Jan 23, 2020

Greek residence permit by investment in real estate in 2020: prices, demand, perspectives

Greek residence permit by investment in real estate in 2020: prices, demand, perspectives

Every month residence permits for real estate in Greece are growing in demand. Real estate prices in Greece are also on the rise, so is the number of tourists to saturate the rental housing market. This is evidenced by the recent statistics. We believe that information in this article can help you to establish yourself in the decision to apply for a residence permit in Greece by acquiring real estate in 2020.

The Golden Visa program in Greece was launched in 2013 and is still operating under the control of the state-owned Enterprise Greece. This is the official agency of the Greek State, under the auspices of the Ministry of Foreign Affairs, to promote investment in Greece, exports from Greece, and make Greece more attractive as an international business partner.

Golden Visa program provides a five-year residency permit in exchange for an investment in Greek real estate which should be worth over 250,000 euros. Principal investors can submit family applications that cover their spouses, as well as children under the age of 21. Having a residence permit in Greece does not require you to live in the country. The residence permit may be renewed every five years, providing the required amount of investment in Greek real estate is maintained.   

Greek residence permit by investment in real estate in 2020: demand for “golden visas”

Recently published Enterprise Greece data show that over the past five years of implementation of the Greek program for issuing “golden visas” to foreigners, the country’s authorities have granted residence permits to 18,616 people, which allowed to attract about 2 billion euros.

Enterprise Greece data show that between the period from launch of the program up to the end of 2019, 6,304 principal applicants and 12,312 members of their families have applied for a residence permit in Greece through an investment program.

Having hit all records in terms of number of applications in 2018 across Europe, the Greeks also successfully beat all competitors in the European market for gold visas in 2019, as well as surpassed their own achievement of the previous year.

In 2019 alone, 2,412 principal applicants received approvals in response to their applications for investment residency in Greece. This indicator is 34 percent higher than in 2018 and 151 percent higher than in 2017.

In addition, these investors included in their applications 5,580 family members in total, as a result of which the number of individuals currently holding Greek “golden visas” reached 18,616.

Although the minimum compulsory investment is 250,000 euros, lawyers and real estate agents note that in practice, actual amounts of investment typically range between 300,000 and 350,000 euros.

Assuming an average investment of 325,000 euros, and given the total number of approved applications for residence permits in Greece for investments to date, it can be argued that the total amount of foreign direct investment attracted by the country through “gold visas” amounts to approximately 2.05 billion euros.

The continuous upward trend in demand for the program is reinforced by Chinese investors, who recently, in 2017, accounted for only a third of the total number of successful applicants. Currently, the Chinese account for 69 percent of the total number of “golden visas”.

Experts in the field of investment migration believe that the demand among the Chinese will continue to grow during 2020. By the end of the year, the share of Chinese applicants in the total number of issued “golden visas” is likely to reach 75-80 percent. It is noteworthy that the second and third largest group of applicants in terms of activity in 2019 were Turkish (8 percent) and Russian (6 percent) nationals.

The same experts also highlight that the increase in the number of applications would have been much more impressive but for the various bottlenecks experienced by applicants in the immigration offices in the Greater Athens (Attica) region, as reported in 2019.

Last spring, according to information by mass media, the region’s authorities halted the process of issuing new residence permits, allegedly due to lack of technical capabilities, instead redirecting candidates to other regional offices. According to local media reports, in recent months the situation has restored to relatively normal, meanwhile immigration agents and their clients tend to bypass the most overloaded immigration offices. 

Currently with the country’s economy demonstrating upward growth trend, it is becoming evident that 2020 will be another year of expansion for the Greek Golden Visa program, as more investors are attracted by expectations of future real estate price increases in Greece.

Real estate market experts say these new investors are different from the first generation of Golden Visa holders, whose main target preferences laid with the cheapest real estate in Greece.

In contrast, the new generation of buyers tend to invest with a focus on growth, looking at expensive buildings that are under reconstruction for resale to potential buyers who wish to obtain a residence permit. This trend was observed in previous years, too, but was true for low-quality real estate. Currently, new investments are made towards more expensive residential development locations, for example, the southern suburbs of Attica and the Cyclades.

Greek residence permit by investment in real estate in 2020: price dynamics for resort housing

Experts recommend that all individuals who are giving a thought to obtaining a residence permit for real estate in Greece, should consider expediting. The data of the Greek Central Bank evidence that the recovery of the European country’s real estate market in the third quarter of 2019 has shown accelerated increase, and real estate prices in Greece have been rising for the seventh consecutive quarters along with improvement trend in economic conditions and increasing interest from foreign investors.

Real estate in Greece makes up the bulk of the Greek households’ wealth. The level of real estate ownership in the country is 80 percent, which is higher than the EU average of 70 percent.

According to the Central Bank of Greece, prices for apartments and houses in the country as a whole increased by 9.1 percent in the third quarter of 2019 compared to the same period a year earlier. Moreover, the price growth rate, since in the second quarter of 2019 increased by 7.7 percent year on year.

It is noteworthy that tendency of price increase is relevant for both old and newly built apartments and houses. Moreover, this trend is recorded in almost all regions of the country. Here should be noted that the capital city leads this upward trend, as compared to the rest of the regions in Greece.

Thus, according to the sector regulator’s recent data, real estate prices in Athens in the 3rd quarter of last year have increased by as much as 11.9 percent annually. Experts report that shared housing platforms, such as Airbnb and the Golden Visa program, have immensely contributed to Athens’s housing market growing popularity.

Prices for Greek homes and apartments fell 42 percent since 2008, at the onset of a protracted recession period. The trend started to change only late in 2015, when the Greek authorities approved the third package of financial assistance. The country withdrew from the last financial assistance program in August 2018, and now it relies on markets to attract financing.

However, Greece’s high property taxes imposed to cover the budget deficit, stringent lending rates by financial institutions and high unemployment rates, which continue to remain at high levels of nearly 17 percent (the highest in 19 Eurozone countries), still deprive the Greek housing market from the opportunity to unleash its full potential.

Given the influx of tourists to Greek resorts, experts also note an increase in prices for residential real estate in Greece, which is used for purposes other than recreation in the summer months. Holiday homes and apartments in Greece in winter also demonstrate price rise.

Sale prices for homes in selected locations for the winter holidays increased by an average of 8 percent in 2019, which is the highest annual growth rate since 2008, according to results of the annual study conducted by Geoaxis Property & Valuations Services.

Fast-growing housing on the south coast of Athens and downtown, as well as luxury villas on the Cyclades, were one of the first real estate categories severely affected by the financial crisis. Their prices demonstrated a lengthy decline in demand, which persisted until 2017.

However, the situation has changed long since. Experts recorded a general increase in prices in all locations covered by their studies. The highest price growth rate in 2019 is observed in Trikala in the Peloponnese, comprising 9.6 percent annually. This is a resort-type mountain village in the neighborhood of Corinth, which in recent years has developed into a highly popular destination for the Athenians, among other factors due to its proximity to the capital.

No less impressive dynamics are demonstrated by property prices in Greece in the Arachova region near Delphi. This larger area is traditionally one of the most popular winter destinations in the country. Housing prices there rose 9.5 percent in 2019.

In the town of Karpenisi, which is also located in central Greece, the annual price increase was 8.5 percent, while in another winter resort in Agios Athanasios in Pella, Central Macedonia, prices rose by 4 percent.

The study also shows that the average area of ​​houses and apartments for sale for winter holidays put up for sale was 171 square meters, and their average age was 11 years, which exactly corresponds to the duration of the crisis in this market. Consequently, we are talking about real estate that was built soon after the financial crisis erupted, and remained unsold, despite a sharp decline in prices.

According to experts, the increase in prices over the past 12 months reflects the consolidated positive effects resulting from the relative steadiness of the financial and political climate in the country, expectations of market recovery with future capital gains, active boost of summer and winter tourism, and gradually simplified access to mortgage lending.

It is noted that year 2018 was the first year since the crisis erupted, when decline in prices for apartments and houses halted and showed the first, albeit insignificant, increase trend since 2008. At that time, the prices rose by 0.7 percent. This change in trend has followed a general decline in prices, which in some areas has reached 62 percent since the crisis.

Obviously, one or two years of growth are unlikely to rehabilitate segment of the real estate market which has experienced a ten-year crisis. Even today, according to research data, prices in the segment under review are approximately half (50.5 percent) lower than the peak level reached in 2008.

The most drastic decline in prices after the crisis (by 62 percent) was recorded in Agios Athanasios, as the market prices today average 1240 euros per square meter compared to 3300 euros per square meter at the peak preceding the crisis.

In the resort of Arachova, prices are now 1,425 euros per square meter compared to 3,000 euros per square meter a decade earlier. That is, no less than 53 percent decline in prices. The decrease was less tangible in the case of Trikala Corinthias, where prices are now 1,255 euros per square meter vs. 2,250 euros per square meter in 2008. While in Karpenisi a price drop of 43 percent was observed: 2,310 euros per square meter vs. 1,325 euros per square meter.

According to experts, many developers had previously chosen this particular niche market for investment, undertaking stringent loans, which were used to fund the construction of chalet-style luxury houses. However, the costs of building and acquiring land in this case exceeded 1,500 euros per square meter, which is much higher than the current average costs of the country’s construction industry as a whole.

Thus, these developers are evidently in a certain trap because even sales below cost do not seem to be able to generate the expected demand to cover their return on investments. This is the picture observed in Livadi in Arakhov, where after the “construction boom” (it came to the point that some maisonettes were built nearly in the lake) dozens of complexes remain unfinished and without any visible perspectives of sale in the near future.

This market is a typical example of the negative effects of excessive expectations cultivated during the decade that preceded the crisis when the Arakhov region was known as “winter Mykonos”. At a time when owning a mountain “chalet” or, similarly, owning a holiday home in Mykonos or Santorini was perceived as evidence of solid standing and wealth, every winter it used to attract many high net worth individuals both from Greeks and visitors from abroad.

Many buyers who have purchased property over the previous decade and currently are in ownership of assets in the area, are unlikely to expect return on their investments in the foreseeable future. This picture, however, may change, providing recent initiatives taken by the government to reduce homeowner taxation and facilitate potential buyers’ access to cheaper lending facilities, prove viable and effective.

Perhaps further stabilization of the economy and the improvement of the winter tourism in Greece, which is significantly behind the summer rates in terms of demand, can contribute to market immersion of these properties and increase in prices.

Greek residence permit by investment in real estate in 2020: resort properties rental statistics in Greece

When you look for a location to buy real estate in Greece aiming to subsequently obtain a residence permit of an EU country, you should also consider the possibility of leasing such an asset in the course of ownership. In this context, experts recommend focusing attention to the resort areas of the country that are popular among tourists, where the demand for rental housing is invariably high.

According to the latest official data published by the Central Bank of Greece, from January to September 2019, the South Aegean Islands were the top among 13 regions of the country in terms of the number of tourist arrivals, overnight stays and tourism spending.

More specifically, tourism spending in the South Aegean Islands for nine months of 2019 amounted to 4.677 billion euros, an increase from 3.993 billion for the same period in 2018 and 3.287 billion for the same part of 2017.

In terms of tourist spending rates over a nine-month period, the Aegean Islands were followed by Crete (3.195 billion euros), Central Macedonia (2.049 billion euros), Attica (2.04 billion euros) and the Ionian Islands (1.84 billion euros).

Between January and September 2019, the number of tourists visiting the Greek islands in the southern Aegean reached 6.025 million, compared with 5.816 million for the same period in 2018 and 5.083 million for the period from January to September 2017. of the year, next in line coming Central Macedonia (5.903 million visitors), Attica (4.654 million guests), Crete (4.55 million guests), East Macedonia-Thrace (3.216 million guests) and the Ionian Islands (2.853 million guests).

Regarding overnight stays, the South Aegean Islands again lead the ranking with a result of 47.99 million overnight stays in hotels for the nine months of 2019. Crete follows with a rate of 38.273 million overnight stays; Central Macedonia (37.289 million), Attica (26.597 million) and the Ionian Islands (22.568 million) come next. 

The level of tourist spending per visit increased to 779.6 euros in the South Aegean, compared with 686.7 euros in 2018 and 646.6 euros in 2017. The South Aegean Islands were followed by Crete (696.9 euros), Ionian Islands (644.7 euros), Peloponnese (483.7 euros), North Aegean (459.5 euros), Attica (438.2 euros), Thessaly (484.2 euros) and Central Macedonia (347.1 euros).

Save your time and direct all your inquiries about obtaining residence, as well as foreign citizenship and passport, by contacting our professional consultants at [email protected]