Investing in real estate in Greece: criteria for selection

The Greek Golden Visa Programme requires, among others, an investment in real estate. Although most types of property are eligible, the prime choice of investors is the acquisition of housing property. The question here is, how does an investor, with little knowledge of the country and its property market, choose a housing unit? What are the criteria for this choice?

Housing units come in many sizes, designs, conditions, ages, and prices. If we add to these technical characteristics, amenities, and neighbourhoods, the picture becomes more complicated. The investment dimension is an added factor, as most investors do not want to lose money but, rather, make a return on their investment.

The first decision one must take is, what will the property be used for: will it be used for own occupation, or will it be rented out? If it is to be rented out, will be on a short-term (e.g., Airbnb) or long-term basis?

1. The rental criterion: In selecting a property to rent on a short- term basis the following must be considered:

a. Is the property of appeal to the tourist market? How accessible is it to buildings/sites of tourist interest?

b. Who will manage the property? For how many years? Who will furnish and equip the flat? How dependable is the manager?

c. Is the solution on offer headache free?

d. How real is the rental guarantee offered? Is the one offering it dependable? Is the rental guarantee built in the (possibly higher) price of the unit? For how many years is the rental guarantee offered?

If it is to be rented on a long-term basis, which market segment will give the highest yield? Will it be of appeal to students and what does that entail?

The answer to the above will narrow down the choices to specific areas, sellers, and property managers. Still, other issues need to be examined.

2. Other criteria

a. Is the property newly built or is it a refurbished old one? What is the likelihood of the housing unit in question requiring frequent repairs? Who will carry out repairs if needed?

b. Does the property comply with modern regulations regarding earthquake resistance and energy consumption? 

c. Does it have amenities such as storage and parking?

3. The legal criteria

Having touched upon the above issues one must ensure that the legality of the title on offer is spotless. A lot can be said on the legal issues surrounding the purchase of property. Suffice to say that the investor must ensure that he/she is being served by people who know what they are doing and who are supported by a solid team of lawyers and public notaries.

4. Capital appreciation prospects.

Predicting future value is a tricky business and a host of parameters come into play.

a. Is the asking price fair? How does it compare to others? Do the comparables have the same technical characteristics and amenities? Are they of similar age?

b. What are the prospects for the economy and the property market? What are the current conditions of demand Vs supply generally and in the area in question?

c. To which market segments does the property in question appeal to and how will the disposable income of these segments behave in the future? What are the predictions on future interest rates?

d. What is the assessment vis a vis value retention and/or capital appreciation? Will the property face economic obsolescence?

A major driver of demand has been the Golden Visa Programme introduced in 2013. The rules have now changed and the investment threshold in what are considered prime municipalities has risen to €500,000 while for the rest it has remained at €250,000. How will this impact property values?

More on this in our article on this matter.