*Get to know the area you are interested in
*After the handshake, do a thorough due diligence
*Many properties in Greece have legal, tax, ownership issues
*Anticipate bumps on the road
*Remember that economy may perform worse than forecast
*Do your homework
With the Greek economy turning and real estate becoming more attractive to buyers in and out of the country, everyone agrees that it is a good time to buy in Greece but what do you have to look out for? What are the peculiarities of the Greek property market and what do you have to avoid?
Greekguru.net turned to some top property experts and asked them about what buyers need to do to avoid making a bad decision.
Dimitris Melachroinos, Spitogatos Network's CEO
In order to maximize the chances of a successful property deal in Greece, you have to first of all familiarize yourself with the area or neighborhood of interest. If you have not visited the area in person, it is very important to consult proper advisors, such as local real estate agents, in order to get a feel of the area and its specifics. This will also help narrow down the needs, priorities and characteristics that you are looking for in a property, since at the initial stage property search tends to be chaotic for most people.
In the meantime, online property search at Spitogatos, automated property alerts on what’s new and constant contact with realtors do help a lot. When the search has become more specific and the property hunter is familiar with the available options and the neighborhood specifics, an on-site visit at the properties of interest, after having signed a property viewing agreement with the agent (if an agent is assisting in the process), is also very helpful in order to make a shortlist, prioritize, meet the owners and start negotiating the financials. It is advised to request from the agents or owners, before visiting the property, floorplans and official layout plans (topographic) of the properties of interest, in order to be better prepared. Furthermore, it is good practice to create a proper check-list ahead of the on-site visits, in order to make sure you have inspected everything you had in mind and asked all the right questions. It is almost certain you will follow up later with additional questions, but better to be well prepared in order to speed up the process.
The negotiation process might take a while, especially if the property at stake is popular and has other interested buyers and / or the pricing gaps to be bridged are relatively big. It is important to stay calm and avoid getting too emotional in this process, compare the pros and cons of the available options and hopefully reach an agreement.
Once you reach the handshake agreement, it is highly advised to hire good advisors in order to conduct proper due diligence, whether it is for residential, commercial properties or land. Property inspection by engineers, credit and legal check on the owner to understand i.e. if there is any outstanding loan / collateral that would impact the deal, request official layout plan and cross check with previous contracts related to the property to make sure there is a match of the actual and the declared area of the property, are among the actions that need to be done. Experienced real estate agents, lawyers and engineers do help a lot in this process. Many properties in Greece are old, many land plots have been acquired through inheritance and the contracts are old or the layout plans (topographic) are outdated or poorly prepared, hence this process is very important since it is common for a property not to be 100% “clean” – but those are all issues that can be resolved.
Once everything has been reviewed and you are ready to proceed, in some cases especially when there are few actions on the owner’s part (i.e. outstanding taxes, renewal of paperwork, licenses etc) or if the property hunter needs to collect the capital required, it is advised to secure the transaction by making an advance payment through a notarized binding contract that would include penalties for withdrawal. This way, everybody is more comfortable to proceed with the final stage of the deal and complete the transaction.
Tassos Kotzanastassis, chairs the Urban Land Institute, Greece and Cyprus, managing director of 8G Capital Partners
The key to a successful property deal in Greece is to remember that economic recovery may turn out to be slower and more protracted than what forecasts would have you believe. Several key reforms are yet to be implemented and a fast rebound is by no means guaranteed. Therefore one should focus on the income characteristics of an asset such as the sustainability of rent, the covenant of the tenant and the impact of potential bumps on the road to recovery.
One might also focus on assets whose occupational base is foreign- e.g. hotels. However, caution is advised since a lot of investors are looking into hospitality, although in many instances the assets they are after (prime and cheap) just don’t exist. The recent devaluation of the Turkish Lira which diverted a lot of tourists to Turkey serves as a valuable lesson: be prudent with the growth projections.
Daphni Korobeli, Shanghai-based lawyer, KCH Law Firm
"An investment is an asset or item acquired with the goal of generating income or appreciation. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit.”
An investment must create wealth, this is the point of it and this is how it makes sense for the investor. Recently there is a very high demand coming mainly from abroad, for real estate investment in Greece. I would like to stress two points on how to make a successful investment:
One is finding the right property. The key to making the right choice for such an investment is knowing the market as much as possible. My Chinese friends say “location, location, location” and they are right. Chinese immigration agencies and agents though sell properties in Monastiraki, as Plaka, to their poor fellows who think they buy in Plaka! Be informed. Consider you want to sell in a few years, will the price justify what you bought it for, including the taxes you paid, all transaction costs paid etc.
Two and equally, if not more important, is making sure that what you’ve found or you think you found is legally ok. Think whether you can sell it back whenever you want to: if there is NO legal problem- because at the time of purchase your lawyer and notary did a great job and the contract is impeccably written- then it should be NO problem to sell it fast. No time wasted for “legalizations” for example, or “engineer’s certificates” etc.
Generally, in terms of legal services, in this case of Golden visa and especially with China, you get what you pay for. I’m always happy to explain in their mother tongue to my Chinese friends all the issues they might face, but also consult on the properties they are interested in buying.