Greeks, especially those residing in Athens, are facing a unique problem brought about by the country’s hugely successful golden visa program.
Locals are finding themselves unable to afford rents because of increases blamed on investment attracted by the golden visa program.
Greeks are being evicted from whole areas of Athens and their homes are being converted into homestays for tourists and visitors.
While investment immigration programs have long been criticized for heating up property markets, Greece is unique because investors are buying properties with no intention of living in them.
Attracted by low real estate prices and growing demand for tourist accommodation, investors are buying multiple properties and converting them into holiday rentals.
Greece Golden Visa: Investment Requirements
- Purchase real estate property in Greece with a minimum value of €250,000.
- Sign a 10-year lease with minimum €250,000 for hotel or other tourist residence.
- Have purchased a property before 2013 currently worth €250,000 or more.
- Own Greece real estate of minimum value €250,000 acquired through donation or parental concession.
- Purchase land with intent to build, provided value of land and construction contract is minimum €250,000.
In some areas of Athens, such properties account for 95 per cent of all rental contracts.
One effect of this demand is that real estate prices have spiked, with some Greek homeowners seeing an eight-fold increase in home valuations in just two years.
There has also been a surge in tenancy rentals for local residents looking for homes.
Rents have risen by 17-20 per cent in a year, and some tenants are staring at a 600 per cent increase in rent for their homes.
The AirBnB Factor
AirBnB is a significant factor in Greece because such properties help investors earn five to seven per cent returns in a year, significantly higher than conventional tenancy contracts.
The Greek government’s decision in January 2018 to completely deregulate short-term property rental contracts has also contributed to this switch. Unsurprisingly, demand for the Greek Golden Visas tripled in 2018.
Property prices and rentals continue to climb higher as more end up in the hands of foreigners.
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While Greek landlords have reason to cheer, there are worries that most of the locals are missing out on the benefits of the surge in property prices.
Business owners gaining from increase in tourism are worrying about employees quitting jobs and moving elsewhere in search of affordable housing facilities.
Residents are complaining about family communities being replaced by profit-centric homestays and hotels.
There are concerns about the strategic benefits of such foreign investments, with the European Commission repeatedly raising concerns about misuse of golden visas for money laundering, organized crime and even anti-national activities.
To allay worries, the government plans on introducing tighter controls even as it has indicated its intent to expand the program and allow investors to qualify for PR through investments into bonds and shares.
Golden Visa Boost to the Greek Revival
The 2008 economic crisis saw the Greek economy lose a quarter of its value. The real estate sector was hit particularly hard with prices in central Athens dropping sharply.
The decision to offer permanent residence to non-EU citizens investing €250,000 into real estate in the country helped revive the country’s tourism and real estate sectors.
Golden visa demand has spelled good news for the real estate sector.
After dropping for years, house prices in Athens rose by close to four per cent in 2018. According to the Athens Real Estate Association, a third of all property sales in Athens involve one or multiple golden visa investors.
Very Popular among Chinese and Russian Investors
Reasons for booming demand are not difficult to find. Visa-free access to the EU region, right to apply for EU citizenship in the future, a safe and secure environment for children, and excellent future prospects for children are some benefits of having a golden visa.
Greece issued 9,756 golden visas for investors and their dependent family members in the first 11 months of 2018, compared to 6,205 visas in 2017 and just 3,695 in 2016.
The majority of demand comes from Chinese investors, followed by Russian and Turkish investors.