A 650 sq metre seafront villa on Mykonos, with an infinity pool and views of three nearby islands, is priced at €6.2m
A 650 sq metre seafront villa on Mykonos, with an infinity pool and views of three nearby islands, is priced at €6.2m

A stylish villa on a resort island became the status symbol of choice for many Greeks during the country’s credit-fuelled property boom. But after six straight years of recession, even trophy vacation homes are on the market at knockdown prices.

Greece’s worst economic crisis on record has shrunk national output by almost one-third, driven thousands of profitable family businesses into liquidation and triggered a mass exodus of bright young graduates. Even though talk of a “Grexit” from the euro has faded, Athens is still likely to need a third international bailout in 2015.

Political risk also runs high. A fragile coalition government is struggling to implement reforms demanded by international creditors, while a radical opposition party committed to imposing a drastic “wealth tax” is ahead in opinion polls.

Yet for steely-nerved investors, Greece offers a once-in-a-generation buying opportunity, with a record number of high-end properties on the market, says Katerina Samaropoulou of Samaropoulou Associates, a Greek estate agent. “Prices have fallen by around half since 2008. You can find excellent quality vacation homes in Greece at similar prices to Spain and Turkey, where previously they could be as much as 40 per cent higher because so few were available.”

One reason for the increase in supply is that Greek owners of multiple vacation homes, a popular investment in the freewheeling noughties, are downsizing. Maintenance costs soared after a new property tax, the haratsi, was added to electricity bills, and the financial police are now catching up with tax dodgers who fail to declare their income from internet rentals of holiday homes.

Ultra-wealthy investors showed the way last year, acquiring Greece’s two most exclusive private islands, both on 100-year leases.

Ekaterina Rybolovleva, the daughter of a Russian billionaire, reportedly paid €100m for Skorpios, a 1960s playground for the shipping tycoon Aristotle Onassis and his second wife Jackie. The 75-acre property in the Ionian Sea, with a compound of three family-sized homes set amid cypress and olive groves, includes a helipad and docking facilities for yachts but was in desperate need of a makeover. Onassis’s granddaughter, Athina, the previous owner, rarely visited Greece.

Aristotle Onassis and Jackie Kennedy Onassis on Skorpios in 1970
Aristotle Onassis and Jackie Kennedy Onassis on Skorpios in 1970 © Ron Galella/Getty

Sheikh Hamad bin Khalifa al-Thani, a senior member of the Qatari royal family, paid €4.9m for Oxia, a pristine 1,200-acre island in the Ionian Sea owned by a Greek-Australian family. Even after tortuous negotiations with the Greek forestry service, only part of the island, covered in pine trees and dense Mediterranean scrub, will be made available for “soft” development; the rest will remain an environmental reserve.

Both sales went through at a significant discount to listed prices in 2010 of €6.9m for Oxia and a reported €120m for Skorpios. “Worries about future taxation drive down offers for high-end properties, but sellers are often quite ready to negotiate,” says Panagiotis Farmakis, sales director at the Greek arm of Sotheby’s International Realty. Estate agents were pleasantly surprised by a new law on property taxation approved by parliament in December that is likely to reduce the overall annual tax burden for owners of second homes.

“It should also be a significant incentive for international buyers since the sales transfer tax they have to pay has been cut by up to 70 per cent,” said Alexandros Moulas, head of residential property at Savills International in Greece.

View of the bay of Vlychos that includes the island of Skorpios
View of the bay of Vlychos that includes the island of Skorpios © Hercules Milas/Alamy

Inquiries and site visits rose sharply in 2013 as fears of a Grexit from the euro receded, but there are few sales of homes in the €6m-10m range, now seen as the top tier of the Greek holiday market. According to several agents, more eastern Europeans, Scandinavians and Swiss are exploring a market previously dominated by buyers from the UK and Germany, but they are cautious about taking the decision to buy. “I think we’ve reached the bottom of the cycle and we’ll see improved demand this year,” said Yannis Ploumis, chief executive of Ploumis-Sotiropoulos, an Athens estate agency affiliated with Christie’s International Real Estate.

Encouragingly for sellers, the Greek travel operators’ association SETE predicts that 2014 will again be a record year for tourist arrivals. “Two good summer holidays can be a catalyst for villa rental clients to take the plunge and buy,” says Samaropoulou.

The seafront villa on Mykonos
The seafront villa on Mykonos

Would-be buyers focus on regions that have long attracted foreigners: Corfu, a cluster of Cycladic islands led by Mykonos and Santorini, and the Porto Heli region of the Peloponnese, including the island of Spetses. A few look further afield to Crete or Halkidiki in northern Greece, which is popular with Russians, and Patmos, a small island in the Dodecanese archipelago where historic houses occasionally come up for sale.

There is now a wide choice of 200-300 sq metre Cycladic villas with infinity pools, hot tubs, intelligent home control systems and magnificent sunset views. Once valued at €10,000 a sq metre, they are now on offer at €4,000-5,000 or less as cash-strapped architects and their clients struggle to make ends meet.

The seriously wealthy are looking for privacy, not simply a high-end house, according to Moulas of Savills.

“They want a private beach if possible, or at least direct access to the sea, and a jetty where several yachts can tie up,” he says.

An eight-bedroom villa close to the sea on Kea is available for €2.7m
An eight-bedroom villa close to the sea on Kea is available for €2.7m

A 650 sq metre seafront villa on Mykonos with views of three nearby islands, an infinity pool and a 4,000 sq metre terraced garden is on sale for €6.2m. And on Kea, a less fashionable island, a villa close to the sea is on offer for €2.7m. It has eight bedrooms, all with sea views, and an outdoor kitchen. Yet despite being the resort island closest to Athens international airport, Kea can still be hard to reach: ferry services to all but the most popular islands were cut back during the crisis. Both properties are listed with Christie’s International Real Estate.

In December, the 35,000 sq metre Elies estate near Porto Heli was sold for an undisclosed amount – though less than the listed asking price of €40m – to a Greek shipowner and his Russian wife. “It’s encouraging that a showpiece property has gone to a Greek buyer . . . It could reassure foreigners the country risk is starting to recede,” Samaropoulou says.


Buying guide

● Taxation is a rollercoaster for property buyers in Greece, even when the economy is relatively stable. Changes are rarely flagged before legislation goes to parliament

● A new law (effective from January 1) replaces two previous annual real estate taxes with the unified tax on property ownership (ENFIA), charged on a scale of €2-€13 a sq metre. It is expected to be marginally lower than its predecessors

● Owners will pay an additional real estate property tax (FAP) annually of 0.1 to 1 per cent of the official valuation of their property, along with a separate tax of €1 a sq metre on the surrounding land plot

● Transfer tax on property sales, paid by the buyer, is reduced from 10 per cent to 3 per cent. Capital gains on property – the difference between the sale price and the initial purchase price – will be taxed at 15 per cent

● Prospective buyers in Greece should still hire a local lawyer to carry out due diligence, even though most properties will soon be offered for sale with identification certifying ownership, a listing on the national land registry or local cadastre, and a civil engineer’s certificate on building specifications and energy emissions

● Lawyers’ and notary fees amount to about 2 to 3 per cent of the purchase price

● Non-EU passport holders need a special permit issued by the local regional administration to buy property in so-called “border areas”. These include Crete, the Dodecanese islands and most of northern Greece

● Crime rates are still low outside Athens despite the economic crisis, but increasing numbers of high-end properties are now gated or equipped with surveillance systems

Kerin Hope is the FT’s Athens correspondent

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