Given that the tax burden increased sevenfold in the past two years, The Hellenic Property Federation reckons more than 500,000 property owners want to sell. Across Greece, about 300,000 residences are believed to be empty.
Last year Canada's Fairfax Financial invested $244 million to become the largest shareholder of one of Greece’s top real estate companies.
Along with Fairfax, other 'contraian investment' players gambled heavily on Greece property including Colony Capital in the US; Invel Real Estate Partners from the UK and Jermyn Street, an Arab-Turkish property fund. In 2014 investments totaling €1.2 billion entered the Greek commercial-property market via foreign investors. That compares to a total investment of €900 million between 2008 to 2012 according to data from the Wall Street Journal.
Watsa said he conveyed to Greek Prime Minister Alexis Tsipras the "message" about getting a deal done and removing uncertainty in a private meeting a few weeks ago. He claims Tsipras was "receptive" and encouraged Fairfax’s continued investments in Greece. Fairfax is exposed in several ways to Greek property, it owns: a 41% stake in Greek REIT Grivalia as well as a majority stake in construction company Mytilineos. They also own Greece’s Eurobank.
Two years ago, private equity firms like Blackstone and KKR were seduced, not just by the weather but because of a certain Central Bank's promise to do whatever necessary to shore up the euro zone. But now, investors say Greece's messy political outlook has sealed off a vital source of capital. Levels of foreign mergers and acquisitions activity into Greece have fallen to their lowest since 1997 according to Reuters:
KKR's first Greek deal since at least 2005 has collapsed and a company Blackstone invested in has lost more than 14 percent in value. And the longer bellwethers like these lick their wounds over bad Greek bets, the longer mainstream investors such as pension funds will keep the country on the blacklist. "The macro risks are too great and the likely timeframe for recovery is too long for most of the players in our space to view Greece as being worth the effort at this early stage," said Marc Mogull, managing partner of real estate private equity firm Benson Elliot Capital Management. Blackstone bought a 10 percent stake in property developer Lamda for 20 million euros in July 2014. Lamda had signed an agreement to develop the site of the former Hellenikon airport but Syriza halted the plan, branding the sale of prime coastal property to Lamda as "scandalous". Lamda's stock has fallen 14.3 percent since Blackstone invested in July 2014 but losses could mount when trading on the Athens bourse, shut since June 26, finally resumes. "The asset class that continues to attract interest, despite the confusion at the moment, is tourism-related property and hotels,"
Notwithstanding foreigners are said to be "keenly eyeing Greek property"; they just aren’t buying anything. The debt crisis has created much too much uncertainty, even if a Greek exit from the eurozone is unlikely there’s still the risk of a Greek property investment becoming illiquid in badly suffering economy.
Also Greece doesn’t have a national land registry system so, property is often sold without clear boundaries in terms of precise lot size or zoning. Plus there is "sky-high taxation" unacceptably high level of property tax which is "unsustainable."
The market is not functioning because of "unbearable taxation" and if a property owner makes income from property, that is also taxed. If Tsipras' government falls, there may be "a boom in real estate” according to economist Theodore Pelagidis at the University of Piraeus.
22 million visitors came to Greece in 2014, a record number according to the Bank of Greece.
The average price of a five-room villa with a sea view in Rhodes is roughly €1.5 million, compared with a similar sized property in Ibiza which costs around €4 million or Miami for €10 million. Mykonos attracts the same ilk of buyers as the French Riviera or the Swiss Alps. But when you see an attractive price in Greece, "be aware of how much you need to pay to the Greek state."
|Bank of Greece Apartment Prices Index - http://www.bankofgreece.gr/Pages/en/Statistics/realestate/default.aspx|