Real-estate markets in Greece are showing signs of stabilizing
Article: Cautious optimism called for with Greek property markets in 2013.
There has been nothing but bad news about Greece’s financial crisis and people are wondering whether it is safe to buy property there. A number of experts believe that the recent austerity measures as well as the confidence that the Euro is trying to inspire will mean a slow and stabilization of the economy and the property market. </intro>
The severe recession and the national debt crisis had a significant impact on real-estate markets in Greece.
- Some brokers say that property prices have declined by an average of between 35% and 50% from their peak in 2008.
- Approximately 150,000 properties were sold every year from 2002 to 2008, but only 11,000 properties in 2011, indicating that the market had shrunk by over 90%.
Greece is now a buyer’s market with buyers able to negotiate prices and buyers with cash have the upper hand.
- New property taxes, a 30% rate of unemployment, and cuts in pensions have forced some owners to engage in property fire sales.
- Price declines on popular islands like Santorini and Crete have reached 20%.
- Most foreign buyers in Greece come from North America and the European Union – and quite a few of them are of Greek descent.
- The French and the Germans buy in the islands and Russians prefer Crete.
- Mykonos attracts buying interest from all over the world.
- There are no restrictions on foreign investment except for a few areas along the Turkish border.
- If you are buying a home costing more than USD $104,700, you are required to hire a lawyer who will typically charge around 1% of the setting price. S/He will handle the title search, the investigation of claims and liens and the selection of a notary. If you like, s/he would also arrange for an engineer to carry out an inspection and review building permits.
- Foreign investors should arrange financing from their own countries because banks in Greece are currently reluctant to lend.
The outlook for 2013
Property consultants Colliers say that, after 3 years of austerity programs and economic problems, they expect that 2013 would be the first year when we see signs of the market stabilizing.
- We will not see a high volume of transactions in the market but investor confidence should return.
- There would be more active interest from overseas investors concentrated on the hospitality sector.
Activity in industrial real estate, such as logistics, will remain depressed because of the restricted availability of bank financing and the time it would take to structure transactions.
- However, increased yields should stimulate the market in the longer term.
- The office markets should start to recover and vacancy rates for prime office property should remain steady because of the concentration of demand.
- Rents should be stable because of the vacancy rates and the limited pipeline of new office properties being developed.
- In non-prime locations, rents are expected to drop by a further 15% to 25%.
- Shopping centers and retail real estate will continue to attract interest but the demand will be mainly for large stores in central locations. These are expected to continue to be the investment vehicles of choice for foreign and domestic retailers alike.
The bottom line
Investors should be cautious until the markets have shown clear signs that they have regained stability and that no further declines can be expected. However, a few opportunities on favorable terms could arise and should be seized.