Increase in investment in real estate for tourism purposes in Greece

It is an undeniable fact that in the last two years and despite the collapse of Evergrade, which led to a certain freeze of interest from Chinese investors, the real estate sector in Greece has shown a particular dynamism with many new investment opportunities.??

The search of foreign companies and funds for properties with investment prospects, whose main objective is commercial and tourist use, is a new condition that is taking shape in Greece. The hotels that had ceased operations at the time when the memoranda were the sword of Damocles over the Greek economy are preparing to return to the market and investors from all over the world are ready to invest in them. Tourism has been and will be the cornerstone of the project, and several foreign real estate companies have strategically chosen to operate in this industry.??

Greece, along with other southern European countries, is attracting investor interest. The U.S. company Blackstone, which is heavily involved in real estate and investment through its subsidiary, has shown a keen interest in the wider Mediterranean region, such as Portugal, Spain and Greece, since the period of uncertainty at the start of the Covid pandemic outbreak.??

It is worth noting that on the sidelines of the 4th BnB Greece Conference 2022, former Deputy Governor of BoG Theodoros Mitrakos stated that Greece has reached 1.2 billion euros in the real estate sector with foreign direct investment. "In Greece there are high yields in both commercial and residential real estate. In some areas they can reach 6-6.5%, while traditionally the yield has been 3-3.5%. So there are very high yields and that has attracted the interest of foreign investors," he said.??

A particularly important element is the combination of tourism with real estate, two sectors that contribute greatly to Greece's GDP. The interdependence of the two sectors is reflected in the fact that in areas where tourism is increasing, prices and demand for real estate are also increasing at the same time. The rapid increase in the use of short-term rental accommodation has led to an increase in property prices in the center of Athens, while foreign buyers' demand for property outside Athens is targeted at areas where the property would be suitable for tourist use. Greece is a country that traditionally bases its economy in the tertiary sector, and tourism and construction are the flagships of the domestic economy.??

The question arises as to why someone would invest in a combination of these two sectors?

First of all, a big motivation is the Golden Visa. Since 2013, when the program came up, until November 2021, according to official data, 9,473 investments were made in real estate with the main goal of obtaining a residence permit. These investments were mainly concentrated in certain areas of the country that are popular with tourists. The small decrease that occurred with the occurrence of the pandemic is considered to have been overcome in conjunction with the upcoming changes to the program. For Golden Visa investors buying real estate worth at least €250,000 in Greece, the real estate transfer tax for older buildings will be around €7,700, while for investors in new real estate, the real estate transfer tax will also be around €7,700 instead of €60,000.??

Another important parameter is the tax regime and the new ENFIA: the tax system has become more real estate friendly with the new legislation, especially since each property is taxed separately for ENFIA. An important element is the free provision of real estate by parents and the possibility of a financial contribution by parents up to an amount of €800,000, which is now exempt from any tax rate.??

In addition, all investors receive strong tax incentives, such as the non-dom. Under the new Article 5A of the Greek Income Tax Law (Law 4172/2014), a single tax rate of €100,000 per year on total income for a period of 15 years will be introduced for individuals who transfer their tax residence to Hellas. At the same time, legal entities are excluded from the scope of this legislation. This new tax regime gives the non-resident, under certain conditions, the right to pay a total amount of €100,000 per year on all income earned outside the country, regardless of its amount, in exchange for being exempt from any tax liability. Year. Taxation is a useful tool to achieve the government's development and investment goals while increasing public revenues. . In the 2 years that the provisions for attracting new tax residents and investments have been implemented in Greece, 75 applications from investors and 23 of their nationals from 21 countries have been approved.??

Support programmes through the NSRF, such as the "I save" programme, as well as the proper use of funds from the stimulus fund, in combination with the suspension of VAT. 24% for newly built properties, will again be important factors for the development of the economy. The changes to the VAT tax rate rules approved by Ecofin allow Greece to extend the VAT suspension of 24% on transfers of newly built real estate for another two years and more precisely until the end of 2024. In addition, capital gains of individuals in Greece are normally taxed at a rate of 15%, but this has been suspended until 31 December 2022, while you plan to extend the measure for the coming years.?

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