How the war affects the real estate market of the Southern Suburbs
The Russia-Ukraine war creates a “headache” for the Greek luxury estate market
- 18/03/2022
If the pandemic brought a halt to the development of the “Golden Visa” in Greece, due to the absence of Chinese buyers who are the main pillar of the program, then the Russia-Ukraine war creates an additional “headache” for the domestic luxury estate market.
The overall participation of Russian investors to the domestic Golden Visa program wasn’t as big as expected, so the exclusion of the Russian investors as a sanction for the Russian invasion of Ukraine wasn’t a huge blow to the program. According to the latest data from the Ministry of Migration and Asylum, 66,44% (6.391) of the investors with residential permits and minimum 250.000 euros in real estate investments, are Chinese citizens. Second biggest group, 6,43% (619), are Turkish citizens and third, 6,22% (599), are Russian citizens.
The markets that interest Russians
However, the luxury real estate market in the southern suburbs, popular amongst Russian investors, will not remain unscathed. As Themistoklis Bakas, President of the Panhellenic Real Estate Network “E-Real Estates”, explained in NouPou: “The footprint that Russian investors leave on the domestic real estate market is mostly related to luxury estates, mainly located on the world-famous islands of our country (Mykonos, Santorini, Rhodes) as well as the southern suburbs of Attiki and with signifiant investments on holiday homes in Crete and Chalkidiki.
Generally though, as far as the Greek real estate market goes, according to Mr. Bakas the Russian investors’ interest in domestic real estate is minimal compared to that of the Chinese or Israelis that usually buy privately or via investing funds.
The connection and contribution to the Golden Visa
What concerns Mr. Bakas the most is the scenario “which we hope will not become a reality” of the “interdependent relationship of Russia and China.”. Russian investors may be excluded from the Golden Visa program, but there is a chance that Russians might not respond “directly” to the sanctions, but their allies, such as the People’s Republic of China may react on their behalf ”. He notes that the possibility of a Russia demanding |anti-sanctions”, such as a ban on Chinese investments in the Greek economy, would be a huge blow to the domestic Golden Visa program.
It’s worth mentioning that the Greek “Golden Visa” program has a yield of upwards to 3 billion euros of investment in real estate from investors who obtained a resident’s permit for themselves and their families. The appeal of the “Golden Visa” program as the cheapest program in the EU, combined with the yield of the Greek real estate, catapulted investments from abroad.
According to data from the National Bank of Greece, direct foreign investments in real estate were almost 1 billion euros last year, 875 million in 2020 and 1,45 billion in 2019. 2018 was a landmark year for foreign investments in real estate purchases, as the sum sky-rocketed 172% to 1,12 billion, from 414,7 million in 2017, which was almost double from 2016’s 222,4 million.