There is strong interest in Greek real estate as the economy posts a ninth straight quarter on quarter growth between July and September 2018. Government figures show that consumer spending has been stronger than expected resulting in GDP increasing by 1% in the third quarter. This compares to 0.4% in the previous quarter with annual growth in the third quarter hitting 2.2%. As a consequence, demand for Greek real estate is increasing and Chinese investors are heading the queue.
Golden Visa program
Under the Greek Golden Visa program, Chinese and other non-EU investors acquiring property with a minimum value of €250,000 can also gain a residency permit. This not only allows them to live in Greece but offers the opportunity to move within the greater EU area. As a consequence of the Golden Visa program, and renewed economic growth, Chinese buying enquiries for Greek property increased by 137.5% in the third quarter of 2018.
Many real estate experts are extremely confident of the short to medium term outlook with further recovery expected in the longer term. There are 5% to 7% rental yields available on short term Athens apartment leases which compares to the European average of 3%. When you also factor in the potential for capital growth, some experts predicting as high as 30% over the next three years, it is no surprise to see real estate investors targeting Greece.
Hedge funds active
Real estate hedge funds have been extremely active amongst the Greek real estate market with many believing the sector and the Greek economy have bottomed out. Many people will not be aware but Greece is no longer under economic bailout restrictions with these ending back in August. As a consequence, the Greek authorities will now have more flexibility as they look to stimulator further economic growth. It is worth noting that the Greek economy fell by a staggering 25% during the collapse which led to the EU bailout and a whole host of restrictions.
It is interesting to see that hedge funds have been shying away from stand-alone hotel assets despite the fact that tourism numbers are recovering. Many believe it is the lack of interest from large hotel chains as well as potential renovation costs which have significantly restricted interest in these assets. However, on the flipside of the coin, many of these assets could be available at rock bottom prices as stand-alone investments.
There are many factors coming together which indicate a positive short to medium term outlook for the Greek real estate market. The economy is recovering, tourist numbers are rising and the Golden Visa program is seen as a very valuable bonus by many overseas investors. While the ongoing recovery in both the economy and the real estate market should be considered in tandem with the overall European Union economy, the previously oversold position in Greece is slowly rebalancing.
Once the banks have managed to jettison their unwanted commercial and residential assets this should release the brakes for further increases in asset values. Written off by many investors just a couple of years ago, and vultures cherry picking the best assets, there may well be further significant upside in Greek real estate.