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Real Estate in Greece: Is It The Right Moment To Invest?

…that was the question to myself having the feeling that Greece gets back on the rails.
However, in order to answer the question we needed to put thoughts in order, view the status quo in Greece macroscopically and finally check if the facts satisfy the main criteria for an ideal investment: “High Performance at Low Risk”.

IDEAL INVESTEMENT= LOW RISK + HIGH PERFORMANCE

Below I represent you the facts in my point of view, by answering simple questions that either refer to high performance or low risk, persuade me almost a year ago.

…I believe are still up to date…

GLOBALIZATION

Will there be demand in the future for investment in the real estate market?

World is constantly changing but always in the direction of globalization. Nowadays citizens of all countries move or even migrate to other states with ease. The culture cultivated by modern people is universal and united, therefore the citizen wherever he goes does not feel like a stranger. On the contrary, he feels home and joins much easier than in the past the local community.

In this international environment, there are opportunities for wealthy citizens and businesses to invest capital around the world, either in terms of the risk dispersion of their capital or in the use of business opportunities. The real estate market covers both cases.

Since technology-led information is blinking and degraded areas, but with good prospects, are developed much faster than in the past, proper timing is needed.

GEOPOLITICAL POSITION OF GREECE

Is stability in Greece necessary for the international community and the great powers?

Greece is the easternmost border of the European Union, the mother of the idea of democracy characterizing the Western world, a hub between East and West, a pillar of stability in its region, and therefore its position is of enormous strategic importance.

Especially in recent years where the countries of the Mediterranean and the Balkans are oscillated by either civil wars or totalitarian regimes with authoritarian leaders, Greece's role in the region is upgraded and its stay as a strategic ally of the great powers seems more necessary than ever.

This is evidenced by the fact that although the country has a great debt due to the poor recourses and funding management over the past decades, the major powers for more than eight years continue to support the country and keep it in the euro zone subject to signature Memoranda that will make it competitive on international markets and will ensure that their money is reimbursed.

At the same time, there is a need for wealthy citizens of neighboring states with problematic living conditions to leave their countries and emigrate to a safer place for them and their families. Greece is their first choice because of its many advantages. It is close to their homeland, it is economical, with low property prices while at the same time provides an economic and privileged golden visa program and also a safe environment within EEC-EMU.

POLITICAL AND FINANCIAL DEVELOPMENTS IN GREECE

Does political developments in Greece create conditions for safe investments?

The economic crisis in the country has caused great political instability. The political forces that ruled over the last few decades have been desecrated as responsible for the crisis; new forces have emerged by adopting a rhetorical of conflict with the lenders and questioning the signed memoranda validity.

As a result, when the new political forces become government in the 2015 elections, the European orbit of the country was questioned. Especially in the summer of 2015 when the newly elected government announced a referendum on whether the people wanted the new measures imposed by the lenders and the answer was no, Greece came very close to its exit from the euro zone and was therefore a toxic environment for investment. The immediate consequence of this announcement was the imposition of capital controls to control the panic of the people.

Today the situation has changed radically. The government turned the “no” into “yes” for the sake of the European course of the country, continuing its monetary policy and hard-hitting policy in order to remain in the euro area. The people realized that there is no easier way to exit the crises, the reactions stop the country's credibility gradually recovers and capital controls relax.

It took the changing of three governments and eight years with huge implications for the people's standard of living to take the necessary actions for the country's competitiveness on international markets.

• Restructuring the banking system.
• Reducing government spending, bureaucracy and state intervention.
• Development of control mechanisms with the help of technology.
• Privatizations of bankrupt public companies.
• Releasing closed professions.

As it appears after years of political conflict and confrontation, Greece has chosen its future within Europe. Now the voices inside and outside the country that wanted Greece out of the European Monetary Union weaken and are characterized as populist.

In 2017 the Greek people, after exhausting his alternatives, are ready to follow the upward road of the memoranda. At least that is what recent polls show (newspaper Naftemporiki, 07 July 2017), since there seems to be a huge lead of a right-wing liberal party, whose agenda is to achieve competitiveness by reducing spending, shrinking the state, privatizing and creating incentives to attract investors.

ECONOMIC RELATIONS WITH STRATEGIC ALLIES - STRATEGIC INVESTMENTS

Are there, or are going to be, infrastructure projects and strategic investments by large investors that prove the country's prospect?

Greece works in the direction of developing economic relations with giants of the global economy. Worth mentioning are the country's efforts to develop its bilateral relationship with the Republic of China which is honorable country at the International Exhibition of Thessaloniki 2017 (82nd Thessaloniki Exhibition, 2017). Indicative is also the fact that Air China announced the launching of direct flights between Athens and Beijing earlier the expected and in particular from September 2017 (www.ypodomes.com)

One of the largest projects in Greece is currently being built in one of the most important ports of the Mediterranean, the port of Piraeus. This investment is being carried out by the Chinese company COSCO and looks forward to the expansion, development and improvement of the port facilities where, in conjunction with the connection with the country's rail network, upgrades this port to a hub between east and west.

On a tourist level, Greece has taken steps to strengthen the existing stream. Visa Centers have been set up in all cities with established Greek diplomacy and, since October 2015, the Visa Information System has been set up in the framework of The Schengen Convention.

(Ministry of Foreign Affairs, 2017)

One can perceive the country’s economic direction by watching investments, subsidies and privatizations. Greece in the future will continue to be a tourist destination with upgraded services as well as a major commercial hub.

INVESTMENTS IN ATTICA


• The great project in Elliniko.
• Asteras in Glyfada.
• Asteras in Vouliagmeni.
• Alimos Marina, Glyfada and Faliro.
• Athens Alive (North Suburbs)


INFRASTRUCTURE PROJECTS


• Infrastructure projects for the redevelopment of the Border in Falliro
• Fourth Metro Line.
• The new suburban railroad extensions.
• The new cruise bay in Piraeus.
• Infrastructure and design works of historic buildings in Athens.
(Avgi, 27 November 2016)
(Ypodomes. 19 April 2017)

MAIN FACTORS FOR SUBSIDY


• Tourism
• Logistics
• Energy
• Innovations
• Technology
• Constructions
(dikaiologitika.gr, 19 November 2014 )

PRIVATIZATIONS


During 2017:
• 14 AIRPORT MAMAGEMENTS - FRAPORT
• TRAINOSE - Ferrovie Dello Stato Italiane

In the near future:


• Public Power Corporation S.A. (PPC)
• Public Gas Corporation (DEPA)
• Athens International Airport «El. Venizelos»

REDUCTION OF PROPERTY PRICES

Are real estate prices in Greece really low? How can we explain the sharp decline in real estate prices?

According to RE/MAX Europe surveys the lowest real estate sale prices are recorded in Greece among 18 countries of the "old" continent. Even in Spain, which has experienced one of the most serious crises in the history of real estate, prices are the double in comparison with those of Greece (iefimerida.gr, 28 June 2017).

The last decade global financial crisis has affected Greece more than any other developed country. The sector affected the most is that of the real estate and there is a reasonable explanation why that happened.

The political developments in Greece since becoming an independent state combined with the government’s inability to sustain the people created a need for strong family bonds and led politicians to the division of land into small holdings that were distributed to people, keeping everyone satisfied.

The tremendous economic prosperity of the last fifty years, before the crisis, found the country to follow a development model based on over borrowing and the above culture that has been cultivated for many years. The average Greek, having the need to secure the future of his family with a fixed value, managed to do it through property ownership.

The crisis found Greece unorganized in terms of productive and controlling structures. The governments had only two ways in order to confront the situation: pension’s reduction and tax increase. Because of the lack of control mechanisms for fair taxation real estate was presented as the ideal tool to fill this gap.

Large property owned by the average Greek, small incomes of Greeks, high taxes and high borrowing of Greek households by banks resulted in changing the balance between supply and demand. As a consequence the Greeks failed to maintain their property and the real estate prices are forced downwards.

MOTIVATION “GOLDEN VISA PROGRAM”

Is there a tool as a motivator to activate the real estate market? Is the program offered by Greece competitive?

The golden visa is a program which, among other things, provides for the issue of residence permits to overseas citizens and their family members as long as they purchase real estate in Greece with a value exceeding EUR 250,000.

The Greek Visa Program, which ranks first among the countries of Europe, along with that of Latvia, offers the most competitive entry fee (250,000 euros).

Indeed, according to the latest available statistics kept by the Ministry of Migration Policy (30 April 2017), the Greek Golden Visa program is showing an upward trend, with residence permits for property owners standing at 1,684 while overall, including of family members, at 4.095.

China ranks first with 701 residence permits for owners and 1,693 comprising family members followed by Russia with 357 and 751 respectively, while Egypt ranks third with 84 permits for owners and 191 comprising family members.

Extremely important is the presence of Turkey, where there is an increase of 50% from the end of February until the end of April 2017.

The advantages of the Greek Golden Visa program include the possibility of non-mandatory presence of the investor in the country, the permanent nature of the license on the sole condition of property possessing, the extension of the program to the ascendants and descendants of the investor-owner, the prospect of further development business initiatives and integration into the investment part of the program.

(Enterprise Greece, 30 May 2017)


LIFESTYLE IN GREECE

How is to live in Greece?

A delightful and quality lifestyle with inexhaustible choices of activities that make a beautiful day to day life.

Greeks are renowned for their optimistic lifestyles and their inclination for adventure and fun! This contributes to the great sunshine in Greece almost all year round, which allows for many different activities outside home.

Residents and visitors have the opportunity to engage in various winter and summer sports as well as to attend large sports events in the country’s excellent sports facilities.

At the same time, there are countless entertainment options such as theaters, cinemas, restaurants, entertainment venues, cultural events, bars, which contribute to a lively and multidimensional nightlife which, unlike other countries in the world, is not limited to the weekend.

Greece is the ideal place for short and long getaways: many kilometers of coastline, gorgeous islands with turquoise beaches, picturesque villages with traditional architecture, beautiful cities, rivers and lakes, forests and mountains, magnificent magical landscapes, all over the country are ready to welcome the visitor, who will enjoy the natural beauty combined with the hospitality of the residents of this country. In Greece, you can make dreamy holidays in luxurious hotel facilities, knowing at the same time local cultures. It is no coincidence that Greece is one of the world’s first tourist destinations but not only that. Citizens of various countries around the world, both young and old, choose Greece to buy a home and stay permanently due to the quality of life provided by the country.

CONCLUSIONS

From the above analysis it is clear that now is the best moment than ever for someone to invest in real estate in Greece and especially in Athens. All the evidence testify that the environment will be safe, property prices are on the rise and there is the perfect incentive: the golden visa program.

Soon the real estate market in Greece will return to pre-crisis pricing, but there will be a difference in comparison to the past: It is individuals and companies from abroad. That will move the market, not the average Greek.

Author: Fotis Gazepidis

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