Investors are keeping an eye on Greece.

This is indeed an opportunity, but care must be taken

The great difficulty in buying real estate in Israel causes many Israeli citizens to look for real estate investments overseas.

Greece has become an attraction, but there are also many risks behind the investment opportunities.

It's time to make an order

Matan Partman, Guest Column

24/01/2022

Monday, 24 January 2022, 09:03

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Recently we have seen celebs expressing their interest in Greece, whether it is investing in real estate or relocating.

In the days when Israeli housing prices are constantly rising, the public may wonder whether this is a gimmick, or the steps taken after market research and informed decisions?

Greece, like many countries in the world, experienced an economic crisis as a result of the US subprime crisis in 2008. Unlike most countries, it took Greece a very long time to recover from the crisis that led it to a debt crisis with EU countries, especially Germany. As for its future, buds of renewed prosperity and recovery can be seen.Instead of going captive after familiar figures, one should examine what Greece has to offer in terms of real estate and what opportunities and risks exist in such a process.

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To the full article

Unemployment has gone down, euphoria has grown.

Athens (Photo: ShutterStock, Shutterstock)

A tavern of circumstances

In recent years, real estate prices in Greece have begun to rise at an impressive rate of 6-8% per year, while there is still a gap of about 25-30% from the peak of pre-crisis prices

It can be seen that out of the fractures resurfaced growth in the country.

Unemployment, after peaking at about 28%, fell to 17% (in Athens only 10%), GDP rose and the economy strengthened. Of tourists and constitutes 14% of the total local economy, as well as an increase in residents' wages, Greece's credit rating and the announcement by foreign banks of their intention to start providing financing in Greece. This significantly pushes the real estate market.

To this, it should be added that Greece is the cheapest country among the member states of the European Union, while the local currency is the strongest euro.

The capital Athens is a city with a student character, which includes large and well-known universities and extensive nightlife.

In recent years, real estate prices in Greece have started to rise at an impressive rate of 6-8% per year, while there is still a gap of about 25-30% from the peak of pre-crisis prices. Today, the government gives various grants to investors and tax breaks, which we will expand on later. In addition, Greece is the country where it is easiest for EU countries to obtain a golden visa and / or citizenship (this is European citizenship / visa), another significant factor in the arrival of investors from all over the world. Cheap real estate prices, along with economic growth, Higher than other European countries and have the potential for significant increase in value.

A prudent investor knows how to spot the warning lights ahead of time

Although Greece is recovering from the crisis, it is still considered a growing economy and therefore more vulnerable to economic crises, something that needs to be taken into account.

It is also a different culture in which the language is first and foremost Greek, which may lead to language gaps between the various professionals and the signing of the various agreements.

In addition, unlike the vigorous and active Israeli culture, the work culture in Greece is considered slower, which makes it difficult, among other things, to find quality manpower.

Finally, some of the economic activity in Greece is done in black.

We as a society of course completely avoid this, but it is a phenomenon that should definitely be recognized.

Begins to recover.

Greece Real Estate Price Chart (Photo: PR)

Real estate investing is a specialty

As with any investment abroad, investments in Greece are linked to foreign exchange, something that must be taken into account, probably in light of the fact that the value of the shekel is very strong. Like many economies in the West, the Greek economy has experienced an increase in inflation. This increase is due to the increase in the prices of goods and transportation that affect the consumer prices of many products and services, as well as the increases in construction materials, etc., which should be taken into account mainly in entrepreneurial projects.

To all this, it should be added that investing in real estate is a specialty. Unfortunately, because of the proximity to Greece and the temptation created by cheap prices and the emotional proximity to Greece that intensified as Israeli tourism in the country increased, more and more Israelis can invest Mistakes that offset them from profits and in other cases, mistakes that also lead to losses. In this case, it is important to understand that every investment has a risk and no one guarantees you such and such promises.

If so, why choose to invest in a country whose economy is unstable?

Greece is less than a two-hour flight from Israel and the options to get there are available immediately and cheaply, especially compared to other countries in the world.

Also, the profit potential is higher, compared to other countries (for example Germany) where the economy is strong and real estate prices are at their peak. The situation in Greece is such that prices are significantly lower than the peak of prices and are constantly on the rise. His, in scattering his investment portfolio and his goals, at the end of the day the investment should suit the investor and not the other way around.

Invest or invest - that's the question

When operating correctly and in an orderly manner, some of the investments can also benefit from the temporary order in Greece, which currently gives an exemption from capital gains tax, which stands at 10%.

At the end of the day, anyone who invests through a professional body is likely to share some of his profits in the end.

This is in the interest of the investor, who wants the responsible body to have a clear interest in the project succeeding.

Bottom line, the investor should check whether the profits in the project he wants to get into are attractive enough after the division with the governing body.

Also, the potential profits is the last thing I look at, because "Excel eats everything".

It is much more important to understand what the company's investment strategy is, what risks they see in the investment and how they are dealt with, what that company's record is and more.

Today, the purchase tax in Greece stands at 3.09% (while in the country it stands at 8% for a second apartment).

Greece is known for its many taxation games, adapted to the form of incorporation and the type of investment, whether it is an investment in a hotel or residence, investment as an individual or through a Greek company, an Israeli partnership and more.

When done correctly and in an orderly manner, some of the investments can also benefit from the temporary directive in Greece, which currently gives a capital gains tax exemption of 10%.

This temporary instruction is renewed every year and so far it has been renewed 4 times already.

In addition, the investor can enjoy an exemption from capital gains tax in Israel under a tax treaty signed between the countries.

To this should be added various benefits provided to investors in hotel projects.

However, it is important to know exactly how to do things right in order to enjoy them.

Since the tax issue is complex, it is crucial to build the tax structure in a unique way for the project in each investment.

Guidelines vary, but profits can still be made.

Thessaloniki (Photo: ShutterStock, Shutterstock)

Caution, revolution

Matan Partman (Photo: RM)

Greece has undergone a real revolution in recent years.

The economy is constantly growing, the local government is helping to bring in foreign investors by reducing taxes and tourism on the island is more popular than ever.

"All of these factors are a significant incentive for real estate investing in Greece. However, it is important to make such a move in a controlled manner and enlist the help of experts who know the local market on all sides and can give each investor the necessary toolbox throughout the acquisition process.

* It should be noted that the author of the article is not an accountant and should not be considered a tax recommendation of one kind or another and that the appropriate bodies should be consulted.

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