Foreign demand for properties is flagging

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Investor demand from abroad for properties in Greece has dropped to its lowest point since 2017 this year. Bank of Greece data show that the inflow of foreign capital for the acquisition of properties in the Greek market in the second quarter of 2020 tumbled 60% from April-June 2019 to reach 140.6 million euros, against €344 million last year.

This is the lowest quarterly performance since the second quarter of 2017. From the summer of 2017 inflows had started picking up, amounting to €170 million in July-September that year and signaling the start of a golden period for the local realty market, not only compared to the years of the financial crisis but historically, as up until then had it never attracted such high funds from foreign investors.

In the first quarter of this year, when the problem of the coronavirus became obvious in China, the first problems surfaced in the local market too: Capital inflows slumped to €230.7 million, against €419.3 million in the last quarter of 2019 and €392.7 million in January-March 2019. This meant an annual drop of 41% in Q1 this year.

From January to June this year inflows from abroad were cut in half compared to 2019, as the decline amounted to 49.5% for a sum of €371.3 million against €736 million last year.

The rest of the year is projected to be even worse, as not only have the effects of the pandemic not been overcome, but the prospects for a rapid economic recovery have also diminished as a result of the resurgence of Covid-19 cases, increasing uncertainty among investors from other countries.

There are two big problems in the local property market, as both its main transaction drivers have been hurt by the pandemic: the investment activity in properties used for short-term rentals via online platforms, and the acquisition of properties for securing a residence permit through the Golden Visa program.

According to the latest data from the Migration Policy Ministry, in the year to end-September, only 368 Golden Visas were issued, taking the sum of issues since the beginning of the program to 7,903.

Throughout 2019, 3,428 investors received Golden Visas, the data show, after investing a total of €857 million in Greek realty.

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