Post-Crisis Property Market in Athens: Phoenix of the Aegean
- Greece recently has gone through a major financial crisis.
- This led to a skyrocketing in foreign investments in Greece’s property market due to plummeting real estate prices.
- Greece’s very successful Golden Visa program also contributed to this surge of investors. Investors all around the world benefited from the scheme that offers EU membership in exchange for real estate investment in Greece.
Global Financial Crisis of 2008
2008’s financial crisis was a worldwide depression that negatively affected hundreds of countries. Greece was one of the countries that got hit the hardest. Greece’s debt exceeding 200 billion euros was compensated by a collective bailout plan which tied Greece’s hands and did not allow for much economic manoeuvre. As a result, real estate prices in Greece plummeted very fast.
Hitting the Rock Bottom
To understand the effects of the crisis, one can look at some figures about the Greek economy before and after 2008-2009. In that period, Greece’s economy contracted by 30 per cent. MSCI relocated Greece under “emerging market” states rather than its previous position as a “developed market”. The debt of the country actually was equal to around 180 per cent of its GDP. The situation was so bad; people went out to streets in protests.
Greek Assets Offering Profit while Bouncing Back
Greece started recovering from the major financial crisis of 2008 more than five years ago. Simultaneously with the recovery, real estate prices naturally started to bounce back to their pre-crisis levels. Of course, it is a long way up. This ascension towards pre-crisis prices provided many opportunities for investors as property market regains its strength. Still, many investors around the world buy houses and office spaces in Greece, especially in the capital, Athens.
In the first few years of Greece’s recovery, Athens has become the focus of foreign investors as they scooped the real estate gems that hit the bottom because of the crisis.
In the first few years of Greece’s recovery, Athens has become the focus of foreign investors as they scooped the real estate gems that hit the bottom because of the crisis. Especially Chinese, Russian, and Turkish investors have shown massive interest in Greek property. Due to their immense interest, central Athens witnessed considerable price inflation in its property market. Properties in districts like Kolonaki or Plaka became very expensive where prices like 5500-6000 euros per square meter are considered normal. Considering this, central Athens where prices go as high as 12000 euros per square meter may not be the right location for further investment. The neighbourhoods that are already experiencing high inflation rates may not be the best places for profit.
Future of Athens Real Estate Market
Greece’s new government tries to strengthen the economy in order to be able to get back to its pre-crisis performance. Also in attempt to revitalize foreign investor trust in the country, new government promises to cut corporate taxes. Reached as high as 14 per cent in 2014, Greece’s sovereign debt yields are currently at 1.10 per cent. These improvements signal that the investor interest in Greece will not come to a halt in near future, but probably be redirected into new areas like eastern Athens.