Foreign capital targetting real estate in Greece doubles

The Greek real estate market is drawing strong interest from foreign players as the latest data from the Bank of Greece shows a 94.6 percent increase in capital inflows tied to property for the first half of the year.

This means that total inflows for the year may reach, or exceed, 2.5 billion euros, based on current growth rates. This compares with annual inflows of between 150 to 200 million euros at the start of the decade, when Greece's economic problems kept getting worse.

The current figures could be more important given that they don't include transactions completed in the summer period, which is when deals with foreign buyers on holiday homes peak every year.

For the whole of 2018, it is estimated that some 1.3 billion euros were invested in domestic property, of which 655 million euros related to direct property purchases. An additional 650 million euros related to the rebuilding of existing buildings or the development of new ones. In 2017, property inflows hit 500 million euros, reflecting the growth of recent years.

Beyond demand for holiday homes in popular tourist destinations, foreign investors are also completing large scale purchases of apartments across the broader Athens area to lease them on Airbnb-type platforms or to acquire the Golden visa, Greece's residency-for-investment program. Since Greece launched its Golden visa program at the start of 2013, Greece has issued more than 4,500 residency permits up until June this year.

This residency program is expected to be broadened, according to sources, as the government gives an emphasis on attracting high net worth individuals who continue to prefer other Mediterranean countries, such as Spain and Cyprus. Greece is looking into offering incentives to boost the number of tax residents as currently, the vast majority of property investors do not live permanently in the country, which means that income for the state is minimal.

As a result, Greece is considering offering Greek citizenship (in addition to the residency permit) to non-EU investors who acquire a home of at least two million euros. This is similar to the program being successfully offered in Cyrpus.

In a bid to avoid any opposition to the plan, the Greek government would limit the new citizenships to 200 per year, while extensive checks would be held on the individuals to avoid related risks, such as cases of money laundering.