Island for sale, due to crisis

Times are hard for private owners of Greece’s islands. Faced with a new troika-imposed property tax and rising interest rates, they are selling off their land. Prospective buyers, however, will need to deal with the local bureaucracy.

Published on 11 July 2012 at 10:54
Deanna Keahey  | A private island in Greece.

Fancy savouring the fresh air of the Aegean Sea from your own private island? If you have the money, it’s time to start exploring the option. The crisis has led to a doubling in the supply of private islands in Greek waters (the islands owned by the state are not for sale). Idyllic beaches, dream views and an exceptional temperature throughout the year are just some of their attractions.

“Before the crisis we always had between six and ten islands on offer, but now we have almost 20,” says Chris Krolow, director of Private Islands, a Canada-based Internet company specialised in selling islands all around the world. Their website lists a good number of Greek islands for sale, ranging in price from one and a half million euros, for the small island of St. Athanasios, to the 150 million euros asked for Patroclos. This majestic island of 260 hectares, very near Athens, boasts beaches that are “large and sandy, with unpolluted waters rich in fish,” according to the website.

Although experts say that the prices have not fallen far, good buys can still be found. “We’ve seen properties going for four million fall to two,” says Nicolas Mugni, broker at the top-tier Grece Demeures agency. The economic crisis, which is keeping almost 28 percent of Greeks below the poverty line, has also hit property landowners.

Tough negotiators

One of the factors forcing some owners to sell more cheaply – either the entire island, or plots of land or buildings on it, such as recreational luxury villas – is Greece’s new property tax. “Most of those landowners have money invested in other assets or land, and the new taxes that have been approved under the austerity pact for Greece means the wealthy will have to pay a lot. The percentage varies, but if you own an island or a large villa it could come to a small fortune. For an expert buyer it’s easier to haggle with such sellers,” says Mugni.

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In addition, many landowners in the islands are unable to pay the interest on their bank loans and have to sell cheaply. Stavros Stellas, a realtor very familiar with Aegean real estate, admits this too. He himself has been forced to lower the price of a plot of land he owns: “I have a large plot of 17,000 square metres, and a few years ago I started to sell it for 1.7 million euros. Now I’m offering it for a million, because I’m under pressure from the bank,” he says.

However, if you have money and want to buy a Greek island, you have to work tirelessly to find it: almost everyone who owns an island property is rich enough not to fall victim to a speculative chaos. Nor do they fear that prices will fall if Greece exits the euro. “A luxury property will not fall in price even if the country goes back to the drachma and the currency gets devalued. He who has no economic problems doesn’t sell cheaply,” Mugni stresses. The Greeks also have a reputation for being tough negotiators.

Proverbial Greek bureaucracy

Another problem scaring off potential buyers is the proverbial Greek bureaucracy: “For an investor it’s an irksome task to buy an island in Greece, knowing that decades will pass before you can build something on it,” Krolow emphasises.

Nevertheless, eager new entries have boosted demand across the battered Greek real estate market dramatically: “We used to have buyers from some 70 countries, but in the last ten months alone that number has climbed to 120”, says Georgios Stroumboulis of the online agency Greek Property Exchange.

“As with any economy in trouble, there are a lot of people out there hunting for a good buy,” the broker adds. Indeed: Greece’s financial problems have turned the country into a stomping ground for professional bargain hunters.

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