Greece (Athens) property

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Stefi
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Stefi

Greece (Athens) property
« on: January 09, 2019, 12:20:09 AM »
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I noticed there are many people who know Greece in this forum, so let me ask your opinion.

It seems to me that apartment prices in Athens are very low and could make a decent investment.
According to Numbeo.com,  Price per Square Meter to Buy Apartment in City Centre   is  around  1,426 EUR.

I have tried some portals for searching actual apartments for sale. (What is the best one for searches? It seems they sometimes list 3 different districts for the same apartment, so you don't know where is it exactly located)

It seems the ones needed to be renovated start from 960- 1000 per sqm, you can find OK ones around 1300-1500, and very nice around 2000 €.

Taking  50 sqm x 1500 = 75 000 asking price, and a rental income of € 350 / month, this is a 5.6% yield, which is not bad at all. Taxes are just 15%.

Or maybe one can buy a better apartment in the very centre and do AirBnb and go for higher yields that way.

But anyway, the yield is just a bonus, I see the huge upside in the prices. You'd have a hard time finding 1500 € / sqm prices anywhere else in the EU, I can see these prices could easily go up (even double) in a few years.


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Alfa1234
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Re: Greece (Athens) property
« Reply #1 on: January 09, 2019, 09:19:14 AM »
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When doing rental properties, take the following into account as well:

- Add at least 1 month/year on average to your expenses for vacancies and non-paying tenants.  This will probably be higher so 2 months would be conservative.

- Add up all the costs associated with replacing everything in the apartment and building, and divide it by the lifespan of it to come to the true monthly cost (say the building will need a new roof every 30 years, cost 200k and you'll have to bear 1/10th of it as there are 10 apartments, you add 200k/10/360=55 euro/month.  A new kitchen would be say 12k and 15 year lifespan when rented out so 66/month etc).  Those are called capital expenses and will give you the true cost of the place. Your yield will drop like a stone.  Do the math correctly.

- Check laws on how difficult and quickly you can kick out non paying or partial paying tenants.  You don't want to be stuck with a year long lawsuit trying to kick out a guy that's living in your place for a fraction of the cost because he knows you'll have a hard time kicking him out as long as he pays 1/5th of his rent every month claiming he lost his job.
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arbusers
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Re: Greece (Athens) property
« Reply #2 on: January 09, 2019, 10:49:36 AM »
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I believe there was a huge business chance for Athens 3 years ago. For Thessaloniki it was 2 years ago. These was the years when funds and wealthy people were buying with a margin of safety. I personally know someone that bought 200 apartments downtown Athens and he explained his way of thinking that proves to be correct and it pays back. His margin of safety was 65% so you understand that he got a chance of a lifetime.
Then airbnb came and gave a huge boost to prices. But guess what. There are towns in Greece with no Airbnb expansion. I believe there is still a chance there.
To mention a few, Ioannina, Volos, Patra and Alexandroupolis are potential and good targets. But there are some circumstances to be met in order to have a good investment:
1. Buy with a margin of safety. That would be 25-30%.
2. Buy property that needs to be renovated. The investment in renovation really worths is.
3. Above all, make sure that who ever rents your apartment, has the ability to pay the rental.
4. A risk assessment for Greece as a country should be conducted, as the future of this country doesn't look good. This risk might add an other % in the margin of safety.

To sum up, I would say ''No go'' for Athens and Thessaloniki, but ''go'' for smaller towns as mentioned above.
There is a webpage with properties called spitogatos.gr. You might want to take look there. I believe you could negotiate prices 30-40% lower than you see there.
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Stefi
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Stefi

Re: Greece (Athens) property
« Reply #3 on: January 09, 2019, 04:55:31 PM »
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When doing rental properties, take the following into account as well:

- Add at least 1 month/year on average to your expenses for vacancies and non-paying tenants.  This will probably be higher so 2 months would be conservative.

- Add up all the costs associated with replacing everything in the apartment and building, and divide it by the lifespan of it to come to the true monthly cost (say the building will need a new roof every 30 years, cost 200k and you'll have to bear 1/10th of it as there are 10 apartments, you add 200k/10/360=55 euro/month.  A new kitchen would be say 12k and 15 year lifespan when rented out so 66/month etc).  Those are called capital expenses and will give you the true cost of the place. Your yield will drop like a stone.  Do the math correctly.

- Check laws on how difficult and quickly you can kick out non paying or partial paying tenants.  You don't want to be stuck with a year long lawsuit trying to kick out a guy that's living in your place for a fraction of the cost because he knows you'll have a hard time kicking him out as long as he pays 1/5th of his rent every month claiming he lost his job.

Thanks, this is all good advice and I agree completely.
As for tenants laws, I read this, don't know if it's correct or not:

Tenant protection laws are neutral in Greece
Rents are freely negotiable between the tenant and the landlord. There is no legal limit on the deposit.

Tenant Security: All residential rentals have a minimum legal duration of three years. If a contract for a lesser period is negotiated, the three years period applies to the landlord, but not to the tenant. A contract for three years or longer terminates automatically at the end of the contract period, without need for notice.
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Stefi
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Stefi

Re: Greece (Athens) property
« Reply #4 on: January 09, 2019, 05:20:45 PM »
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To sum up, I would say ''No go'' for Athens and Thessaloniki, but ''go'' for smaller towns as mentioned above.
There is a webpage with properties called spitogatos.gr. You might want to take look there. I believe you could negotiate prices 30-40% lower than you see there.

Thanks for the detailed answer, I really appreciate it.

However as a foreigner I'm more inclined to buy in Athens, and not in the small towns.
I think it is easier to rent out in Athens, maybe through an agent as well (another 5- 10% dent in the profits on the rent I suppose, but still OKish)

I think urbanisation (moving to big cities) is a secular trend. Maybe it will not be in Athens, as the greater metro area has already 3,5 million people, but the city center has only about 600k.

You said there has been a price boom in Athens since Airbnb (2016-2017 ?), but how much actually?
I quote this page: https://www.globalpropertyguide.com/Europe/Greece
they might be wrong though
"In Athens, the average price of apartments fell slightly by 0.44% (-1.39% in real terms) during the year to Q3 2017, the lowest y-o-y decline since Q2. Quarter-on-quarter, prices increased 0.1% (1.34% in real terms)."

So the people who you mentioned who bought 3 years ago, at what prices did they buy?  If they bought around  900 € per sqm, and I can buy now around 1300 €, of course it won't be that great, but it can be still a decent investment if prices hit say 2000 € in 3-5 years.
This is assuming you can buy an OK apartment for 1300ish. The link I mentioned said:
In our latest survey, the average price per square sq. m. in Central Athens ranges from around EUR 2,800 to EUR 3,300.
which might be true or untrue for the average, but I was able to find OKish apartments for much-much less than that on the site you mentioned.
The only problem I have with that site is that the location most of the time cannot be determined, for example:
https://en.spitogatos.gr/sale_Apartment_Metaxourgeio__Athens_-l6784994?fbclid=IwAR1UKDSvSlsAvsl5JbUcGKxVkOEGrOglSlu6-NfaCbeXiF8ruj05W_NlRYA

It is not clear whether this is in Gazi, Metaxourgio  or Votanikos ?
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arbusers
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Re: Greece (Athens) property
« Reply #5 on: January 09, 2019, 05:49:55 PM »
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A local agent means higher costs, plus you have to find someone reliable.
The link your provided is talking about prices in general, but you are not looking for properties in general. Right? If you go for the big properties that means that you are looking for high spending customers. No AirBnB but something more permanent.
They bought in far lower price than 900. Their margin of safety is huge. The build an excellent scheme who is taking care from A to Z.
-Locating property
-Negotiating
-Paying
-Renovating
-Finding the clients.
Notice these people didn't go for the AirBnB, but they rather targeted students who are looking for a home for 4 years until they finish with the University.
You simply can't have an accurate picture if you rely to links and statistics. You have to go there and get deeper to the market.
These 3 areas mentioned there is because they cant fragment the map to smaller areas. They are very near to each other, probably a distance of 1-2 km.
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Stefi
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Stefi

Re: Greece (Athens) property
« Reply #6 on: January 09, 2019, 08:08:27 PM »
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The build an excellent scheme who is taking care from A to Z.
-Locating property
-Negotiating
-Paying
-Renovating
-Finding the clients.

this sounds like a great scheme, but I'd think it only works if you buy a lot of properties or you team up with other investors.
I'd buy a maximum of 5, bur rather 3 or 4. Renovating is a big hassle, finding the right workers is next to impossible .(at least in my country)
I don't think that buying luxury flats (anything above 2000 EUR) would be  good value
The renting to students sounds good.
What is it that they are looking for?  35 - 50 squaremers,close to city centre and good public transport I guess?
Buying price would be around 1200-1300 / sqm that doesn't need renovating  and monthly rent around 350-400
Do you think this  estimate is about right?
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arbusers
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Re: Greece (Athens) property
« Reply #7 on: January 10, 2019, 06:24:00 PM »
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The calculation looks good, but i d go for a margin of safety.
Students are not only in the city centre but some suburbs as well.
In your calculation you should take into account the risk of the country which is immense.
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Stefi
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Stefi

Re: Greece (Athens) property
« Reply #8 on: January 14, 2019, 02:35:07 PM »
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The calculation looks good, but i d go for a margin of safety.
Students are not only in the city centre but some suburbs as well.

Thanks, this makes sense.
What is the square meter price range you'd look at the suburbs that you'd call a good margin of safety? Around € 1000 / sqm? Is it possible?
And which area? Places like Egaleo, or even further away from the centre?

I see that you have quite a gloomy outlook on Greece for the longer term.

The actual interest paid by Greece to EU/IMF is around 2%, which is very doable.
If there is no big exogenous shock, I don't think a recession would be on the cards.
Unemployment is still very high, but I see it more as an upside to my thesis, as I'd expect it to come down more.
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arbusers
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Re: Greece (Athens) property
« Reply #9 on: January 14, 2019, 03:18:10 PM »
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Again, we believe it is not a good idea to buy Athens. Our suggestions are well recorded above.
A margin of safety would be something like 25-30% lower from current prices. But you have to define current prices wisely. Maybe you need the help of an expert.

You can read our position on Greece here:
https://arbusers.com/index.php/topic,698.75.html
I hope you don't get scared.

You might already know that Greece hold a safety pillow of 24BN Euros. You can be more than sure that these billions will be handed to the markets one way or another. Soon, Greece will seek for help from the International factor ad this time no help will be offered. The next option for Greece will be to suck as much capital possible from salaries, pensions and taxes. Otherwise and euro-exit will knock the door once again.
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Stefi
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Stefi

Re: Greece (Athens) property
« Reply #10 on: January 15, 2019, 01:05:14 AM »
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Thanks for the answer.
I'll go through the posts in the stock market thread soon and will also post something.

And another question:
Numbeo lists
"Mortgage Interest Rate in Percentages (%), Yearly, for 20 Years Fixed-Rate"
as  5,04 %

Do you think this number is about correct?
Current yield for 10y Greece government bonds is about 4,3%:
https://www.investing.com/rates-bonds/greece-10-year-bond-yield
A 0,7% markup sound plausible.

And is it common to (partially) finance the buying of a 50-60 sqm apartment in Athens with a 20-year mortgage? (not for investors, but for end-users).
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arbusers
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Re: Greece (Athens) property
« Reply #11 on: January 15, 2019, 07:54:59 AM »
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To be realistic, no Greek bank is in position to give a loan. NPL's are around 52% but my belief is the number is around 65-70%.
Don't believe government bonds rates as these could be manipulated with 5-6k daily.
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cortomaltese
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Re: Greece (Athens) property
« Reply #12 on: January 15, 2019, 08:38:21 AM »
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The calculation looks good, but i d go for a margin of safety.
Students are not only in the city centre but some suburbs as well.
In your calculation you should take into account the risk of the country which is immense.

Could you please elaborate a little more on your pesimistic approach regarding Greece's prospect?
Country just succesfully finished with memorandums
GDP slowly but steadily raising
Unemployment slowly but steadily falling
Tourism prospects still looks great and every year breaks new records (needless to mention that GDP coming from tourism is very significant)
Apart from the 24 billion pillow , every year there's a surplus norther than the 3% required by EU , so the debt paying requirements of the country is well secured at least in short to medium terms


Is your pesimistic aproach due to other than strict finacial reasons? For  example geostrategic ones?
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arbusers
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Re: Greece (Athens) property
« Reply #13 on: January 15, 2019, 06:20:54 PM »
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Country just succesfully finished with memorandums

Depends largely on the definition of success.

GDP slowly but steadily raising

In a period when all countries GDP is running, Greece’s GDP was just crawling. In reality, the distance between Europe and Greece is getting even bigger.

Unemployment slowly but steadily falling

Largely because youth migrated abroad. How healthy is this for the future of any nation?

Tourism prospects still looks great and every year breaks new records

Correct. How much sustainable is this? You have an economy with only 1 pilar. 2019 projects are not showing a new record.

every year there's a surplus norther than the 3% required by EU

Surpluses are always a burden and a problem for every economy and I cant see any reason why Greece should be an exception. In Greece’s case, the surplus is based in the ‘’no pay’’ mode of government, plus the diminish of public investment program.

Is your pesimistic aproach due to other than strict finacial reasons? For  example geostrategic ones?

Read more:
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