There is “congestion” of investors at the local offices of the Greek Ministry of Immigration Policy, as the “Golden Visa” program that grants residence permits to those citizens outside the EU who acquire properties worth at least 250,000 euros, retains its momentum this year as well.
At the same time, according to relevant data from the beginning of the program, 81.5 million euros, or 10% of the total value of the program’s transactions, related to the purchase of real estate worth more than 1 million euros, which means that they had been made by investors who aim mainly to resell the properties to their customers (who are interested in obtaining a visa) and / or to lease them. A typical example is a Chinese investor who spent 5.3 million euros this year to acquire a property in the Cyclades. According to information from real estate agencies, this is a businessman who acquired a small hotel consisting of 10 rooms in Imerovigli, Santorini.
Already, at the end of this year’s second quarter and according to official data received by Enterprise Greece, in 2018 there were 423 new licenses issued (1,119 if we include the relatives of the applicants). In fact, this number could be even higher if the application process was shorter, although it remains faster than in countries with competitive programs.
In total, since the beginning of the program in mid-2013, 2,881 licenses have been issued, while the trend is constantly rising. In particular, out of 443 licenses in 2014, the number rose to 507 licenses in 2015, 577 licenses in 2016, before skyrocketing to 931 licenses in 2017, a number that is expected to be achieved again in 2018, possibly to increase again. In total, according to revised data of the Ministry of Immigration Policy, the amount of capital invested in the purchase of real estate amounts to about 900 million euros, which means that the average value of each transaction exceeds the minimum limit of 250,000 euros and is set at 312,000 euros.
It is clear, therefore, that this program has taken on a purely investment character, as to a large degree, buyers are not interested in using the properties themselves, but to either rent/lease them or to resell them in a few years and capitalize on their expected appreciation in value.
This development has essentially fueled the creation of a new market, as more and more real estate companies and investors are rushing to meet the demand by creating the relevant “product”, and with the help of short-term leases that have offered immediate return on capital, greatly facilitating the whole process.
Indicative of this trend is the fact that out of the 2,881 licenses, 71.5%, or 2,059 licenses, have been issued in Attica, which clearly shows the intention of investors to take advantage of their properties. In terms of countries of origin, China remains at the top with 1,351 licenses, followed by Russia with 426 and Turkey with 289 licenses. Turkey has now consolidated its position in the top three, beating Egypt, which with 107 licenses, is significantly behind and is in fourth place.
Chinese and Russians are leading the way in investing in residency licenses. These are mainly family companies, which have a liquidity of 5-30 million euros and move mainly in the region of Attica to acquire complete buildings, which they then renovate and offer them for rent, usually through digital short-term rental platforms. These properties, that have now been turned into investments, are then sold to foreign customers who are interested in obtaining a residence permit under the “Golden Visa” program.
For example, a Chinese investor approached one of the largest real estate agencies in Athens, expressing his interest in acquiring a total of 20 buildings in the greater area of the center of Athens with a budget of 20 million euros. In other words, he is willing to pay about 1 million euros for each building. The goal is to create/develop 250 apartments and given the difficulty of finding apartment buildings with few owners (so that negotiation is easier), even the acquisition of offices, that can be converted into homes with a change of use, is considered. The initial phase of the investment, along with the cost of rebuilding the buildings to be acquired, is estimated at 40 million euros. If successful, the plan, drawn up by the Chinese company, provides for an even larger investment of 100m euros.
The resulting apartments will be sold to Chinese buyers interested in obtaining a residency permit. The preferred areas are Kerameikos, Neapoli in Exarchia and as close as possible to metro stations in the center. On the other hand, Koukaki, Plaka, Monastiraki and Kolonaki have been excluded due to high market costs.
Another relevant agreement was reached by the Greek real estate company Homm, which has entered into an exclusive partnership with a Chinese travel agency to issue residence permits. The purpose is to sell apartments to interested Chinese investors. Homm will provide the apartments. In total, there is talk of 75-80 furnished apartments, in an investment of 2 million euros. “We have agreed to proceed with the purchase of four apartment buildings, two of which are in the area of Neos Kosmos (near the metro station), one in Plateia Amerikis and another in Plateia Attikis. The apartments will be renovated, equipped and sold to Chinese who are interested in obtaining a residence permit”, says Mr. Dimitris Rizos, head of Homm. At the same time, Homm will provide management services (leases, etc.) to the new owners of the apartments.
What seems to be a given now is that Greece is considered an attractive property investment destination, especially as more and more foreign investors realize that costs are much lower than in other countries with similar programs.
In fact, even if all the relevant costs are taken into account (property costs, fees, taxes, etc.), the final amount is still below other countries, such as e.g. Cyprus, Portugal and Spain. Also, especially in the Iberian countries, the prices are (proportionally) higher than in Greece, which means that it is easier to enter Greece than in other countries, especially for small investors. At the same time, given that values have fallen by 45% on average in Athens, there are serious prospects for capitalizing on future capital gains. For example, an investor could acquire more than one property, with the prospect of selling some of them in the future and making a significant profit, but without losing the “visa”, as he will still have others in his possession. Already “real estate packages” have become available, with the aim of promoting them to interested buyers.
However, the returns are also attractive through the utilization of the growing popularity of short-term leases. According to the Russian real estate company Tranio, which is also active in the Greek market, in April of 2018 AirDNA database data (which analyzes Airbnb data) only in the center of Athens were recorded 21,600 foreign visitors, who used the properties of the specific platform. This is an increase of 34% compared to the corresponding month of 2017, when 16,000 visitors were recorded. In addition, during the summer months, the average rental price reaches 50 euros/night, with fullness (for properties located on the Airbnb platform) reaching 70%. These are numbers that are particularly attractive to a foreign investor.
Polygyros of Halkidiki and Athens have attracted most of the individual sales. In the first case, Russian investors have invested 19.3 million euros since 2013. Respectively, in Athens, Chinese interests have spent a total of 10.7 million euros to acquire old apartment buildings.
The aggressive promotion of the “Golden Visa” program continued during the first half of the year by the organization Enterprise Greece. In September f of 2018, the program will be re-launched in Cairo, Egypt, this time with a national pavilion and six Greek companies as exhibitors, followed by appearances in Istanbul, N. Delhi and Shanghai.
There are rumours that the residency application process will be sped up by the services of the Ministry of Immigration Policy. The goal is to automate the process, so that time is significantly reduced. This is a crucial step in view of the operation of Immigration Offices from China and the USA in Athens.