ARENCORES – REAL ESTATE EXPERTS IN CRETE 1
IS NOW THE RIGHT TIME TO TO BUY
IS NOW THE RIGHT TIME TO TO BUY BUY A PROPERTY
IN RETHYMNO, CRETE?
ARENCORES – SEPTEMBER 2019 RESTful N.8
ARENCORES – REAL ESTATE EXPERTS IN CRETE 2
CASE STUDY:RETHYMNO PROPERTIES
Is now the right time to buy Is now the right time to buy
RERTHYMNO PROPERTIES: CASE STUDY
ARENCORES
ARENCORES – REAL ESTATE EXPERTS IN CRETE 3
James Eddie has just bought her first property in
Crete, Greece. After months of searching, the 55-
year-old, together with his wife, Lott, has found a
large plot in Rethymno, Crete. The couple
completed the property purchase process on July
2019. The price: just under € 300,000.
“The property sellers had a lot of interest and we had
to go to sealed bids,” says James, a civil engineer
and entrepreneur in the United Kingdom. “With the
help pf our real estate professionals, we moved
quicker than we would have liked because the
market was a little sparse and we were worried
about how many more similar properties were
going to come up for sale in Rethymno. But we liked
it,” he says, “so we went for it.”
If James had waited, would he have got a better deal?
“Property prices have risen much faster than
property prices across Greece in recent years. In
2018 alone, plot prices rose an average 2%, while
residential property prices rose a more modest 3%.
In 2019, however, the roles have reversed. While
residential property prices continue to climb, plot
prices have lost steam. Essentially, plot (with
building permission) prices are no longer rising, with
the rate of increase falling in Rethymno in
particular.”
According to the latest figures from RESTful, plot
prices fell close to 1.2% in June 2019, while
residential property prices rose 0.3% from the level
in June 2019 – and a number of indicators point to
this trend continuing into the autumn. In the first
three months of this year, prices were up 2.5 per
cent on the first quarter.
Greece emerged from a decade of bailouts in
August last year and is now relying on financial
markets to cover borrowing needs. The recent
elected government fully lifted remaining capital
controls earlier this month. Its economy remains way
below the size it reached before the crisis, when
national economic output was around 242 billion
euros.
The newly elected conservative government is keen
on accelerating the country's economic recovery
through promised tax relief and investment friendly
policies.
In its spring forecasts, the EU Commission projected
the economy would remain resilient and expand by
an annual 2.2 percent this year. The country's central
bank sees growth remaining at last year's pace,
around 1.9 percent. If that were to happen, property
prices could increase 5-20 per cent in the next three
years, according to the Bank of Greece.
Lott is very excited about their first real estate
investment in Greece. “Neither of us are particularly
concerned about the crisis,” she says. “This is our
first property purchase in Greece and we’ll probably
be here for three to five years at least, so we were
more concerned that we wanted to buy in an area
that was going to come up.”
Many property agents and real estate experts agree
with her. Speaking at a property market conference
earlier this year, Bank of Greece Deputy Governor
Theodoros Mitrakos said the Greek real estate
market was transitioning towards stabilization,
showing significant signs of recovery and mobility in
both the residential and commercial property
market which is expected to continue into the next
year. This, of course, is exactly the kind of thing
estate agents like to say, so how can we be sure?
The answer depends on your circumstances, but let
us look at the evidence to help you decide whether
to make a move — or wait it.
ARENCORES – REAL ESTATE EXPERTS IN CRETE 4
Request more information about this property at
[email protected] or visit www.arencores.com
A rare and unique find – a large plot of 3,177.00 sqm (2 plots of 1075.00 sq.m and one plot of
1027.00 sq.m) in Rethymno, Crete. This is a great investment opportunity for anyone interested
in possibly building a hotel or apartments, as you can build up to 1200.00 sq.m. on this property
if you are going to use it as business premise. Alternatively, even if you're interested in building
your own home, you will have up to 400.00 sq.m allowance for building your residence.
Think Thinking about buying a property in Rethymno, Crete?
ARENCORES – REAL ESTATE EXPERTS IN CRETE 5
What the data show
The seasonal nature of the property market makes
spotting and predicting short-term trends difficult,
and the real estate framework makes it even
harder. Still, there is some evidence the market in
Rethymno should be follow a path of growth. The
Greek economy grew by around 2% in 2018,
according to the European Commission(EC) – an
improvement from last year’s 1.5% expansion and
the highest growth since 2007. After a short-lived
recovery in 2014, Greece’s economy returned to
recession in 2015, with GDP contracting by 0.3%
and by another 0.2% in 2016, amidst the imposition
of capital controls and the closure of most of its
banks. Before this, the country’s real GDP had
contracted by 3.2% in 2013, 7.3% in 2012, 9.1% in
2011, 5.5% in 2010, 4.3% in 2009 and 0.3% in 2008.
The EC expects the Greek economy to grow by 2%
this year but the International Monetary Fund (IMF)
is more optimistic, projecting 2.4% growth.
The country’s debt is expected to fall to 174.9% of
GDP this year and to 167.4% of GDP in 2020,
ARENCORES – REAL ESTATE EXPERTS IN CRETE 6
according to the European Commission, down
from 182.5% of GDP in 2018.
Unemployment was 18.6% in September 2018,
down from 20.8% a year earlier, according to the
Eurostat.
Inflation was 0.6% in 2018, from 0.7% in 2017, zero
inflation in 2016, according to the Hellenic
Statistical Authority. According to the Bank of
Greece Inflation is projected to accelerate to 1.2%
this year.
However, there are two important elements that
the report of the Bank of Greece and other reports
cannot display. First, the fact that all the figures and
numbers would be completely different if the
market was allowed to operate properly without
government intervention. That means allowing
auctions to happen without any restrictions.
Secondly, the last three years have seen a lot of real
estate investment related to the increase of
tourism.
This is affecting the numbers and the market
dynamics, which is not representing the correct
market outlook for the residential and
commercial/office properties around the country.
Another reason that we are observing a small
positive change in the market is the mandatory
increase of the tax values which has been
implemented over the last few years. This increase
is completely artificial and does not change or
affect positively the market values.
The reality of the Greek property market remains
misty. There are some areas such as popular islands
where holiday houses show an increase in demand
based on the impressive current status of Greece
as a popular tourist destination in the region as well
as the golden visa program.
In reality, the core section of the housing and
commercial market around the country is still
suffering from low demand and lack of affordability
as the average purchase power of the Greek family
has been weakening year after year since the
beginning of the recession.
What the agents say
After such a large adjustment — even greater in
international currency terms — Rethymno is
starting to look like pretty good value for property
investors. “And very good value in comparison to
its competing cities in Crete, Chania, Heraklion and
Agios Nikolaos.
In the first quarter of this year, Maria Gkika, owner
of the ARENCORES real estate agency firm says her
agency received the highest number of offers on
properties in Rethymno for 5 years, and in July, it
reported 3.2 new buyer registrations for every
ARENCORES – REAL ESTATE EXPERTS IN CRETE 7
research article in Rethymno property market —
the highest ratio for 4 years.
“Property buyers have been watching the market for
value and holding off,” she says. “But only up to a point
can they hold out. Now they want to make a decision
— and they’re looking for opportunities.
“People are a little bit bored of talking about crisis,”
says Nikos, an estate agent based in Rethymno. “I think
that the hard times currently appear to have passed for
the domestic property market… and if there are no
turnarounds in the near future, it may be safe to say
that overall the property market reached its lowest
point in 2015-2017 and from then on is beginning to
recover.
Property market professionals say that the main
drivers behind this growth – besides the economic
stability and the conclusion of the bailout programs
– have been the expectations for significant returns
from the utilization of properties through short-
term holiday rental websites such as Airbnb and
HomeAway, and the successful program granting
five-year residence permits to non-European Union
citizens who invest at least 250,000 euros in Greek
realty.
Out of the estimated 70,000 houses and apartments
leased through the online platforms in Greece, a
considerable share belong to foreign owners. Many
of them are Chinese, who also choose to buy
apartments in the southern suburbs of Athens for
their own use.
Other nationalities act differently in the market: The
Russians don’t just focus on the center of Athens but
also opt for holiday homes and the region of
Halkidiki in Central Macedonia.
Middle Eastern buyers, such as those hailing from
Lebanon, Saudi Arabia and the United Arab
Emirates, also prefer properties in the capital’s
southern suburbs, but they tend to put them up for
long-term lease to Greek households, not through
the online platforms.
It should be stressed that last year the
Golden Visa program led to buyers being
awarded 1,399 residence permits – up 46
percent from the 961 permits issued in
2017, according to data from the
Migration Policy Ministry.
ARENCORES – REAL ESTATE EXPERTS IN CRETE 8
What the developers say
Residential construction in Greece is rising again,
after almost a decade of declining activity. In 2017,
building permits rose by 9% y-o-y to 13,785 units,
after annual declines of 5.3% in 2016, 0.6% in 2015,
18.2% in 2014, and 28.1% in 2013. Despite this, it
remains far lower than the 70,000 to 80,000 permits
issued annually from in 2004 to 2007.
The recovery extended last year. During the first
nine months of 2018 (based on figures
from Hellenic Statistical Authority):
Number of permits: 10,817 units, up 9% from a year
earlier.
Floor space: 2.35 million sq. m., up 17.9% from a
year earlier.
Volume: 10.17 million cu. m., up 15.7% from a year
ago.
So is now the right time to
buy property in Rethymno?
The property market recovery is gaining
momentum as buyers, buoyed by better borrowing
conditions, stake their claim in a smaller pool of
properties on the market.
Some real estate professionals say that Greece’s
real estate recovery is a tale of two markets. They
say that key cities and tourism hot spots –like
Chania and Rethymno are enjoying a fresh boom,
fueled by interest rates that are still near historic
lows, an economic recovery and a banking system
that’s finally cleaning up its act.
However, if you travel out of the main centres to
the outskirts of smaller villages, and there are still
ghost constructions with once ambitious
developments still stand half finished, unable to
find a buyer.
Property experts expect strong demand from
domestic and foreign buyers. They predict that
popular locations such as Rethymno, Chania,
Elounda, will continue to attract buyers, particularly
from Germany, Israel and France.
However, despite there being the general belief
among estate agents that benefits will trickle down
— because that is what happened after the
financial crisis, the last time property prices
slumped — that may not be the case this time.
There has not been any real correction in the wider
property market of Rethymno. In fact, it looks like
more of a stagnation that correction. The big
transaction falls happened a couple of years ago
and now the number of sales are just bumping
along at very low levels and property price growth
is kind of going sideways.
After such a large adjustment, Rethymno is starting
to look like pretty good value and, thanks to stamp
duty reforms, and the reduction of certain property
taxes for landlords, (ENFIA) there some great
prospects than there were five years ago.
However, some investors and property byers are
still waiting. But waiting is not right for everyone.
James Eddie and his partner would have certainly
lost out on a property they loved if they had not
committed to buying it. They can afford the
mortgage repayments and they intend to stay for a
while. If you put your life on hold in the search for
conclusive proof that the property market has reset
itself, be prepared to wait for a long time indeed.
ARENCORES – REAL ESTATE EXPERTS IN CRETE 9
Rethymno
Basking between the commanding bastions of its 15th-century fortress and the
glittering azure waters of the Mediterranean, Rethymno is one of Crete’s most
enchanting settlements. Its Venetian-Ottoman quarter is a lyrical maze of lanes draped
in floral canopies and punctuated with graceful wood-balconied houses, ornate
monuments and the occasional minaret.
Ribbons of mountain road wind through
the timeless interior, passing fields of wildflowers and traditional hamlets cradled by olive groves. Descend into the spooky darkness of grotto-like caves; explore steep, lush gorges; and rest in the shade of lofty Mt Psiloritis, Crete’s highest peak. Visit enduring monasteries, Minoan tombs and Venetian strongholds. Rethymno is also a magnet for artists, many practising age-old trades with modern twists.
Crete's third-largest centre has lively
nightlife thanks to its sizable student
population, some excellent restaurants and
a worthwhile sandy beach right in town.
The busier beaches, with their requisite
resorts, line up along a nearly
uninterrupted stretch all the way to
Panormo, some 22km away.
ARENCORES – REAL ESTATE EXPERTS IN CRETE 10
ARENCORES RESEARCH REPORTS
The information contained in any research report
does not constitute an offer to sell properties or the
solicitation of an offer to buy, or recommendation
for investment in, any property in Greece or any
other jurisdiction.
The information in any research report is not
intended as financial advice. Moreover, none of the
research reports is intended as a prospectus within
the meaning of the applicable laws of any jurisdiction
and none of the research reports is directed to any
person in any country in which the distribution of
such research report is unlawful.
Any research report provides general information
only. The information and opinions in each research
report constitute a judgement as at the date
indicated and are subject to change without notice.
The information may therefore not be accurate or
current. The information and opinions contained in
research reports have been compiled or arrived at
from sources believed to be reliable in good faith,
but no representation or warranty, express or
implied, is made by ARENCORES as to their accuracy,
completeness or correctness and ARENCORES does
also not warrant that the information is up to date.
Moreover, you should be aware of the fact that
investments in undertakings, securities or other
financial instruments involve
risks.