Greek real estate in 2022-23: peering through the looking glass

by Antonis D. Papagiannidis

Central Bank interest rate hikes and the overall shift to restrictive monetary policy, along with the feeling that real estate in many places around the world had reached a new bubble territory, lead to falling housing markets. Meanwhile, the changes in work practices, to which the corona-virus lock down experience served as catalyst, had already thinned out the commercial property market insofar office space is concerned; on-line shopping did the same for main street shop properties.

So, could Greece be the exception to this trend? This year’s (23rd) Prodexpo Real Estate Conference gave a balanced answer to this question. The wide-ranging Prodexpo agenda covered issues ranging from the Athens Riviera prospects and the debate over sustainability in today’s Greek cities/the “Green surge” and all the way to holiday homes in a silver economy setting or social housing and student accommodation.

The resulting overall picture could be best described as fragmented. Growing interest of foreigners to buy homes in Greece has sustained demand, with Germans (or Greek-descent diaspora members resident in Germany) mainly going for homes in Halkidiki, Thessaloniki or Crete while Americans (or US-resident Greek diaspora members) opt for the southern suburbs of Athens or the islands. Summer residences throughout the Cyclades have also experienced mounting interest. Golden visa-based demand for real estate may have peaked: earlier demand from Chinese or Arab investors seems to have reached a ceiling, but Turkish demand remains vivid. Growing demand from Israelis, either for a pied-à-terre flat in central Athens or for middling developments (e.g. in airbnb territory) is increasing.

Meanwhile, the upswing of tourism in the post-Covid era has fueled demand for hotel properties; most importantly, this trend has consolidated projects that started earlier on (based on depressed prices) but were held back due to lock-down conditions for the better part of 2020-21. Also, on the positive side of the equation, one finds upgrading properties for energy-saving reasons or else demand for new-builds in a greening perspective.

On the other hand, the overhang of properties – in their tens of thousands – in the hands of funds who inherited them from banks in the wide-ranging effort of cleaning the balance sheets of the latter, or else housing units threatened to be auctioned following debt foreclosure, is a factor of downward pressure of property prices. This, along with looming elections, is the reason such legal procedures are currently shifted to the back burner, for the third or fourth time within a decade.

Finance Minister Christos Staikouras gave in Prodexpo 2022 a preview of the intention of the present Government to freeze for two more years the implementation of the (2013-legislated, then repeatedly postponed) 15% capital-gains tax on sales of existing property; this comes further to the freeze of the (24%) VAT on new-builds.

Staikouras reminded Prodexpo participants that Greek real estate had crumbled under the successive shocks of the debt crisis-induced burst of an earlier bubble, ten years ago; then came the corona virus crisis, while now it is the energy-cum-inflation crisis that weights on the market. The attempted tax massage takes a twin approach: on one side, to counteract pressures exerted on new-builds by the exploding costs of inputs; on the other, to somehow curb a looming housing price explosion, due to the Greek middle-class reflex to shift savings to real estate in times of crisis.

As Alice discovered in Levis Carroll’s “Through the looking-glass”, realities can at times be reversed.