Has Greece just killed its Golden Visa Programme?

The government of Greece has just announced that new thresholds will be
applicable from the 31st of March 2024. There will be three thresholds:

1. €800,000 will apply for properties in Athens, Salonika, and islands with
a population of more than 3,100 inhabitants. This means that islands
such as Crete, Rhodes, Evia, Mykonos, Santorini, and well-known
islands will fall in this category.
2. €400,000 will be applicable for all other areas.
3. €250,000 will only apply to redevelopments of listed buildings and
commercial or industrial uses.

Additionally, properties for categories 1 & 2 above will have to have a minimum
area of 120 sqm. All properties bought under the Golden Visa Programme will
be forbidden to be rented out on a short-term basis (i.e. on platforms such as
Airbnb, Booking.com etc.).

The effects of these changes
The threshold of €800,000 means that very few applicants will opt for this kind
of property.

The threshold of €400,000 also means that very few applicants will be able
find and invest in such properties since:

a. They will be in areas little known to the international market where
current supply is low.
b. Such areas are not as easily accessible and offer low yields for housing
properties thus making such investments undesirable.
c. The requirement that they have an area of at least 120 sqm means that
the prices of older properties will be inflated by current owners to the
€400,000 threshold. This will impact negatively on yields since they will
need to be rented out to a limited local market which has largely low
disposable incomes and is used to paying low rentals.
d. The supply of new €400,000 properties to be sold at €3,300/sqm
(€400,000/120sqm) will be low, if any since high development costs will
make such developments unprofitable and hence unfeasible. The fact
that these areas are unknown to the global market will also mean high
marketing costs, something which will add to the already high
development costs.

The threshold of €250,000 is the only attractive one but is largely theoretical at
this stage. Redeveloping listed buildings is a major hustle because the
progress of the works is slow, there are shifting and usually costly demands by
the appropriate authorities during redevelopment, and there are high costs in
making these buildings compliant to energy saving requirements and anti-
earthquake standards.

The redevelopment of industrial uses is a much more realistic option, but it
too is fraught with uncertainty for both the developers and the investors. Such
redevelopments will obviously be in industrial areas around cities. If we take
Athens for example, it means that these will, as a rule, be based either just
west of the Acropolis or in the western part of Athens.

Industrial uses relatively close to the Acropolis will come with the danger of
works being stopped because ancient monuments will probably be found on
site. Developers avoid such areas since the discovery of ancient monuments
has been known to lead to extremely high costs and bankruptcies.

Redevelopment of industrial uses in areas further out from the centre mean
that the investors will need to be convinced that such areas will be upcoming
and will gradually build higher yields over time. This is not easy: the
redevelopment must be located in an easily accessible area, offer an
attractive housing environment and be an attractive proposition to the local
market for long-term rental. That will prove to be a difficult mix to achieve.
The redevelopment of commercial uses may prove an easier task. The cost of
acquisition of the property to be redeveloped will play a major role here. The
resulting properties will be sold at around €250,000 which means that given
the redevelopment cost, the land cost element cannot be higher than €700/
saleable sqm. This figure may be hard to achieve for commercial property.

What should prospective applicants do?

The first two options are largely theoretical ones: few will pay €800,000 unless
they primarily want to buy such a property and get a Golden Visa as an added
bonus, and those who will look for €400,000 properties will discover that such
properties are very few and unattractive as an investment. The only attractive
option is the €250,000 one but supply and variety will, at least initially, be very
limited.

Potential applicants must therefore take advantage of the timeframe to the
31th of August 2024 to find suitable property and apply under the current
rules and thresholds. It must be noted that demand surged in anticipation of
these changes and, as a result, suitable property is increasingly in short and
dwindling supply.

It is probable that the Golden Visa Programme will enter a period of low
activity as current supply dries up and new supply takes a long time to
materialize. Therefore, it can be said that the government did not kill Greece’s
Golden Visa Programme but it may have put it in a deep freeze over several
months.