athens House Price Index
According to the Greek edition of Kathimerini, apartments in the “triangle” formed by the areas of Monastiraki, Omonia and Syntagma are practically inaccessible to local people: in most cases they are already leased to foreign tourists.
Construction volumes continue to decline, albeit more slowly. according to the Global Property Guide, in 2016 the number of permits issued in Athens for the year decreased by 1.4%. In general, the secondary housing market in Athens feels better than new buildings: according to the Bank of Greece, their prices in the first quarter of 2017 decreased significantly (1.7%) than for properties older than five years (1.2%) . This is partly due to the peculiarities of the Greek taxation: VAT for buyers of primary apartments is 24% of the cadastral value, while for buildings whose construction permit was issued before 2006, tax on the transfer of property rights is paid instead of VAT (about 3% of value of the object).
In general, the attitude of analysts to the prospects of the Greek real estate market can be called “moderately optimistic”: for example, PwC predicts a rise in prices per square meter of about 0.6% per year.
Another thing – the market sector associated with the flow of tourists. Athens is a tourist center of the country, which, thanks to the preserved cultural monuments and a comfortable climate, will be of interest to foreigners, regardless of the economic situation. Especially in conditions of instability in other competitive areas: Turkey, Egypt, France and Spain.
The number of arrivals of foreign tourists at Athens airport
According to the Association of Greek Tourist Enterprises (SETE), in 2016 almost a third of international arrivals in the country fell on the capital, which is one and a half times more than the second most popular Heraklion. From 2012 to 2016, the number of arrivals at Athens airport from abroad grew by about 16% per year: from 2.6 to 4.5 million. Tourism makes the city a promising destination for real estate investors who buy apartments in the city center for for short term rent to tourists.
The demand of foreign investors is also fueled by cheap “golden visas”: a residence permit in Greece can be obtained by purchasing real estate worth 250 thousand euros. in other competing markets – in Spain and Portugal – the starting price starts from 500 thousand euros, and in Latvia the mandatory duty raises the threshold to 262.7 thousand.
The minimum amount of expenses for obtaining a Golden Visa
Interest in Greece is growing: if in 2013, when the program was launched, Greece issued only 20 visas, then in 2014 their number increased to 455, in 2015 – to 968, in 2016 – 1,550. Main buyers of “golden visas”: Chinese , Russians, Turks and Egyptians.
At the hotel market in Athens is already noticeable recovery. Over the past two years, several large hotel chains have entered the market, including Wyndham and Aman. In June 2017, the Hines company bought one of the most famous buildings in the city – Athens Ledra, the former Marriott hotel. Therefore, if investors are planning to earn on rent or a potential price increase – you need to act now.