View of Athens /Photo by Ukrinform
The most important sporting event of this year — the Summer Olympics — will be held in Athens, the capital of Greece. As the practice of the last decade shows, sporting events of this level promise considerable profits for their organizers. And not only for them. As «Русский Фокус» notes, the rental cost of any piece of property that can be used for letting during the competition rises by 5-10 times compared with the usual level. And today it can be said with confidence that Athens will not be any exception in this regard.
Unlike other European countries, the Greek real estate market has not been subject to any serious ups and downs for a long time. The standard situation: growth within inflation, a slight rise, but not more than 3-5% per annum, stagnation with a slight decline of 2-3%. Everything is Mediterranean-quiet and measured under the rays of the scorching sun, conducive to laziness and tranquility.
Nevertheless, this year the Greek capital, which does not attract tourists very much in the summer months — too hot — will set its own record in rental rates. Already now, for the period of the Olympic Games, the average daily cost of accommodation in hotel rooms is around $300. Rental cottages and two-bedroom apartments cost $400 or more per day, depending on the distance to the main sports arenas. And rates are rising every day. According to estimates by Athens realtors, by the end of June those premises that remain unbooked will be offered at twice the price. However, such prices are due exclusively to the Olympics. It is held only once every four years, and the honor of hosting it falls to the Greeks no more than once a century. And it would be a sin not to use such a unique chance. Especially since already in September prices will return to normal, and Greek real estate will again become one of the cheapest among other countries - full-fledged members of the European Union.
What Greece Has
Prices for various kinds of Greek real estate can pleasantly surprise residents of the largest European cities. In the most expensive city — Athens — they range from 900-1,000 euros per square meter. The increase in cost is primarily influenced by well-known factors: view characteristics, which for Greece means a sea view (an additional 5,000-6,000 euros), the floor of the apartment (the most expensive are apartments on the top floors of buildings with flat roofs, where it is customary to arrange summer bedrooms, small gardens and swimming pools), and distance from the center.
In Athens, the relatively distant from the city center are more prestigious: in the Greek capital, such districts as Glyfada, Kifisia, and Psychiko are more expensive than others, considered elite due to their excellent views and distance from the city center that is acceptable for Greeks (5-7 km). Apartment prices in other large Greek cities, such as Thessaloniki, Peloponnese, Piraeus, Heraklion, and Larissa, are on average 25-50% lower than in the capital. However, there are also exclusive offers on the market with prices exceeding one million euros - these are primarily huge villas in the coastal strip with a large and already developed land plot. And, frankly, they are worth it.
Pay Taxes and Sleep Peacefully
Real estate in Greece, as in any other EU member country, can be purchased by any foreign citizen, whose rights protection has been elevated here to the rank of state policy. With one exception: property located in the border zone (primarily meaning territories near the Turkish border) will not be sold to a foreigner under any pretext.
An important and pleasant feature of Greek real estate legislation is the fact that properties worth less than 80,000 euros are not subject to an annual property tax. Another, undoubtedly pleasant, fact for our compatriots, in addition to the first, is the possibility of discussing with Greek government officials options for understating the real market value of a property and fixing in the purchase and sale agreement a price below the necessary price threshold. Ownership of more expensive real estate by individuals is subject to an annual tax of 0.3-0.8% of the value, as well as an additional tax of 0.25-0.35%, known in Greece as TAR.
True, you will have to pay the actual taxes on the purchase of real estate in any case. The transfer of ownership is taxed at a rate of 9% for properties worth less than the same 80,000 euros and at a rate of 11% for properties whose value exceeds this level. In addition, when notarizing the purchase and sale agreement, a three percent municipal tax on the transfer of property is paid. It should be added that any income from renting out real estate is also subject to income tax, which is calculated at a progressive rate from 5 to 42.5%, plus monthly payment of stamp duty in the amount of 3.6% of the income amount. The only consolation is that there is no value added tax in Greece, and its introduction is not expected. In Greece, there are also no restrictions on foreigners obtaining a mortgage, which today is issued in the homeland of the Olympics for 15 years at 5-8% per annum.
How to Make Money
In principle, in Greece you can indeed get a decent annual income from renting out real estate. Renting out a house or apartment yields 8-12% per annum of the commercial value of the property. Greater profits can be expected from investments in housing under construction. In this case, following the classic scheme of "buying a plot - construction - selling a finished house", in Greece you can get a return of 30-40% per year with a successful choice of property. By the way, Greek construction companies work at a very good European level: with an average cost of 500 euros per square meter for turnkey house construction, they strictly adhere to deadlines - 8-10 months - and maintain excellent quality of the actual construction and finishing works, for which they prefer to use natural marble.
However, the Greeks themselves consider investments in real estate serving numerous tourists to be more profitable - various hotels, small shops, and taverns-cafes. And this despite the fact that the Greek commercial real estate market is considered oversaturated and in a situation of fierce competition and price dumping. Nevertheless, various catering establishments in Greece on average bring about 7-10% net income, and the profit from operating hotels of various levels is within the same range.
How to earn no less than Onassis
However, the sweetest dream of any Greek thinking about ways to invest capital and make a profit is to become Aristotle Onassis, i.e., a shipowner. By the way, in the legislation of most European countries, sea vessels are also classified as real estate and, accordingly, are operated in the same legal field. In Greece, it is believed that the guaranteed profit of the owner of a yacht or boat rented out is 10-15% per annum (this takes into account the decrease in the vessel's value with age, loan payments, maximum expenses, and minimum income).
That is, the actual profitability is higher, and this is its lower level, which can be guaranteed by various operating and tourist companies that charter the yacht. The normal operating life of a yacht is 10 years. A loan for its purchase differs from a mortgage only in terms: when purchasing a yacht or boat for commercial use, the loan is granted for five years, and when ordering the construction of a new vessel - for 10-15 years. A slightly larger start-up capital (from 100.000 euros) is needed to become a co-owner of a sea freight company, also a very prestigious and respected field of activity in Greece. This type of real estate management has an average profitability of 9-11% per annum with a normal operating life of a cargo vessel of about 25-30 years.
Simply to Enjoy
And yet, mostly non-residents purchase real estate in Greece for personal recreation, rather than for making a profit or setting up a business. As specialists from real estate agencies note, doing business in Greece has its own specifics, which foreigners find quite difficult to adapt to. Therefore, more than 90% of all purchases made by foreign citizens are residential houses on the coast or on the numerous (more than 3.500) small islands - the wonderful and even climate with, perhaps, overly hot summer months, the low cost (compared to mainland Europe) and low operating expenses allow owners of Greek real estate not to worry too much about ways to profit from it, but simply to enjoy their holidays.