The flight of Greek capital into real estate purchases abroad has not been stemmed by the drop in prices on the domestic market, according to experts who add that the negative trend has not been affected by a government decision to suspend the obligatory submission of a statement outlining the provenance of funds for the purchase of real estate until 2013. They say that the decision, originally intended to provide a lifeline to the real estate market, was undermined by a slew of taxes on real estate that have compelled many potential investors to look beyond Greece?s borders.
According to the data, the most popular places where Greeks are investing in real estate are Great Britain, Germany and France, with Turkey, the Balkans and Switzerland coming in second place. According to Konstantin Vollbach, a real estate adviser for the Athens-based Immoconsult firm, which has been specializing in the domestic real estate market since 2005, says that Greek purchases in Germany have shot up since early 2010.
The trend is continuing today, although there has been a small downturn in the region of 10-15 percent compared to last year, mainly because of the uncertainty surrounding the eurozone debt crisis. ?If the markets calm down, it is certain that demand will return to the same high levels,? said Vollbach.
According to the real estate adviser, Greeks and other foreign investors with a dynamic presence in Germany?s real estate market are attracted by the high returns and the safe investment environment. Today, of course, given the rise in the price of most properties in Germany, returns have declined by an average of some 5.5-6 percent, in contrast to positive returns in the region of 7-10 percent two years ago.
?There are of course those who are afraid of losing money, but the majority are interested in Germany because of the returns,? explained Vollbach, adding, ?As far as the type of investment is concerned, interest is almost exclusively centered around the acquisition of residential and other complexes, of mixed uses, with shop space on the ground floor and apartments on the other floors.? Most investments range around the 200,000-3,000 mark, Vollbach said. In some cases, he added, people want to acquire an apartment for personal use, such as because they have a child studying in Germany.
The advantages of the German real estate market, meanwhile, include the fact that banks in that country will readily issue loans to non-Germans, which cover up to 50 percent of the investment, depending on the quality and history of the property.
?Interested parties, however, need to know that German banks are especially strict in regard to the provenance of the capital being invested and they will closely examine whether the money comes from within the banking system or if is the product of tax evasion or other illegal activities,? Vollbach warned. ?If someone walks into a bank with a suitcase full of money, it is certain that he will leave without having accomplished anything.?
It is also worth mentioning that Berlin is the top choice for Greeks looking to buy property in Germany given that prices in the capital are low compared to other cities, such as Frankfurt.
Greeks have also been traditionally drawn to London in terms of real estate investments, both because they see it as a glamorous city and because most are familiar with it. They are also attracted by extremely favorable real estate tax laws and incentives, as well as by the safe investment environment in the English capital.
Greek buyers in London comprise about 3 percent of all foreign investors, making them a significant presence: This year alone, Greeks are expected to spend some 126 million euros on property purchases in London, given that the overall estimate for sales to foreign buyers in 2011 is expected to come to 4.2 billion euros.