Buying Property in Greece for Under £80,000

Ancient Greece may have laid the foundations for modern culture and civilisation, including democracy, philosophy, education and a host of literary and mathematical concepts, but it is foundations of an entirely different kind that are now occupying the minds of savvy British property buyers. Heritage is only one of the many draw cards of a country that also has azure islands, Mediterranean sunshine and now, budget direct flights from the UK to attract second-home buyers.

The property market in Greece is already an established one, with a solid internal and international property market to regulate and stimulate prices, which have been rising steadily over the past decade. “Eighty per cent or more of buyers of property in Greece are lifestyle buyers, meaning that there is a strong resale market – prices are realistic and not driven by property investors," says Spyros Mantzos of A Property in Greece. But with an established property market, as well as the sharp appreciation of the euro, which Greece joined in 2001, opportunities for buying property in Greece for under £80,000 are not as widespread as even a few months ago. However, if you know where to look, there are still property bargains to be had in the whitewashed idylls of the Greek islands and mainland.

With over 150 of the 2,000 or so islands that make up Greece inhabited, not to mention a mainland teaming with cities, villages, harbours and beachfront, there is perhaps too much choice when buying property in Greece. John Batty, managing director of Greek property specialists Aegean Blue, says traditional property investors are still focused on the established destinations like Crete, Santorini, Corfu, Zakynthos and Mykonos. "Over the last year we have also seen the first 'structured products' arising in Greece, offering a comprehensive package of services including guaranteed rental income for the first years, furnishing packages and a number of exclusive services including spas, marinas, sport facilities etc," Batty adds.

This maturation of the types of  products available to foreign investors buying property in Greece, along with the takeover by EasyJet of GB Airways in December, widely seen as a harbinger of budget flights into the country, is expected to have a stimulatory effect on the property market as the influx of visitors fuels holiday rental demand and, in turn, demand for property in Greece.

Greece can also thank the Athens Olympics for raising the country’s profile and stimulating massive infrastructure investment, which has improved its already significant attractions. Capital growth has been around ten to15 per cent per annum over the last few years, and property rental yields can be as high as 7.5 per cent according to Mantzos. Of course, these vary according to the property and location, with Batty arguing that average returns range between four and six per cent: "Some developers offer guaranteed rental incomes for their projects targeting pure investors. In these cases four- to six-year rentals are offered on an average of five per cent per annum. Most desirable destinations are the northern coast of Crete, Zakynthos, Kefalonia, Santorini and Mykonos where the highest yields can be achieved. Upcoming property markets worth considering are the less developed island of the northern Aegean Sea, including the Sporades (mainly Skopelos and Skiathos) and Samos."

Crete is the largest of the Greek islands and deservedly one of the most popular tourist destinations in the Mediterranean. In spite of its popularity and relative upward price pressure, properties under £80,000 are still to be found, with two-bedroom houses in need of work starting at around €50,000 (£38,300), according to Oonagh Karanjia of Crete Property Consultants. Renovated old stone houses can start from around the same price for a one-bedroom property, while apartments a few metres from the beach start as low as €55,000 (£42,150). For example, studio and one-bedroom apartments at Makrigialos in the south-east of the island, around 25 minutes drive from Sitia, start from €48,000 (£36,800) and are just 50 metres from the beach. In Papagianades, a two-bedroom renovated stone house with courtyard, roof terraces and sea views is for sale through Crete Property Consultants for €91,000 (£69,750).

A Property in Greece is selling a two-bedroom 60-square-metre bungalow in the 200-year-old village of Loutra, around ten minutes from the beach, surrounded by olive trees and with panoramic countryside views for €104,000 (£79,700). Foremost Villas has a two-bedroom apartment for sale at Drapanos Krystyna set in the hills inland from Kalives at the entrance to Souda Bay, with shared pool and views of the White Mountains for €93,000 (£71,250). If you fancy taking on a renovation project, Artec SA is selling a 60-square-metre stone house set in a 180-square-metre plot in the Apokaronas area, about 30 minutes from the airport at Chania; building permission for restoration work and extension of the property is already in place for the €55,000 (£42,150) home.

The verdant island of Corfu in the Ionian Sea off the west coast of Greece can also claim a fair bulk of the country’s visitors, who come to enjoy its mild Mediterranean climate and numerous architectural and archaeological attractions. Spiros Analytis, managing director of Corfu Property Agency, says a combination of planning laws, forestry and archaeological restrictions prevents Corfu from being turned into a concrete jungle and limits supply of property, which maintains prices. "The limited property supply rolls over to the rental market as well. Rental accommodation (beyond large hotel accommodation, which also fills to capacity during summer months) is highly sought-after. Privately owned properties thus yield excellent rental income." He adds that "returns of 6six to eight per cent are available through rentals via tour operators; and given the fact that there is excellent property rental income achieved, there has been in increase in demand for such properties."

Corfu Property Agency is selling a ground-floor, one-bedroom apartment, 40 metres from the beach in Acharavi, north Corfu, with a large balcony for €78,000 (£59,800). For off-plan property near the beach of St George in south-west Corfu, the company is offering a terrace of three, 38-square-metre one-bedroom cottages, each with a veranda area and small private garden, for  €75,000 (£57,500) for the middle cottage or €85,000 (£65,150) for the cottages on either end.

While the main islands attract a proportionately large quota of visitors to Greece, their popularity has spawned a second tier of emerging islands that have started to draw their own wave of potential property investors. Top of this list is Skopelos (where the film version of Mamma Mia was shot last year), which is luring quiet-living Greek island retirees and holiday-home buyers alike. The island is part of the Sporades chain and there are direct flights from the UK to nearby Skiathos; from there it is a 30-minute hop by hydrofoil to the port town or there is also a hydrofoil service from the mainland. Aegean Blue is selling a range of apartments at Skopelos Village, 500 metres from the beach, starting from €97,000 (£74,300) for a one-bedroom apartment. The apartments are situated on the bay opposite the capital port town of Skopelos and owners can walk into the town in under ten minutes.

On the island of Samos in the Aegean Sea, Barrasford and Bird is developing a resort and spa at Halcyon Hills, which will offer guaranteed rental returns when completed. Although it is above budget for individual buyers, the resort will also be offered on a fractional ownership basis that will cost from £16,375 to £32,750 for 1/8 or 1/4 of the property.

The beachside idyll of the Greek islands may have lured the majority of second-home buyers, but there is an investment case to be made for buying on the mainland. In response to the Olympics in 2004, property investment expert Obelisk says that "demand for rental accommodation was boosted and, in turn, heightened investors' interest in new residential opportunities, particularly within Greece's major cities." The scene of the Olympics and the historic capital Athens has seen sustained property price rises of around ten to15 per cent in the last few years according to estate agents Des Res. The company has one-bedroom apartments for sale in Larissis starting from £69,000 or similar-size off-plan properties in Athens starting from £73,000.

There are no legal restrictions on EU residents buying in Greece and the process is relatively simple, but fees and taxes of around ten to 15 per cent on top of the purchase price must be factored in. This includes transfer tax on resale properties or VAT at 19 per cent on new builds, municipal tax, lawyer's and notary fees and land registration. Greece's Piraeus Bank, which has a UK arm to deal with property investment in Greece and Bulgaria suggests buyers should discuss repayments with their lender so that the potential exchange rate risk between the euro and sterling can be covered from the start. This is particularly pertinent considering the currency movements in recent months.