Story by Hsiang-Yu Wu ·
THESSALONIKI, Greece – The real estate market in Greece, nearly crippled because of an economic crisis that has left local investors with no money, has seen a bump in purchases from wealthy overseas buyers, especially Russians, who are looking to translate their investments into residency permits.
The main reason for Russians to invest in Greek properties, experts say, is that real estate prices have plunged by as much as 50 percent since the Greek economic crisis started in 2008, according to Nikolas Hourvouliades, chair of Anatolis School of Business at the American College of Thessaloniki. “During the last few years of crisis, a lot of Russians have come and invested in Greece, and they have created a very positive profile for the general public,” he said.
People across numerous sectors of the economy have noticed. “It’s a trend,” said Dimitris Piperopoulos, a sales executive at the Eurobank. He indicated that Russian investment in Greece was consistent during Russia’s recession in 2008, but then dipped. “The trend was declining between 2010 to 2013. After 2013 they were coming back as usual. Now they are coming back and even more.”
According to Piperopoulos, Russian investors are interested in securing residential properties at vacation sites for personal reasons, but also so they can obtain a residence permit, which is a visa that grants five years residency in Greece, and renews every five years. In 2015, there were 1,175 permits issued to Russian citizens as compared to 970 in 2008, according to Eurostat, the statistical office of the European Union.
Launched in July 2013 to help alleviate the economic crisis, the Greek “golden visa” program offers a five-year residential permit – similar to a green card in the U.S. – to non-EU residents in order to encourage foreign investment into Greece. To get the visa, a buyer has to invest at least 250,000 euros, or $280,000, in a single piece of property.
An extra bonus, though, is that the Greek residence permit allows the freedom to travel throughout the EU “Schengen zone,” which is comprised of 26 European states that do not have border control. In other words, this gives Russian property owners free access to most European countries.
Furthermore, residence permits are issued not only for investors but also for their families. And, it’s not necessary to stay in the country to retain or renew the visa, though full citizenship can only be granted if the permit holders actually live in the country for seven consecutive years.
While some might view an uptick in foreign investors as a sign of a country losing control of its assets, that doesn’t seem to be the case in Greece. Due to the deep Orthodox roots and strong historical connections, Russia and Greece have an amicable relationship. This is why Russian investors are favoring Greece over other European countries such as the Balkan states, Turkey, France and also the United Kingdom and United States, Piperopoulos said.
Vladimir Khanukaev, a Russian who owns a real estate company named Greece.ru in Thessaloniki, echoed that. “Greeks like Russians.” Greeks “generally like Russian people due to our similar cultures and the connected religion,” he said.
According to Piperopoulos, rich Russian investors are mostly buying residential properties downtown in the northern Greek city of Thessaloniki, along the coastline of Athens and on the Greek islands such as Mykonos, Santorini and Crete. Others mainly buy residences for their summer vacation such as in Halkidiki, a popular tourist destination in northern Greece that’s only a three-and-a-half-hour flight from Moscow.
“Our main clients are Russians,” said Khanukaev, who claims to be the first to market Greek real estate properties to Russians in 2002. From his experience, the first peak of Russian investors buying Greek real estate was in 2008, before the Russian economy suffered its own crisis. “There was a very big interest at that time,” he said, noting that was also the time of a global financial crisis – which many investors took advantage of.
Moreover, the majority of Russian investors are businessmen who want to be able to come and go as they please. “They don’t need to apply for visas, and can stay here all year around whenever they want with the residence permits,” he said.
This has also translated to Russians purchasing larger, infrastructure-oriented pieces of real estate, again acquiring them at low prices in the wake of the economic crisis here. For example, Russian investors along with Germans and the French bid on and were awarded part ownership of the Port of Thessaloniki, the country’s second largest port, despite workers’ multiple strikes to protest the move.
The deal, which will be finalized in the coming weeks, was for about $251.5 million, to be paid over seven years, for a lease that expires in 2051.
“It is better to invest in properties during a crisis period,” said Khanukaev. “The prices are lower.” But that will inevitably change as the country digs out of its financial hole. “When the crisis is over, the prices will go upper again. So that people who bought properties during the crisis period will gain money.”
According to real estate agents located throughout the city, housing prices have dropped dramatically – reinforcing the claim that they’re ripe for Russian investors to scoop them up.
A few examples: A modest-sized flat at the coveted boardwalk area in the port of Thessaloniki was sold for $335,000 about 10 years ago, and today is on the market for about $223,000, said Xrysa Papaioannou, the broker listing it. That’s more than a 33 percent decrease. Meanwhile, an apartment she listed away from the water, in the busy downtown section of Thessaloniki, was sold recently for $52,600. When it was last purchased in the mid-2000s, it went for $78,000 – again, about a 33 percent difference, not calculating for inflation.
Commercial properties have been hit, too. One 1,184 square foot building in downtown Thessaloniki, bought in 2009 for $5.58 million with a monthly rent of $15,000 sold in 2016 for $2.3 million, she said, and a monthly rent of only $10,000.
The order of countries with the most residence permits is China, Russia, Ukraine and Lebanon, according to the Ministry of Interior and Administrative Reconstruction.
People from the Balkans and eastern European countries are also showing up as buyers in Greece, real estate agents say, mostly in an effort to escape their turbulent homelands. “Turkish people are mainly looking for year-long residence in case they need to leave Turkey,” said Piperopoulos.
This has produced some tension within the Greek population, he added. “In general, [Greek people] are not negative to Russians but are negative to Turkish people because we have this all history for centuries,” said Piperopoulos.
He said the difference among his clients is, Turks are generally looking for properties that are just above the 250,000-euro threshold, while Russians generally invest more.
“We have dealt with a Russian citizen who bought for 3 million euros [or $3.36 million] on the second peninsula of Halkidiki last week,” said Piperopoulos. “We don’t have Turkish people giving so much money because they only need a way out of Turkey due to Turkey’s turbulent political situation.”
According to Damianos Sachbazidis, deputy general director of the real estate firm Grekodom Development Company, based in Thessaloniki, the numbers of Russians investing in Greek real estate are becoming higher each year. “Mainly every Russian client is interested in getting the residence permit,” he said. Approximately 60 percent of their Russian clients got their residence permits and about 500 properties were sold all over Greece from Grekodom Development Company’s 12 branch offices last year, said Sachbazidis.
For many Greek people, the fact that Russians are making substantial investments in their real estate market does not seem to be a concern. It does not make a significant difference who is buying these properties if it’s helping the economy, many say.
“You know the country is in a crisis. Nobody is happy when you need to sell your properties,” said Piperopoulos. But “if you need to sell a property, you don’t care who buys it. You just care [about] the money you get. That’s it.”