What keeps prices in the Greek real estate market high and demand “warm” despite the shock of the pandemic – The role of the Golden visa and taxes
The warm interest of foreign investors – in addition to the stock market, corporate and government bonds – is transformed in the real estate market and this is evident from real estate prices, as well as the strong demand recorded by market executives. The pandemic did not stop the course of Greek real estate and despite the slowdown it seems to be immune to the pandemic. The question is why. What are the reasons that foreign investors choose Greece? According to market executives, investors view the Greek market warmly, first of all due to the relatively low prices with those of Western Europe, while the tax incentives and the Golden Visa program have played an important role.
For example, the investment cost in Greece is lower compared to other countries in Northern and Western Europe, when the cost of investing in real estate in many cases exceeds € 10,000 / sq.m if it is the center of the capital. Also, any natural person abroad transfers his tax residence in Greece, can be subject to a special regime, if he invests in real estate or companies or securities or shares or units in legal entities or legal entities based in Greece, at least 500,000 euros and in fact within 3 years. Those who enter the special scheme will pay each tax year a flat tax, regardless of the amount of income earned abroad, 100,000 euros for a 15-year period.
- Real estate prices
According to the report of the Bank of Greece, even in the midst of a pandemic, property prices for the third consecutive year are increasing. In 2020 they recorded an increase of 4.2% on an annual basis, compared to 7.2% in 2019 and 1.8% in 2018. A positive fact is that property prices even after the above increases remain at a level of 25% lower than with the peak of the market in 2007, creating investment opportunities, while in many cases they create the climate of the “second” investment opportunity for returns. “While, do not forget that the cost of investment in Greece is lower compared to other countries in Northern and Western Europe, when the cost of investing in real estate in many cases exceeds € 10,000 / sq.m if it is the center of the capital “, comments Themistoklis Bakas, President of the Panhellenic Network of E-Real Estates.
- Golden visa
2019 was a record year for the golden visa program with 3,504 licenses. 2020 was a difficult year but the interest remained alive. In 2021, according to Mr. Bakas, Greece has an additional advantage in addition to the cheaper compared to other EU countries limit of investment in real estate of € 250,000, which sets as a basic condition, now based on the annual Henley index Passport Index for 2021, the Greek passport is ranked eighth, as it offers access to 184 countries around the world without the need for a visa.
- Tax incentives
Any natural person abroad, who transfers his tax residence in Greece, can be subject to a special regime, if he invests in real estate or companies or securities or shares in legal entities or legal entities based in Greece, at least 500,000 euros and even within 3 years old. Those who enter the special scheme will pay each tax year a flat tax, regardless of the amount of income earned abroad, 100,000 euros for a 15-year period.
As Mr. Bakas explains, with the aim of wealthy retirees abroad, those who join the Non Dom 2 program will pay, every tax year and for a 15-year independent tax with a rate of only 7% for all their income earned abroad. The basic condition is that foreign retirees must transfer their tax residence to Greece and stay in the country for more than six months a year. At the same time, our country, with the aim of self-employed foreigners who will come to stay and work in Greece, is provided with income tax exemption and solidarity contribution for 50% of income, as well as exemption from living presumptions for residence and car. Prerequisite is a two-year stay in the country, while the favorable regime will last for 7 years.
While, the suspension of VAT on buildings with construction license from 01.01.2006 onwards, the suspension of real estate transfer value tax until 31.12.2022 as well as the 40% tax deduction for expenses related to receiving services for energy, functional and aesthetic upgrade of buildings, do not concern only the domestic investors but also the foreigners who do not really pass the above provisions.
- Greece is a developing tourism industry, profit sharing
Tourism is a tertiary sector that is constantly developing globally over time. According to Mr. Bakas, “our country can undoubtedly be the” apple of contention “in the global tourism economy in the coming years. The participation of the tourism industry in the domestic GDP of our country is increasing year by year, while at the same time, our country is in the first place in the preference of travelers and potential travelers from European markets, in terms of which country they would like to visit on their next trip to Europe. At the same time, according to a relevant survey conducted in September 2020, our country is ranked 7th in the world, after very large countries and economic powers (Spain, France, Italy, Germany, United Kingdom, and USA). In European markets – visitors from European countries – Greece is ranked 6th (ahead of the US), while in non-European markets, it ranks 10th, following in addition to the aforementioned countries and Asian destinations (Thailand, Japan), as well as Mexico”.
The tourism sector, due to the conditions, creates investment opportunities that certainly foreign investors will not leave unexploited. Even in the midst of a coronavirus pandemic, 16 new hotels located on the main thoroughfares of Athens have been completed, many of which are expected to open in the near future and receive the first visitors.
- 85% of the Greek territory is a tourist destination
With more than 16,000 kilometers of coastline, with approximately 6,000 larger and smaller islands and islets, and with a well-established position in the global tourism market, Greece presents excellent investment opportunities in this sector. “The investment cost for the purchase of a cottage 85 sq.m – 100 sq.m in many areas of coastal mainland Greece does not exceed 120,000 € -150,000 €. “Western Greece with its ‘golden’ sand, the Peloponnese with its natural diversity, the coasts of Thessaly, the coastline of Epirus and Central Greece, as well as Macedonia, are a fertile ground for the creation of high quality tourist destinations and facilities.” , says Mr. Bakas.
- Facilities, Infrastructures, Renovations, Goodwill
Greece currently occupies the 25th place in the world ranking of the World Economic Forum for the competitiveness of countries in tourism, among 140 economies, according to the Travel and Tourism Competitiveness Index for 2019. It is worth noting that at the level of individual indicators, Greece ranks 13th in Health and 18th in Aviation Infrastructure and Tourism Services Infrastructure. “In Greece there are more than 800,000 beds, more than 500 conference facilities, more than 8,000 berths for yachts / yachts, and direct air connections of important European airports with many Greek destinations. At the same time, the renovation projects that have been announced and some of them have started to be implemented, create investment opportunities – goodwill, while many contribute to the transformation of Athens into a destination of international standards “, according to Themistoklis Bakas, President of the Pan-Hellenic E-Real Estates Network .
- Cultural heritage, Natural beauty, geographical diversity
Greece is one of the richest countries in Europe in terms of the importance and the number of historical monuments. Greece counts 18 “World Heritage” monuments, a significant number of museums, monuments and archeological sites, as well as many churches and places of religious interest, which places it among the top ten destinations of historical and cultural significance.
“Our country’s competitive advantages, such as the rich cultural heritage, the natural beauty of the place and the geographical diversity, have attracted significant investments in the tourism sector in recent years, strengthening the image of Greece on the one hand as a global tourist destination and on the other, with excellent investment opportunities “, says Mr. Bakas.