Property market in freefall due to Covid

The property market views 2020 as a lost year, as it has backtracked significantly on its course to recovery recorded over the previous couple of years. The pandemic has resulted in the dwindling of the market’s main growth driver – i.e. buying interest from abroad – and this is clearly reflected in the figures of the Bank of Greece.

In the first nine months of the year capital inflows from abroad for the purchase of properties dropped 42.5% on an annual basis: In the year to end-September only 593 million euros was invested, down from €1.03 billion a year earlier, amounting to a reduction of €437 million.

Even so, the property market continues to absorb a considerable share of foreign direct investments in Greece, accounting for 25.3% of the sum, compared to 32.3% last year. Despite the difficult juncture, this year’s performance has already exceeded that of 2017, when the local realty market had attracted €415 million from abroad.

The main reason for the drop in investments from abroad is the collapse of Golden Visa program revenues, concerning investments made by non-European Union citizens in the Greek property market in return for a five-year residence permit. This year the number of permits issued is unlikely to exceed one-fifth of the total in 2019.

Migration Policy Ministry figures show that a record number of permits were issued in 2019, amounting to 3,428, with the investments connected to them totaling some €1 billion. This year, from January up until early September, only 368 permits were issued, and it is unlikely that figure will grow significantly before the end of the year given the new lockdown from November 7.

Besides the Golden Visa takings, the absence of purchases of properties destined for utilization through short-term rental platforms this year has also had an impact on the market. In the absence of foreign visitors and their uncertain return in 2021, many foreign investors have chosen to wait and see how this particular market will shape up in the coming months, given also the fact that thousands of apartments have been removed from those online platforms over the last few months.