Understanding Greek Real Estate

In the eyes of many, the time to enter the Greek Real Estate Market is now. Values of land and buildings have depreciated by as much as 40% compared to a few years back. Yet, the market is not booming, foreign investment is not taking place and the general excitement is lagging far behind the expected levels. What is wrong?

The answer to this question is many-fold. For one, everyone shares the same understanding that investments require a predictable and friendly environment. The definition of these terms equal "absence of buerocracy" and smooth taxation. None of these two elements are currently noticable in the air. So it seems that Greece needs to learn the hard way that no matter how cheap the opportunity, no matter how attractive the location, if you do not create the conditions the allow these comparative benefits to shine, no one will show up to signal interest. And though it seems that at a political level these things are being understood and addressed, the manner with which issues of concern are being tackled do raise the question about ulterior motive. At the same time, one should not loose sight of the fact that the Greek real estate market never really observed the internationally accepted rules of economy, particularly the ones related to "supply" and "demand". The reason for that is closely linked to the size of developments "per se", which are small to medium and usually "a one owner project". In their majority these projects are self-financed, thus no external dependence on banks or third party financing that would in times of decline dictate a certain transactional behavior do apply. Many of these owners prefer to sit on their properties for ever, rather than selling them for less than what they had imagined to get at the outset of the development. Intricate? Yes, indeed.

Greece is the country, where people had been cultivated for decades to believe that the only safety net for not so prosperous days is property. All of a sudden and with the outbreak of the crisis, the Troica has targeted property ownership and made it almost its mission to dismantle it. Greeks owned more m2 per capita than the rest of the Europeans and this did not stand right with our European partners. The increase in taxation on real estate has sparkled a trend to sell any property holding where only possible, so long as dignity is preserved. And the term "dignity" is very tricky, should one try to apply it in the Balkans.