A Practical Guide to Real Estate Investments in Athens for 2024
With this publication, we're initiating a series of articles about choosing and purchasing property in Athens. The first episode will delve into the unique aspects of the Greek capital's real estate market and detail the considerations for selecting high-yield properties.
Despite recent challenges faced by the European Union, its real estate market remains appealing for foreign investors. Experts predict that European property values will show an average annual increase of 3.41% over the next five years.
Greece's prolonged economic downturn has led to unexpected shifts in property ownership patterns. Traditionally, Greeks held onto property conservatively, preferring to pass it down through generations rather than sell. However, new economic realities, coupled with unsustainable debts and high unemployment, have forced many to alter this stance, creating more opportunities for foreign investors than ever before.
Furthermore, Greece's "Golden Visa" program, launched in 2013, has been a significant incentive. It offers a five-year residency right to non-EU investors who invest in Greek real estate.
Today, Athens is undoubtedly one of the most accessible European cities for investment. Its attractiveness for property investment, particularly for short-term rentals (STR), is primarily due to its tourist appeal. In the first half of 2023, Greece welcomed over 10 million tourists, a 26% increase from the previous year.
Many visitors are drawn to the capital, attracted not only by world-renowned historical landmarks but also by beach resorts and newer attractions like the Stavros Niarchos Foundation Cultural Center, opened in 2016. Other benefits of the city include its low crime rate and well-developed infrastructure.
As the Greek economy continues to grow, albeit not as rapidly as in the first half of last year, this progress reflects on the rising real estate market and housing costs. Furthermore, an increased threshold for the "Golden Visa" has spurred prices: until July 31, there was a transition period during which properties could be purchased under the old conditions, energizing investors. By August this year, the price per square meter here increased by 9.75%, reaching 2,408 euros, which, however, is still far below the prices in many other European countries.
Greece's inflation rate has more than quadrupled over the year: from 11.5% in August last year to 2.7% in August this year. However, the consumer price index has shown a rising trend in the last couple of months. The interest rate in Greece as of September 2023 stands at 4.5%.
By 2025, Athens will have implemented a comprehensive program for the reconstruction of central districts. This initiative will see the construction of many new buildings and the renovation of old ones, along with updates to public and transport infrastructure. This step will create more supply in the capital's real estate market and make the city even more attractive for foreign investments.
The gross yield from long-term rental of one-bedroom apartments in Athens can reach almost 8%, while larger housing yields range from 3.5% to 6.3%, depending on the district.
Demand for STR (Short-Term Rentals) in Athens in the first quarter increased by 20% compared to the same pre-COVID period of 2019. The touristic allure of the Greek capital makes short-term rentals even more lucrative: yields of 11% annually and above, one of the highest among major European cities. The season here lasts from May to October, ensuring at least six months of high demand for apartments among tourists, with an average occupancy rate at the peak of the season being 60-70%.
Unlike most other European capitals, offering apartments for short-term rental in Athens does not require licensing. However, when purchasing property, non-EU residents are required to submit a statement of intent to the Ministry of National Defense, supported by a series of documents. Additionally, be prepared to pay a range of fees: property transfer tax, real estate agency commission, notary, and legal services. These costs total about 7-8% of the property's value.
Investors acquiring property for STR in Athens should not overlook certain pitfalls.
Firstly, income from short-term rentals must be declared just as long-term rentals are: including property details, names of tenants, and rental duration. The Greek government enforces this to combat underreporting of such incomes by owners. Failure to comply will result in significant fines.
Secondly, not all residential buildings in Athens can be used for STR. Before purchasing a property, be sure to review the house's bylaws which list the permitted types of rental.
Lastly, some tourist areas impose restrictions on short-term rentals: up to 90 days per year.
Let's consider a real case study through the seven stages our team undergoes in the initial phase of selecting a real estate property in Athens for an investor.
For our exercise, we will look at a case where the investor has laid out the following requirements: find one property with a total cost not exceeding 500,000 euros, suitable for earning passive income from rentals. One of the investment objectives was also to obtain the “Golden Visa” and to finalize the transaction within two months.
Financial conditions significantly narrowed down the pool of properties in the initial selection phase, as did the strict transaction timeline – most of the target-yield properties did not fit our timeframe.
What we did: Visualized processes using a non-stop pipeline. Outlined the criteria for selecting a suitable property.
For finding properties, we worked with realtors as well as open sources and unmoderated aggregators. In the process, we filtered out fake listings, which a solo buyer must be prepared to encounter. It was important for us to gather the most accurate picture of the most promising real options on the market.
What we did: Created a vast network of realtor contacts as an alternative source for information about off-market properties and new listings. Sent a template request for purchasing investment property to 20 top real estate agencies. Additionally, we selected a shortlist of properties in need of cosmetic renovation: there are many more such properties on the market than those ready to launch.
At this stage, we gave priority to central and nearest-to-center districts, not considering residential suburban areas and Athens satellites, as this significantly influences the future yield of the property. In the end, we focused only on a narrow market segment with a high cost per square meter.
What we did: Collected analytics on districts near the center and selected the top-5 for our shortlist, considering their growth potential and the possibility of STR. We also considered properties in Piraeus and other satellite towns, as well as alternative coastal areas of Athens, taking into account seasonality.
Athens is a narrow and dynamic market, thus, the speed of purchase here plays a significant role.
Together with the technical team, we launched the Renty Intelligence selection algorithm, which allowed us to create a collection of investment properties specifically tailored to the client's requests.
The next step was to evaluate all the properties based on historical data. A standardized model was used to assess economic indicators, including occupancy rates and profitability.
The Renty team selected the top yields among the chosen listings and also checked for overvaluation of properties with yields ranging from 7% to 9%.
Our representatives personally inspected the selected properties. They evaluated, among other things, technical compliance: the overall condition of the building and internal communications, potential repair costs considering the apartment's interior. The location was also checked on-site. You can read endlessly about the advantages of one district or another, but only by being at the actual building can you truly understand how the location "lives," how pleasant the surroundings are, what kind of cafes, restaurants, shops, attractions there are, and everything necessary for a successful STR launch.
In the following episodes, we will talk about the next stages of buying property in Athens: from legal checks to the actual purchase of the property.
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