ECONOMY

Second-home prospects

The Greek economy stands to benefit immensely from developing its second-home market but it will have to wait another year since things are not yet in place for the process to start in 2008. By all accounts, Greece is a major tourist destination in southern Europe, commanding a market share of approximately 10 percent in the Mediterranean. However, unlike Spain, Italy and France, it has not been able to translate this potential demand into a strong vacation-home market for more than 2 million Northern and Eastern Europeans who are looking for a second home in the greater region. Although there is potential, it appears that the politicians, bureaucracy and vested interests have conspired to constrain it and 2008 looks like it will be another disappointing year. Hoteliers’ fears Surprisingly, it appears that the owners of some hotels do not seem to be too enthusiastic about the idea of the second-home market because they are afraid they may lose customers, although just over 20 percent of tourists in Spain, for example, have their own home in the country. «The demand is solid and certainly exists. There is great interest from organized associations of retirees and others from abroad, some of whom have been disappointed with their experience in Spain, in buying a second home in Greece,» says Panos Michalos, the head of DTZ Hellas. «However, we do not have major projects to offer and unlike other countries, such as the UK, so-called integrated development is unknown here.» Michalos, like other real estate executives, point the finger of blame at the absence of proper zoning and the problems linked with urban planning. He predicts that if there is no new zoning plan next year, developers will continue to build a few maisonettes in the minimum area of 4,000 square meters required by current law outside the town plan. Resistance Despite announcements to the contrary, Greece has not taken the necessary steps to ensure that the foundations for the development of this industry have been in place and there is talk that the legislation for the new zoning system has met with fierce resistance from vested interests and its final version is likely to be watered down. «There are different laws applying in different parts of the country. There is one set of laws for the Cycladic islands and another for the Ionian islands which, along with the fragmentation of the land available for development into many small ownerships, creates additional obstacles,» says Miltos Epithimiades, the head of Aspis Real Estate company, who foresees a «low flight for (the second-home industry) in 2008.» According to Epithimiades, 200-300 second homes are sold annually in the country, mainly to Greeks and secondly to foreigners. The latter include some Bulgarians in northern Greece, who have purchased in the greater area of Kavala in recent, attracted by the mild weather, the sea and the moderate selling prices ranging from 80,000 to 130,000 euros, according to local real estate agents. Eastern investors Although Eastern Europeans are a relatively new breed in the Greek tourist industry, beginning to arrive only in the second half of the 1990s, they represent a new source of foreign demand for second homes although they cannot compare in numbers and purchasing power with the Northern Europeans, at least the majority. Still, the biggest problem for Greece has been the supply of modern second homes in organized communities with easy access to transportation and healthcare facilities such as hospitals. And although there are developers eager to construct such projects and foreign investment funds ready to buy stakes, the Greek state continues to disappoint, hesitating to do what other countries have long been doing, putting Greece at a disadvantage with its new competitors, namely Turkey and Croatia. It is no coincidence that there are just 6 golf courses in Greece compared to over 300 in Spain and more than 70 in Portugal and even 9 in Cyprus. Revenue to tap It is estimated that Greece could have additional revenue in excess of 2.5 billion euros if it managed to develop its second-home market, including lifestyle resorts, according to real estate industry executives. According to some calculations, Greece could earn more than 120 billion euros in the next 10 years by selling 1 million units at an average price of 120,000 euros to foreigners alone. This is much more than the 20 billion euros plus it expects to get from European Union funds in the next five years. Moreover, this delay may turn out to be beneficial if it learns its lesson from Spain, where overbuilding and overcrowding along coastal areas have damaged the environment and disappointed foreign investors. Undoubtedly, Greece has made progress in upgrading its infrastructure in terms of everything from roads to telecommunications during the last 15 years and has thus laid the foundations for a number of industries to take advantage and grow. Nevertheless, it has been unable to exploit the vast potential of its wonderful landscape and weather to benefit its economy more by offering a second-home market with modern facilities to foreigners. Unfortunately, 2008 is not going to be the year in which this process will start. However, 2008 can turn out to be a launch pad for the years to come.