Owning a sea-view property on the Aegean coast is becoming a reality for a growing number of Chinese investors. Foreign capital is flowing into the Greek real estate market, the epicenter of the European debt crisis. This is due to the residency permit system, which grants residency to investors exceeding a certain investment amount. Investment in Greece is considered to have the lowest entry barrier among European countries with similar systems. Currently, Chinese buyers account for over 40% of foreign buyers of Greek real estate. The influx of Chinese "hot money" has drawn significant attention for its effect on boosting the Greek real estate market and stimulating the economy.
"Golden Visa" and Real Estate Investment Immigration
Greece's efforts to overcome the economic crisis are beginning to bear fruit. On November 21st, a senior Greek government official stated that Greece expects to exceed its budget surplus target for the third consecutive year in 2018. This result will help alleviate budget shortages and thus assist the domestic population affected by the economic recession.
The "Golden Visa" has played a crucial role. The Greek government introduced the investment promotion policy known as the "Golden Visa" in 2013. According to policy regulations, investors and their families can obtain a five-year residency permit by purchasing real estate or investing in construction in Greece for over €250,000, granting them free travel to 27 Schengen countries. The residency permit can be renewed as long as the property is not sold, and can be renewed after five years until citizenship is granted. After citizenship, one can freely travel to 169 countries worldwide, second only to the UK and the US in terms of the number of countries one can visit.
According to data released by Greece in the first quarter of 2017, 1,684 investors have obtained Greek permanent residency through the €250,000 real estate purchase policy, with Chinese citizens accounting for 41.6%, ranking first.
For those genuinely interested in immigrating to Greece, investment risks seem less of a concern. "Compared to the purchase restrictions in major and medium-sized cities in China, Greece is seen as an advantageous investment project for preserving and increasing wealth. Compared to other immigration countries, European immigration incentives are not indefinite; they are only for periods of sluggish economic growth," said the head of a Greek project at an immigration agency.
"The €250,000 investment threshold allows you to purchase up to three properties in Greece. Currently, Greek property prices are still at a post-crisis low; apartments in the city center can be bought for tens of thousands to €100,000, making now a good time to buy in Greece," said the aforementioned official.
According to Greek government statistics, 2,014 foreigners used this system to purchase real estate before September 2017, with investments and related income exceeding €1 billion. The number of residence permits issued, including for family members, has also gradually increased, reaching 1,567 in 2016, an 80% increase compared to 2014.
The Belt and Road Initiative and Chinese Capital
Economic and trade exchanges between China and Greece are continuously heating up. With the ongoing implementation of the Belt and Road Initiative, Greece, as a key point on the Maritime Silk Road and a gateway to Europe, has become an important foothold for Chinese capital entering Europe. Kaisheng Immigration experts stated that in the first half of 2016, bilateral trade in goods between China and Greece reached US$1.81 billion, a year-on-year increase of 9.7%.
In 2010, at the height of the Eurozone crisis, Chinese companies invested in the Port of Piraeus, Greece's largest container terminal. Now, China owns a majority stake in the Port of Piraeus, and seven of its eleven senior executives are Chinese.
In June of this year, Greek Minister of State for Coordination of Government Work, Alexos Vlapoulis, announced that the development project for the former Athens airport would officially commence within six months. This project will transform the Hellenikon site, formerly the Athens airport, into one of Europe's largest seaside resorts, led by the Greek Lamda Group, with Chinese private enterprise giant Fosun Group and an Arab fund as investors.
Simultaneously, China's State Grid Corporation of China acquired a 24% stake in the transmission and distribution electronics company under the Greek state-owned power company. With infrastructure as a core focus, ties between the two countries are strengthening, and real estate is no exception.
As the Greek economy recovers, not only are Chinese business tycoons like Jack Ma venturing into Greek real estate, but many urban middle-class individuals are also beginning to pay attention to Greek properties. Real-time data shows that 1,684 overseas individuals have already obtained five-year residency visas and immigrated to Greece through this policy by investing in the Greek real estate market.
Kaisheng Immigration experts point out that with the positive impact of the booming tourism industry on the real estate market, this year has seen the fastest growth in foreign real estate buyers in the past decade. "In the first few years after the introduction of the Greek immigration program, it didn't attract much attention, but this year the situation is very different. Increased investment from Chinese companies in Greece, especially the entry of some large state-owned enterprises, has increased investors' enthusiasm for buying property in Greece for immigration," said the head of a Greek project at an immigration agency.
Economic Recovery and Financial Liberalization
According to local media reports, Greek Finance Minister Evklis Tsakalotos has signed a decree on further eliminating capital controls in the country. The decree stipulates that from December 1, 2017, Greek residents will be able to withdraw 100% of funds remitted from abroad to their existing accounts in Greece.
According to statistics from the Bank of Greece, global tourists bring in €13.2 billion in tourism revenue for the country. Among these tourists, 150,000 are from China. The Greek tourism industry predicts that one million Chinese tourists will visit Greece in 2021.
Multiple data points signal a recovery in the Greek economy. On Monday, a senior Greek government official told Reuters that the Greek authorities will outline projections for the main surplus—the fiscal surplus excluding debt repayment—in the final draft budget submitted to parliament on Tuesday, expecting a surplus of 2.4%-2.5% this year and exceeding 3.7% next year.
These figures indicate an upward revision of Greece's fiscal forecast. The draft budget submitted on October 2nd showed that Greece aimed for a surplus of 2.2% in 2017 and 3.57% in 2018.
Since the 2008 financial crisis, Greece's GDP had been declining at a rate of approximately 4% annually until 2016.
Creditors, led by Germany, have been pressuring Greece to implement fiscal and economic reforms, drastically cutting welfare spending. The European Central Bank's financial assistance to Greece was also conditional on the Greek government cutting its budget.
Since June of this year, international rating agencies Moody's, Standard & Poor's, and Fitch have successively upgraded Greece's credit rating. In late June, Moody's announced that it was upgrading Greece's sovereign credit rating from "Caa3" to "Caa2," and revising its outlook from "stable" to "positive." Moody's stated that although economic and political risks in Greece remain high, many other factors drove the upgrade, including Greece's strong fiscal performance in 2016 and temporary signs of economic stabilization.