Part III: Greece.
In my past two articles we covered France and its magnificent Côte d´Azur as well as enchanting Portugal with its superb and often unpolluted beaches and beautiful cities. We will now venture back to the other side of Europe and consider Greece at the other end of the Mediterranean with its pristine gin-clear waters and its interesting history. Why would anyone consider Greece, if after all we do have very similar weather, and taxes are much higher in that jurisdiction, and we have a flight to catch each time? Let us be realistic here: Greece is a charming country with great practical advantages for someone looking for a place to retire in the sunny side of Europe.
Greece is the land of Gods and where real democracy all started, so the world does owe them something. It is also a country of incredible beauty; lush in vegetation in certain areas, dry and arid in others; where beautiful mountains and plains mix rather interestingly, often covered with old pine trees and olive groves. It boasts no less than 2000 islands with whitewashed houses that remind us of places in northern Morocco or Spain.
Is Greece a top choice to make a sound property investment? Not an easy question to answer, but it is certainly improving and the market is not as bad as a few years back, offering interesting yields of return as far as rental income from an investment is concerned. Greece is the perfect choice – islands in particular – to buy prime property and use it as a holiday destination, and rent out for whatever period we do not make any use of it. This can be achieved using any OTAs like Airbnb or HomeAway to name a couple. The official average rate of return is about 4% for long-term rentals but I have clients who obtain several times that figure renting to holiday clients who simply prefer less spoilt areas of the islands in the Aegean Sea, with its pristine transparent and warm waters. The Greek transparent blue sea is unmatchable.
Back to business, the reality is that Greece has been through an extremely difficult economic period and was badly hit by the recession from 2007 up until recently. In all those years the property market in Greece contracted to a degree of 42%. Not far off Italy and other mediterranean countries which suffered severely from the world economic crisis. The fact is that Greece is now slowly making its way to recovery following several massive cash injections and a bailout from the EU. A true fact is that the Greek economy grew by 1.6% in 2017 and some 2.5% in 2018. Housing prices have either stabilised or are starting to move slightly upwards. It looks as though the worst is probably over, but there is a long way to go still for the market to get to an acceptable level of growth.
The Greek government, in order to boost recovery and foreign investment, offers residence to non-EU nationals who make a minimum property investment of €250,000. Spain and Portugal offer similar investment incentives with a difference. Spain for instance, requires a minimum investment of €500,000 – double of what Greece is requesting. This plan grants an unconditional full residency permit that lasts 5 years and can be renewed, provided the non-EU investor keeps the property. This measure, along other austerity measures, has helped the housing market to slowly show signs of getting back into black figures; a break much anticipated by this ancient country.
According to EU official sources, the possible real GDP growth expectation for Greece this year is about 2.5%. We must realise that Greek political stability and its economy starting at a low base will surely improve its figures, encouraging growth.
And what about purchase expenses in Greece? Are they too high perhaps, or quite similar to other mediterranean EU jurisdictions? At the time of publication of this article the total purchase expenses for Greek property is 10% approximately. This includes transfer tax, notary fees 1%, lawyers’ fees 1%, agency fees 2% and registry fees. It is reasonable compared to Spain where expenses can be 15% or more.
If I rent my property what taxes will I pay on rental income? At present, taxes for non-residents stand at 15% for the first €12,000 and 35% from €12,000 up to €35,000. Not bad; less than in France or Spain. The tax is paid only on income once all the running yearly expenses have been deducted.
And if I sell at a profit what capital gains tax will I pay? At the moment, capital gains tax on net profit stands at 15%. Quite reasonable.
And what about company tax? 26% at the time of writing this article.
Apart from all these important economic figures what are the main reasons to buy property in Greece?
I can think of at least 11 reasons to buy a lovely compact size villa in Greece:
- Excellent value for money properties. You can easily pick up a gorgeous 3-bedroom 1000m2 plot villa in Crete with a pool and superb sea views for just over €250,000. A 2-bedroom flat with sea views about €95,000. Running costs are as low as €30 monthly. Quite unknown in other jurisdictions.
- Greek hospitality. It is second to none. Friendly people and a language that has no equivalent of the word foreigner. They use ‘guest’ instead.
- Climate. 300+ days of sunshine. Balmy winters and pleasant summers.
- Very safe country with probably amongst the lowest crime rates in the EU.
- Beautiful safe and clean seas. Over 400 blue flagged beaches in Greece. Perhaps one of the most beautiful seas in the world.
- Healthy lifestyle and mediterranean food. Greek food is rated one of the healthiest in the world.
- Very low cost of living. Greece is great value for money in every sense.
- Good flight services, particularly with Mainland UK.
- Golden Visa investment opportunity available to non-EU investors.
- Restrictions on overdevelopment. Greece is very environmental friendly and protects its villages and buildings as well as restricts any high-rise condo buildings or overdevelopment. Your views will surely stay as they are for years.
- Greek culture. Amongst the oldest and most interesting in the Mediterranean. The land of Gods and the birthplace of democracy.
We do owe them something.