Investment in rental business in Greece: European residence permit and high profitability amid rising prices

On August 30, the Independent Public Revenue Authority of Greece (AADE) announced the launch of a digital registry for those who rent out Greek property for short-term rent through online platforms: for example, Airbnb, Booking and HomeAway. Those who ignore the new rule face a fine of 5 thousand euros. The purpose of the regulator is to provide tax control and protection of tenants’ rights. Although the relevant law came into force on January 1, 2018, the launch of the registry was postponed several times and took place only eight months later.

This news is important not only as a guide to action for existing and potential landlords. The launch of the registry is another confirmation of changes in the local real estate market. Against the background of positive economic news – GDP growth is the fifth consecutive quarter and the completion of the third program of macro-financial assistance – the real estate market in Greece is beginning to attract investors from abroad. Why?

“Golden Visa” in exchange for the purchase of an apartment
One of the main motivations of foreign buyers to invest as investments in Greece is the European residence permit. In 2013, the Greek government launched the “golden visa” program: the country issues a residence permit in exchange for real estate investments worth 250 thousand euros. From the launch until the end of July 2018, according to the official Greece Agency Enterprise Greece, the country issued 2,968 residence permits to foreign investors (7,565 – including members of their families).

Investment in rental business in Greece
The Greek investment program is one of the cheapest in Europe: Latvia offers the same minimum threshold, but according to its conditions the investor has to pay 5% of the duty, Portugal issues a residence permit for the purchase of real estate from 350 thousand euros, Spain – 500 thousand, in Malta the investor must invest in bonds and real estate, which raises the starting amount to 300 thousand, and in Cyprus – to 330 thousand euros.

Investment in rental business in Greece
The majority of recipients of a Greek residence permit are investors from China (47%), Russia (15%) and Turkey (10%). Most often, the hunters for “golden visas” buy real estate in Piraeus and Athens – they account for 27% and 25% of issued residence permits, respectively.

High yield
Many investors rent purchased property for short-term rent in order to recapture the invested funds. The demand for daily rent provides a record flow of tourists: in 2017, according to the Bank of Greece, more than 30 million travelers from abroad visited the country.

Investment in rental business in Greece
Due to high demand and low real estate prices, the net yield from short-term rentals in Athens is 5–7% per annum versus 3% in most European capitals. “Greece is one of the last real estate markets in Europe, where the monetary“ drought ”continues and the market has not recovered since 2008. Real estate prices in Athens are 42% below the pre-crisis level, ”explains Georgy Kachmazov, founder of Tranio, an international real estate broker.

Square meter is expensive
Those who want to realize their investments in Greece and get high returns need to be in a hurry: the State Bank records a rise in prices for residential real estate for the second quarter in a row.

Investment in rental business in Greece
In Athens, prices are rising faster than in the rest of Greece: in the second quarter of 2018, the cost of apartments increased by 1.2% year on year against the average value of 0.8%. As Alina Churikova, project manager for Tranio in Greece, explains, the capital shows the highest occupancy rate in the short-term rental market during the year. “In Athens, unlike the resort locations, tourists travel in the winter, so real estate works there without a break for the low season. As a result, an apartment in the capital shows a more attractive yield than in any other place in Greece, and is the most profitable option for investing, ”she says.

Investment in rental business in Greece
One of the first Tranio projects in Athens: a flat reconstructed for short-term rent located in Kukaki, the central area of ​​the capital. Expected yield – 5-7% per annum