Greek tragedy has its benefits
The Greek economic tragedy is very unlikely to have any kind of happy ending, unless of course you are an international investor looking to gain a foothold in paradise.
Greece is on course for a third consecutive year in recession, with the economy shrinking by 6.9 per cent in the second quarter, according to the latest economic indicators.
Although this is slightly better than for the same period last year, when the economy shrank by 8.1 per cent, most commentators think that house prices have not fallen anywhere near as fast, or as hard, as they soon may have to.
The international bailouts Greece has twice been forced to accept came at a price, with the government being forced to agree to harsh cuts in public-sector pay and reduced spending. Interest rates will have to rise, increasing the number of properties out on fire sale.
To date house prices have only fallen 4.3 per cent since their peak in 2008, but, combined with an enforced increase in property tax, the property vultures are starting to gather.
The tax has forced many Greeks to put second homes on the market and they are at bargain-basement prices for those looking to invest. It is not uncommon to see prices slashed by 40 per cent as the owners try to offload their homes before the situation gets any worse.
British buyers who have always loved travelling to Greece, comprising 6,000 islands of which only 227 are inhabited, on holiday have been at the front of the hunting pack, according to property portal Rightmove and financial analyst Moneycorp. In their latest report, they say property searches for Greek homes are markedly up, more than 50 per cent month-on-month, in particular hot spots, such as the islands of Rhodes and Samos.
Interest is one thing but, according to leading broker Nicholas Mugni, who is a partner for the top-tier real estate agency Demeures de Grece, that interest is playing out into actual sales. It is true that searches for places in Greece have increased in the last few months, partly due to the massive exposure of Greece in the news worldwide, Mugni says. 'Of those, up to 50 per cent are then real leads and we expect to translate 30 per cent of them into sales.'
It is not just the bargain hunters who have been out in force. Mugni says: 'We have noticed a much higher interest in prime properties this year. Most of these wealthy clients negotiate but do not offer an unrealistic price. They are very aware they can take advantage of the situation and make a good deal.'
Giannis Kriaras, manager director and CEO of the Ktimatoemporiki estate agency, agrees that it is not just the modest end of the market that is being watched. 'We have observed a great rise in interest regarding luxury estates, compared to more modest homes. In fact, the interest shown concerns villas priced at Euro1 million [HK$11.3 million] or even more,' he says.
The kind of idyllic getaway rich foreign buyers could perhaps expect is one stunning estate on Mykonos, sandwiched between two beautiful and popular bays, aptly named Paradise and Super Paradise.
The house itself is more than 13,000 sqft of hedonistic beauty, with accommodation over four villas for a possible 26 guests served by an impressive staff of 14, a ratio that would allow most whims to be catered for.
As a shopping list for a holiday home, it ticks a few additional boxes with not one but two home cinemas and a real wrap-around sound system which, the agents say, is of professional quality and is piped through the property and all the extensive gardens. Nineteen million tourists visit Greece annually, entranced by the history and its pristine beaches and water. But there is something more to Greece. It's a passion that captures hearts and minds, but will it capture a new breed of holiday home owner?
You would expect the agents to be bullish, and they are about the islands, but not so much about property in the capital Athens which, due to the red tape involved, rarely passes into foreign hands. Most agree that if property prices are to stabilise they will begin first in the islands, whereas Athens and its suburbs prices will be bumping at least until 2013.
But those wishing to invest will have to have nerves of steel, as the restructuring of debt will almost certainly lead to another downgrade in the country's credit rating, already at an historic and global low. Will a discount of 40 per cent be enough to entice the brave?
One group who are being encouraged to shop while the more risk adverse stay at home are the Russians. One leading Russian property portal urges it readers to look further than traditional favourites such as Spain and France, or the new venues of Croatia and Bulgaria, and look at Greece.
Visitors from Asia are, however, in small numbers, but this may be about to change.
Sipsas Dionissios, broker and owner of the Remax Real Estate Group, says: 'We have noticed that many Chinese companies have shown interest in investing in Greece.
'They have come into contact with our company regarding investments in marinas, large land for development, luxury homes and even private islands.'
The number of islands and islets that belong to Greece. Only 227 of the islands are inhabited and only 78 of them have more than 100 residents