On small islands over the Mediterranean Sea with houses, shops, hotels (basically all buildings) colored in white and blue, capturing the country’s iconic flag and keeping its culture alive, people from around the world fly to explore the magnificent Greek civilization that has been kept preserved throughout the years as it copes with today’s modernity. Egyptian travelers, on the other hand, have started to buy properties in the Greek islands rather than just going on summer vacations. Invest-Gate looks into this common trend among wealthy Egyptians that has been growing over the past year or two.
Over the past few years, and especially after Greece’s recession in 2008, travel agencies across Cairo have been working closely with those in Greece to tailor holiday packages for the exploration of the Greek islands of Mykonos, Santorini, Glyfada, and Lefkada, to name a few. The more Egyptians are traveling, the more popular Greece is becoming in terms of buying properties and even holding wedding ceremonies. For wealthy Egyptians, it has become a common phenomenon to hold wedding ceremonies during the summer season across the many Greek islands. Mykonos, for instance, has popped up on the radar following last year’s island wedding ceremony of businessman Karim El-Chiaty, owner of Travco Group Holding in Egypt, and “the number of requests for villas on this island has increased tenfold,” according to CBRE, the world’s leading commercial real estate adviser.
Greece’s real estate market has become accessible to Egyptians thereafter. Talking to the Head of Residential Agency at CBRE Safina Ahmad, she highlights the similarities the world’s oldest civilizations of Greece and Egypt share that made Egyptians feel home away from home.
“There are many reasons why Egyptians are interested in buying properties in Greece. It is the friendship between the two oldest civilizations of the world that is deep rooted and echoed in their cultural similarities,” she expresses. “Egyptians feel very comfortable in Greece.”
“The buyers we have met travel to Greece several times a year. Some have children attending schools or universities in the country or plan to send them,” Ahmad tells Invest-Gate.
“It is common for those, who have already established real estate holdings in their home countries, to diversify geographically and Greece is a natural choice for Egyptian investors,” she says.
According to CBRE, the Bank of Greece noted by the end of 2016 several consecutive quarters of zero percent property price movement and the y-o-y change was just -0.4%, marking the lowest drop since 2009. The Global Property Guide notes that with prices adjusted for inflation, the real estate market increased by only 0.03%.
A June 2016 analysis by the Bank of Greece shows that between 2008-2015, EUR 18 bn (or 8.2% of GDP) investments in construction were lost, slowing further the economic activity. Housing market prices dropped more than 5% from 2011 onwards, while the total house prices contraction accounted for 41%, especially in the urban centers during the same period. Moreover, transactions volume (property deals) of dwelling stock dropped about 19% and shrunk by approximately 72% in total.
“The taxation of real estate property rose by six times comparing to 2010 to almost EUR 2.5-3 bn,” the analysis reads.
Moreover, London-based professional services network PricewaterhouseCoopers (PwC) confirms the significant slowdown witnessed in the Greek housing market during the same period, highlighting the tax increase, “representing almost 2% of the disposable income per capita”.
Comparing the Greek market to Spain and Italy, PwC report claims, “While house prices in Spain and Italy seem to have adjusted to the economic conditions, in Greece they have become slightly cheaper” to those with disposable income.
House supply is dominated by the existing dwelling stock, 55% of which has been built before 1980. The existing dwelling stock continues to expand at a slower pace. Ahmad confirms, “Concerns of oversupply have completely dissipated as building permits have dropped to around 12,500 units compared to 70,000 to 80,000 permits issued annually between 2004 to 2007.”
With Greece’s high tourism flow, Bank of Greece states that the country’s economy has increased to 2.7% this year and anticipates it to go over 3% in 2018. Ahmad believes such factors are the trigger to the recovery of the real estate market. “These factors signal the recovery of the housing market with economists agreeing that the market has now bottomed out. This year, we are expecting to see modest price growth, which we can expect to gather pace thereafter,” she tells Invest-Gate.
With relatively low property prices and affordable taxes when compared to the Egyptian real estate market, Egyptians’ interest in investing in Greece alarmed agencies like CBRE. Ever since, the agency’s participation in CityScape Egypt last March, it has been “registering over two hundred enquiries a month from Egypt alone.”
“We received overwhelming responses from local clients. Egyptian buyers have an interest in investing in Greece mainly due to its amazing investment value,” expresses Fong Fong Lee, public relations consultant at Euroterra Capital, the reputable Greek developer behind the marketed Crystal Waters project in Lefkada, and participant at this year’s CityScape Egypt.
Among the projects that are highly promoted among Egyptian property investors in Greece today is the Crystal Waters in Lefkada Island, claiming to be a preferred second home destination “among sailing enthusiasts,” claims Ahmad.
Crystal Waters comprises 100 boutique residential villas and apartments, capturing the traditional architecture of the island. All units overlook the Skaros Mountains, and are just 50 to 200 meters away from the beach. This gated community also enjoys a wide range of luxurious amenities, “epitomizing the very best of Greek living,” Lee demonstrates.
To interested Egyptian investors, this new project, as Lee puts it, “provides the very best amenities, including dedicated five star concierge service, a swimming pool, an outdoor restaurant, and meandering communal gardens,” in addition to the project being offered to Egyptian buyers on a – 7%- installment plan – over five years with rental guaranteed!
On the other hand, Ahmad confirms that Euroterra Capital is a trusted developer among interested Egyptian buyers with a wide portfolio across Europe, including Central London. CBRE also confirms that it has received purchasing requests from Egyptian buyers in other destinations, including Glyfada Island in Athens and some off-market villas in Mykonos as well.
Another key factor that drives Egyptians to Greece is the chance of becoming residents at the European Union with EUR 250,000 only, unlike many other member countries across the union like that of France, requesting a total investment of EUR 500,000. “Residency is a selling point to around 50% of the Egyptians enquiring about and buying in Greece,” Ahmad admits.
Indeed, such a residency program allows visa-free travel to 26 Schengen countries, “ideal for those, who need to travel throughout Europe for business,” Ahmad states; but is an annual income tax in a foreign currency put into consideration when buying a property?
“Many Egyptians we have seen aim for investment. They either pursue a better quality life in Greece with its sun and sea… or invest for capital gains and rental returns,” assures Lee. “Many of them are businessmen, entrepreneurs and investors.”
According to Lee, the real estate market today has attracted Egyptian individuals more than local developers. “We have not yet seen moves on the part of developers in Egypt to promote the market or their products to Greek buyers. The majority of their external marketing activity has been focused on the Middle East, where there is great demand for property, particularly in Cairo,” Ahmad tells Invest-Gate.
Coming out of a recession and opting to recover, Greek developers have managed to gain trust from the outside world, allowing Egyptians – with similar economic conditions – investment opportunities in the country. But turning tables, Egyptian developers are doing nothing to attract the Greek population to the local market and only focus on Arab investors. It is ironic how the wheels have turned. Egyptians today are to dominate the Greek property market, when Egypt was once home to a huge Greek population that now dwindled to around 10% of its peak.