Real estate: ENFIA, taxation, loans and others "Problems" in 2022

Themistoklis Bakas, president of the pan-Greek real estate network E-Real Estates, spoke about what the image of the real estate market will be in 2022.

The coronavirus pandemic is the main regulator of tomorrow and is reshaping data that until now have been considered landmarks in many sectors of the economy.

“The Greek economy receives as a ‘dowry’ dynamic growth in 2021 compared to 2020 and assurances from the ECB that government bonds will remain protected this year. However, we must not forget about crises: pandemics in the energy sector, as well as inflation, which is a very difficult task that needs to be solved this year, ”Themistoklis Bakas believes.

Solution – focus on private investment

A counterbalance to all of the above, according to him, can be an important instrument “Greece 2.0”, which our country has at its disposal for the transition to permanent and sustainable development throughout the year. “The emphasis on private investment (about 1.5 billion euros goes almost exclusively to small and medium-sized enterprises) and narrowing the investment gap. The criteria that will determine the sustainability of small and medium-sized enterprises will be the most important success factor, ”he comments and lists the“ challenges ”for the Greek property market in 2022.

Prices for building materials / plots

The rise in prices for building materials reaches 20% -30%. The increase in their prices in relation to the increase in the value of land is a decisive combination affecting the asking prices for the sale of new homes. At this point, one should ask the question to what extent the above factors will affect the asking prices of the sale and whether it will reduce the interest in buying.

Green transition

The recent announcement by the Prime Minister that the installation of fuel oil heating systems will be banned from 2023 provides a first glimpse of the changes that are taking place in the real estate market due to the environmental crisis. The changes that have already been launched by the EU strategy (with a plan for the period up to 2030) are to reduce greenhouse gas emissions by 60%. Greening real estate will increase construction costs and sales prices. While, according to the head of ESG of the German investment group DWS Group (it has assets of more than 1 trillion euros), Ms. Alexandra Nyagul, it is planned to “reach a point in the near future where real estate that does not meet the criteria cannot be sold , not rented. “

New mortgage loans

The ability of banks to increase the mortgage lending rate, as well as the volume of money, will play an important role in the further development of the real estate market. In the period from 2015 to 2020, the issuance of mortgage loans was at the level of 577 million to 687 million euros per year, and in 2021, respectively, amounted to 900 million euros, when for 2005-2007 from 5 billion to 15.5 billion euros per year. If we calculate that the average loan in 2021 was about 100,000 euros, then we understand that we are talking about 9,000 new mortgage loans.

Interest rates

A possible rise in interest rates due to inflation affects the real estate market – both by increasing the cost of money for industry professionals and for potential buyers of real estate. A nice fact is that most banking institutions have lending programs with fixed interest rates for 7 and 10 years.

New wave of red loans

According to the interim report, Yannis Sturnaras is sounding the alarm once again: loans of several billion that are now in regulation (Bridge, stepup programs) from the fourth quarter of 2021 and in 2022 will be classified as non-performing.

Auctions

Given the opportunity to reduce the initial commercial value of the property put up for sale by 35%, the real estate market is likely to “resist”. If the statements of the head of the claims management company are valid, with 50,000 properties will be available through auctions every year for the next five years at discounted prices (even 35% of free market prices). Which, of course, makes you think about entering the domestic real estate market.

Tourism

Tourism is a key investment aid in the domestic real estate market. The “safe tourism” factor will be the main regulator of how potential domestic travelers and foreigners decide to spend their holidays this year. Greece will strive to start the season early, with the first signs of pandemic-safe tourism that are encouraging our country’s world-renowned summer destinations. At the same time, the tourism model is changing, not only in our country, but also in almost all European countries in the south, such as Spain, Italy and France, which “exploit” the resources of the restoration fund.

Golden Visa

From 2013, when the Golden Visa program was launched, until November 2021, 9473 real estate investments were made in order to obtain a residence permit. They are targeted at specific areas of the country.

During the pandemic, and especially in 2020, 938 visas were issued, and from the beginning of 2021 to November – only 898, which indicates a rapid decline compared to 2019, when their number reached 3536. We hope that the upcoming changes in the Golden Visa program after the end of the pandemic will be in a direction that will stimulate investment throughout the country, as well as eliminate cases that “discredit” the Greek real estate market.

Tax regime / ENFIA

The tax regime is becoming more favorable for real estate. An important factor here is both the free provision of real estate by the parents and the parental monetary donation of up to € 800,000, which is now exempt from the unfair tax rate of 10%.

Tax incentives (e.g. Non-domestic)

Taxation is an extremely useful tool for achieving growth and investment goals, and for securing government revenues. Using and properly targeting stakeholder information will be key to success. For 2 years of implementation of the provisions on attracting new tax residents and investments in Greece, 75 applications of investors and 23 of their relatives from 21 countries have been approved.

Short term rent

Interest in short-term rentals, which has fallen due to the pandemic, has resumed. This is recorded in terms of occupancy both in the summer months and in the winter season in many directions. The sharing economy sector can be “part” of the new tourism model.

Changes due to Covid-19

Working from home is now a new trend, with the result that both private / government employees and freelancers are looking for additional space inside their home to work with. The course of a pandemic will determine its dynamics.

Population income

According to the ELSTAT 2020 household income and living conditions survey, the population at risk of poverty or social exclusion accounts for 28.9% of the country’s population (3,043,869 people).





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