The Greek islands have the azure skies and crystal clear sea credentials to suit millions of tourists, yet their popularity with tourists is not quite matched with overseas property investors. However, the factors behind this Greek dichotomy are being addressed and now may be the perfect time to enter the Greek island property market.

A complex web of bureaucracy, old fashioned laws, lack of financing and high taxes has combined to put some investors off Greek property in the past, however the current Greek government is keen to attract overseas buyers to its shores. A change of government in 2004 has ushered in a new political direction in Greece and high unemployment rates, heavy taxation levels and endless red tape are now changing for the better.

The former socialist government had stifled an emerging property market in Greece – with restrictions on foreign ownership and heavy taxation on profits from Greek property – whereas today a twice elected, forward-thinking government is encouraging investment from overseas.
Taxation is one of the key areas to experience reform – now if you reinvest profits derived from capital appreciation of Greek property assets, for example, you avoid capital gains tax, and foreigners can also buy property unrestricted in Greece.

Encouragingly, the current Greek Minister of Tourism, Aris Spiliotopoulos, said recently in a speech at the launch of the new promotion campaign Greece Abroad that his intention is to show the world that Greek property has the same capacities, services and infrastructures as the rest of the developed countries in the EU.

Meanwhile, in its report on the Greek travel and tourism economy, the World Travel and Tourism Council (WTTC) praised the former Minister of Tourism, Fanny Palli-Petralia, for initiating strong leadership and sound strategy to Greece's previously under-performing tourism market. Greece is doing well in terms of the amount of market share it commands, with a 10 per cent share of the Mediterranean tourism.

From the point of view of buy-to-let investors the landscape is definitely improving in Greece. Tourism numbers are increasing year on year, with the WTTC predicting up to 3.7 per cent growth in tourist-generated revenue annually. The government has also received significant amounts of money from the EU for spending on infrastructure improvements – 48 billion euros between 2000 and 2004 alone.

A new product from the UK arm of Greek bank Piraeus, has also made borrowing money to buy in Greece much easier and attractive for investors in high-end Greek property.

The 'High Value Invest Product for Greece' is offered to British, Irish and expatriate investors with minimum income levels of £75,000 who require financing for Greek property valued over 500,000 euros.

The product is specifically for investors because, depending on the location of the property purchased, between 50 and 75 per cent of projected market rental income is taken into account towards mortgage repayments. Buyers using this product also get the advantage of an interest only period of up to ten years whilst borrowing up to 80 per cent loan to value in Euros, Sterling, US Dollars or Swiss Francs (interest rates currently start at 5.5 per cent for interest only loans denominated in Euros).

"The Greek government is looking to the long term in encouraging foreign investment and it is our policy to actively facilitate property buyers looking to make both lifestyle and investment choices in Greece," Irini Tzortzoglou, Head of Retail Banking at Piraeus Bank UK, comments. "We specifically invite British, Irish and expatriate investors to talk to us when considering the almost untouched wealth of opportunities of the Greek real estate market."

High-end property on the popular Greek island of Crete may represent the best option for those looking to capitalise on the improved conditions in the Greek tourist and property markets.

The villa pictured is offered by Cretan Residences at  695,000 euros, and thus qualifies buyers for the Piraeus Bank financing arrangement. The property is arranged over three floors and currently includes family living accommodation and four self contained apartments – making it ideal for buy-to-let investors. Notable features of the property are two large terraces, with the views shown above, and outdoor swimming pool.

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For more information:
Piraeus Bank
Cretan Residences

Article first published Febryary 28th 2008