2024-03-23 06:56:31
Three restrictions on property purchases for obtaining a “golden visa” are being promoted by the government, in an attempt to curb the pressures exerted by this investment activity on prices
The changes to the “golden visa” program, which will now be addressed to a significantly smaller number of investors, are “locked in”. According to reliable information, the changes will be many and important. First, in the Regions of Attica and Thessaloniki and in all islands with more than 3,000 inhabitants, the minimum amount of investment will increase to 800,000 euros. Today, a limit of 500,000 euros applies only in the center of Athens, in the northern and southern suburbs, in the Municipality of Thessaloniki, in Mykonos and in Santorini. Thus, areas such as Evia, Crete and all the popular island destinations will now have the high limit of 800,000 euros.
Across the rest of the country the limit will also increase to 400,000 euros instead of the current 250,000 euros, in an effort to avoid the phenomenon of concentration of all demand in a few places across the territory, resulting in sharp increases in house sale prices . The only case where the limit of 250,000 euros will apply will concern listed properties and buildings, in order to give an incentive to investors to proceed with such purchases in order to give new “life” to many properties that currently remain unused.
Another important parameter is that now purchases can only be made for properties with an area of 120 sq.m. and above. Investors will also be prohibited from exploiting real estate through digital short-term rental platforms. It seems, therefore, that the financial staff is trying to close every possible “window” for utilization through short-term leasing. One could buy, for example, a large apartment and configure it in such a way that it can be used as a short-term rental. The large area parameter remains, however, so that foreign investors do not directly “compete” with domestic investors, who as a rule prefer smaller properties.
Purchases can only be made for properties with a surface area of 120 sq.m. and above.
However, as real estate market players point out, the exploitation through short-term leasing concerned only 5%-10% of the properties bought by foreign investors from third countries. The main reason is that it requires active management, which costs money and certainly reduces potential revenue. So most people preferred long-term rental.
In his statements yesterday, the Minister of National Economy and Finance Kostis Hatzidakis said that the amendment will be submitted within the week. “The government has already made an intervention last December for Airbnb. The real estate market has risen as expected. Transactions made with “golden visa” in real estate are 7% of the total. That’s why in the “golden visa” we will go to the places that are more touristic and we will increase the limit to 800,000 euros, while in the rest of the areas the limit will increase to 400,000 euros”.
According to Mr. Hatzidakis, “we believe that when the limit was lower it pushed the prices up and that’s why houses in the center of Athens went up from 250,000 to 500,000 euros and now to 800,000 euros. Now the investment will be for real estate of great value and not for a house that a couple wants to buy, for example. We keep the prices of listed properties low because there are many abandoned ones that are difficult to repair, so we give an opportunity to their owners to sell them and to those who want to get a residence permit to invest in them.”
New conditions apply from October
The new “golden visa” measures are expected to be officially announced soon, but will not be implemented immediately. In the thoughts of the financial staff is to give a grace period until September 30, until the new changes take effect. Specifically, until this date, interested investors will be able to enter into preliminary agreements and private real estate purchase agreements, through which they will secure the right to secure a residence permit.
They will then have a window of time until the spring of 2025 in order to complete the signing of the relevant purchase and sale contracts and to proceed with the submission of residence permit applications.
This development is expected to cause, for the second consecutive year, a serious distortion in the housing market, as it will trigger a new “panic” among investors, in order to meet the relevant deadlines for the new changes. Areas where the 250,000-euro regime still applies, mainly within Attica, will be under the greatest pressure, which has already been observed since 2023. During the previous year alone, 4,231 new licenses were granted, a number that was almost 100% higher than of 2022.
It is characteristic that last year a total of 8,351 requests for investor licenses were submitted, a number that surpassed any previous one, equating to real estate purchases with a total value of more than 2 billion euros.
Today, 7,596 applications are pending, a development that is certainly due to the overloading of services. Prior to the program changes, an average of about 2,000-2,500 permits were issued annually.
The increase to 500,000 euros did not work
“The proposed changes to the “golden visa” program are being pushed forward at a time when, as has been demonstrated in practice, we have seen no effect on the price front from the recent increase in the limit to 500,000 euros”, says Mr. Lefteris Potamianos, president of the Association of Realtors of Athens – Attica. As he points out, while almost eight months have passed since the doubling of the limit, prices in the center of Athens have not only not decreased, but on the contrary continue to increase, even though foreign investors have now completely left and are moving to other areas, where it has remained the limit of 250,000 euros, such as, for example, Piraeus and the western suburbs.
It is characteristic that based on the Spitogatos Property Index during the second quarter of 2023, i.e. before the recent changes to the “golden visa” regime, the average asking price in the center of Athens was 1,885 euros/sq.m. After doubling the limit to 500,000 euros, the average asking price increased to 2,000 euros/sq.m. during the third quarter and at 2,037 euros/sq.m. during the fourth quarter of 2023. That is, there was no de-escalation of prices, while the same was certainly true of rental prices.
Eight months later, housing prices in the center of Athens have not only not fallen, but continue to rise.
According to Mr. Potamianos, “the problem with the high sales prices that have “frozen” and the buying and selling in the center of Athens is due to the lack of supply, as the closed properties are hundreds of thousands and are either in the hands of over-indebted households and heirs, who they cannot make use of them, either under the control of banks and debt management companies.” As he states, “the problem was not the “golden visa”, as the number of transactions that took place was few”. Specifically, in 10 years, approximately 20,000 properties have been acquired by foreign investors from third countries, the majority of which are exploited through long-term rental.
Accordingly, as stated by Mr. Alexandros Risvas, head of the investment immigration law office “Risvas & Associates”, “the high prices were not due to the investors through the “golden visa”. We also saw it in the case of Portugal, a market with many similarities to the Greek one. There, recently, real estate investments to secure a residence permit were abolished. Nevertheless, selling prices continue to move upwards due to pent-up demand from domestic buyers and low supply.”
According to Mr. Risvas, the new changes promoted in the Greek program are not based on real data, but are a purely political decision. They will result in the complete withdrawal of most investors due to the high costs, as other countries, such as Cyprus and Spain, will now offer more competitive prices (310,000 and 500,000 euros respectively).
Source kathimerini.gr
Nikos Rousanoglou