20 Jan 2025 20Jan 2025 Greek Real Estate Market: A Decade of Evolution and Challenges Introduction The Greek real estate market has experienced significant fluctuations over the past decade, influenced by economic crises, global trends, and government policies. From the depths of the recession in 2012 to the recent surge in prices and demand, the Greek real estate market exhibits interesting trends affecting both investors and individual buyers. The following is a brief overview, starting from a slightly earlier point (2012) and reaching the present. 2012-2015: The Recession Period This period began with one of the greatest crises faced by the Greek economy. The real estate market was severely impacted by the economic recession, and prices fell by up to 40% in many areas. Statistics (2012-2015): • Decline in property prices: On average, prices fell by 30% nationwide. • Decrease in new building permits: By 70% compared to pre-crisis levels. • Increase in unsold properties: Approximately 250,000 properties remained unsold until 2015. The lack of financing from banks, high property taxation, and economic uncertainty limited demand. At the same time, foreclosures and auctions increased, creating a picture of stagnation in the market. 2016-2019: The Recovery Begins After 2015, the first signs of recovery began to emerge. Foreign investment, the growth of tourism, and, very importantly, the Golden Visa program contributed to the gradual rise in prices and demand. The market emerged from lethargy and began to move on a dynamic trajectory. More specifically: • The impact of capital controls: The imposition of capital controls in 2015, although initially causing turmoil, ultimately strengthened domestic demand for real estate. Many Greeks, as they no longer had the ability to invest abroad, turned to the real estate market as a safe haven for their money. Moreover, in Greece, owning a home remains a stable value. • The rise of tourism and its impact on real estate: The rapid growth of tourism in recent years has revitalized the real estate market, especially on islands and coastal areas. The increased demand for rental properties has led to rising prices and a new trend towards renovations and the creation of high-standard tourist accommodations. There is also a lot of interest in the center and suburbs of Athens, as well as other large cities (Thessaloniki, Patras). • The entry of foreign investors: Another significant factor that has affected the market is the entry of foreign investors. Programs like the Golden Visa have attracted investors from all over the world, who are seeking properties in Greece either for primary residence or for investment purposes. Foreign investors are primarily interested in properties in central areas of large cities and on islands with high tourist value. New Trends in the Real Estate Market • Short-Term Rentals Platforms like Airbnb have created a revolution at the rental market, making it easier for property owners to rent out their properties on a short-term basis. This trend has been fueled by the increasing demand from tourists. • High-End Properties There's a growing interest in purchasing and renovating high-end properties that offer luxury amenities and cater to the needs of discerning clients. • Energy Efficiency The growing awareness of environmental issues has led to a surge in demand for energy-efficient properties. Investors are seeking properties with lower operating costs and higher energy ratings. Statistical Data (2016-2019) • Price Increase: Property prices saw an average increase of 15%. • Sales Increase: Property sales surged by 25% compared to 2015. • Foreign Investments: Foreign buyers accounted for 25% of all property transactions. 2020-2024: A New Reality The period from 2020 to 2024 brought new challenges and opportunities to the Greek real estate market. The COVID-19 pandemic, the energy crisis, and technological advancements significantly impacted property demand and prices. According to the Bank of Greece, housing prices rose substantially from 2017 to 2024, with an overall increase of approximately 70%. Moreover, in 2023, apartment prices increased at an average annual rate of 13.4%. Athens saw a 10.8% increase, Thessaloniki 14.6%, other major cities 13.9%, and the rest of the country 11.2%. Key Trends • Shifting Preferences: Many buyers are now gravitating towards suburban areas and locations closer to nature, seeking larger spaces and a higher quality of life. • Energy Efficiency: Upgrading properties to improve energy efficiency has become a top priority, with the government offering various incentives. • Digital Platforms: Real estate transactions are increasingly conducted online, streamlining processes and reducing costs. Golden Visa: Benefits and Drawbacks The Golden Visa program deserves special attention, as it has dominated the Greek real estate market over the past decade, creating a unique category of properties and a “class” of real estate agents, lawyers, surveyors, engineers, etc., who have specialized in this area and gained expertise. According to many experts in the field, the Golden Visa acted as a "cure" for the Greek economy, which at that time could be likened to a seriously ill patient. The program was a catalyst for the Greek market, attracting significant foreign investments, primarily in specific areas such as Athens and the islands. For example, in 2023, property purchases by Golden Visa investors increased by approximately 170%, reaching a total value of €975 million. By November 2023, 7,752 applications had been submitted, representing a 78% increase compared to the previous year. However, the excessive reliance of the market on this program has also brought about a number of "side effects". Let's briefly examine the benefits and drawbacks: Benefits: • Increased Investments: The program brought significant capital inflows into the Greek real estate market. • Development of Tourism Infrastructure: Many investments focused on tourist areas, contributing to the development of infrastructure. Drawbacks: • Price Bubbles: The concentration of demand in specific areas led to an increase in property prices, making them inaccessible to Greek buyers. • Market Imbalances: The real estate market became heavily dependent on the decisions of foreign investors, making it vulnerable to external factors. • Limited Options: Investors' preference for specific types of properties (e.g., new apartments in tourist areas) limited the options for Greeks seeking different types of housing. 2024 Changes Last year, the government introduced changes to the Golden Visa program aiming to decentralize investments and strengthen the Greek economy. Specifically, as of September 1, 2024, the following changes have come into effect: New Investment Thresholds: • €800,000: Applies to areas such as Attica, Thessaloniki, Mykonos, Santorini, and islands with a population over 3,100. • €400,000: Applies to the rest of Greece. Exceptions: • €250,000: Maintained for investments in listed buildings for restoration or for changing the use of a property, such as from commercial to residential. Minimum Property Size: • The property must have a minimum area of 120 square meters. Restrictions: • The residence permit will be revoked if the property is sold or used for short-term rentals (e.g., Airbnb). These changes aim to regulate the real estate market and attract high-quality investments to the country. However, the impact of these changes on the real estate market is still unclear, creating an atmosphere of uncertainty. Future Predictions Experts predict that demand for real estate will remain high, with a focus on tourist properties and energy-efficient ones. Prices are expected to continue rising in central areas and popular tourist destinations, while investors will continue to seek opportunities in the Greek market. However, challenges persist, including bureaucracy, urban planning expansion issues, a lack of adequate infrastructure in some areas, construction costs, the practical implementation of housing programs such as "My Home" and "Renovate-Rent," the policy on vacant properties, and the uncertainty created by the global economic situation. Continuously monitoring market trends will be crucial for understanding the opportunities offered by the Greek real estate market. However, many anticipate a balance. "Real estate buyers are now more aware of what they want to buy," says Mr. Potamianos, president of the Athens-Attica Association of Real Estate Agents. "The Greek real estate market is already at high levels relative to Greek incomes, while compared to foreign incomes, prices are still considered normal or even low. In general, property prices are not going to fall sharply, as there is no reason for it, nor are they going to rise sharply. A balance will be maintained for a long time, during which sellers will ask for high prices and buyers will seek lower ones. When these prices converge, then transactions will take place." IRG PRO: A Decade of Excellence in Real Estate Over the past ten years, IRG PRO has established itself as a leading force in the real estate market. With a profound understanding of the Athens and suburban markets, we are uniquely positioned to offer customized solutions that cater to the specific requirements of our clients. Partner with IRG PRO for your real estate endeavors. Contact us today to explore how we can assist you in realizing your property goals. Tags: News
