Months after doubling the cost of its golden visa from €250,000 to €500,000 in 36 municipalities, Greece is considering another substantial hike in minimum investment requirements.
Like Portugal, the Greek program may be becoming a victim of its own success. Greece allowed golden visa investors to qualify for fast-track permanent residence by investing €250,000 in real estate in the country.
Portugal’s decision to shut down the real estate option for its golden visa and rising property prices in Greece last year prompted the government to double minimum investment requirements in 36 municipalities.
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The change, which came into effect in August 2023, seems to have little impact on investor demand with average monthly applications rising to 721 post the change as compared to 693 between March and July.
Investor demand is focused in and around Attica, which has seen property prices rise by 71 per cent in the past six years. Like Portugal, ordinary citizens in Greece are discovering they have been priced out of their own country’s real estate market.
Government Attempts Damage Control
The government has indicated it will step in to cool the property market by hiking minimum investment requirements for its golden visa program.
One option is an across-the-board hike in golden visa requirement to €500,000. The only exception would be listed properties of particular cultural or historical interest.
Or, the government may focus on high-demand regions like Attica and hike investment requirements to €800,000 or more to compel investors to explore alternate destinations within Greece.
Will the Hike Solve the Problem?
While the goal to direct investments to properties and regions that are in desperate need sounds good on paper, there is little clarity on whether investors will support such a move.
Firstly, there is no clear link between growing foreign investments and rising property prices. Foreign real estate purchases account for a very small percentage of the total value of the property market of a country or a region.
In Portugal’s case, there has been no substantial cooling down of property prices despite the shutting down of the real estate investment route. It may be that the golden visa program is a convenient target while flawed government policies and lack of affordable housing may be the real reasons contributing to rising property prices.
Will Investors Dump the Greek Program?
Golden visa investors, especially from China, have a reputation of preferring safe and tried-and-tested options when making golden visa investments. This is why programs offering the direct real estate investment route with the lowest price tags have been very popular.
Australia’s SIV, which was very popular among Asian investors, saw a sharp slump in demand after the country removed direct real estate purchase as an eligible investment.
It remains to be seen whether Greece can afford to take unpopular decisions considering application volumes rose by close to 100 per cent in 2023. Demand has surged so much that applicants are staring at a record-high backlog of close to 28,000 pending applications.