Research Proposal: Real Estate in Greece

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Real Estate in Greece

The work of Costa Siomopoulos entitled: "Fast Growth for Greek Real Estate" state that over the past few years that there has been integration of real estate management, development and exploitation in Greece as social security funds, property and construction companies. Leasing firms, portfolio investment firms, foreign institutional investors, realtors, property valuers and others. (nd, paraphrased) Historically in Greece, property market growth is stated to have been "almost exclusively linked with self-financing and antiparochi ( a quid pro quo transaction, in which the owner of land exchanges it for space in the apartment or commercial block constructed on it." (Siomopoulos, nd)

It is stated to have been these practices that resulted in "chaotic construction and Athens and other Green cities during the post-war period, on the basis of the law on condominium ownership and the substantial increase of floor-area ratios." (Siomopoulos, nd) This was viewed as safe money placement in the past in Greece instead of being viewed "aw an actual investment." (Siomopoulos, nd) Contractors shaped the market post-war through selection of construction location and direction of home buyers and ultimately affecting the development in residential sections of each city. (Siomopoulos, nd, paraphrased) Contractors are stated to have acted as real estate brokers as well mediating in property transactions. Construction in Greece is stated to comprise approximately "…5% of the GDP and 25% of total private investment." (Siomopoulos, nd) Property is the most important of all assets in Greece and is stated to represent the largest financial investment that households make. The Greeks have an intimate relationship with their home according to Siomopoulos and this is stated to be clearly evident by the fact that home ownership is 97% in rural areas and 80% for the total population in Greece. Recent initiatives are stated to include the "introduction of Value Added Tax on new-builds, and the gradual replacement of the property transfer tax with the capital gains tax: initiatives that promote the rationalization of the property market." (Siomopoulos, nd) However, it is related that the government has made other moves with their eye on the real property market other than those which are tax regime related. The Public-Private Partnerships (PPPs) which are stated to be designed to "cover the housing needs of the Public Administration, the development of new financing instruments by the State, such as sale and lease back, and the promotion of a National Land Use Plan." (Siomopoulos, nd)

I. The FACTORS THAT INFLUENCE the SUPPLY and DEMAND of ESTATE

Noted as factors that boost demand for commercial real estate in the Greek market are the "changes in the attitude of Greek consumers, the evolution of the market and its alignment with other European markets, the expansion of existing chains and the entry of new ones in the Greek market…" (Siomopoulos, nd) There are presently more than 20 shopping centers that are organized as such operating currently throughout Greece "either in the form of Malls, or in the form of multi-stores or multiple purpose areas, while 12 more are due to start operating within the next three years." (Siomopoulos, nd) This fact is stated to indicate "the continuous growth of demand from retailers, entrepreneurs and professionals involve din the fields of entertainment and catering…" (Siomopoulos, nd)

There is further a demand for logistics space stated to be "rapidly increasing with the advent of new international retail chains from the multi-store, electronics and electrical appliance fields which are already being established in Greece." (Siomopoulos, nd) Greek office space is stated to be "characterized by equilibrium between supply and demand and price stability while interest is focused on premium properties." (Siomopoulos, nd) When it comes to office space it is stated that "users are more sensitive to price, than location…" (Siomopoulos, nd)

Demand for office space is for the most part "generated by insurance firms, pharmaceutical companies and financial institutions" as well as from ship-owning families and institutions. Demand for holiday homes in Greece are expected to rise in the future according to studies conducted by European tourist organizations as "a large number of Europeans, mainly pensioners, are potential buyers of holiday homes in Greece. However, it is stated that Greece needs to improve the investment climate and problems needing immediate solution include the "…institutional and taxation regimes, market transparency, the bureaucracy involved in issues related to archaeological and forest inspection services, as well as the creation of the National Land Use Plan and the sub-plans that will clarify land use and zoning issues." (Siomopoulos, nd)

II. STEPS of the REALIZATION of a PURCHASE

Real estate in Greece is primarily governed by the provisions set forth in the Greek Civil Code (Astikos Kodikas) regulating property ownership. The types of rights existing in Greece over land (in rem) include those of:

(1) ownership;

(2) real and personal easements; and (3) mortgage.

Failure to register land rights in Greece results in the real estate failing to be conferred to the rightful owner as in Greece "registration is considered as a prerequisite for the lawful conclusion of any real estate transaction." (Article 1198 Civil Code)

The purchasing process of property in Greece is straightforward and is a process that is similar to processes of purchasing in Ireland and the United Kingdom. Steps involved in real estate transactions in Greece include those as follows:

(1) property is selected;

(2) Financing is secured and can be either local or financing from abroad;

(3) an English-speaking solicitor is appointed

(4) Application for Greek Tax Registry Number (AFM) must be completed and can be done by solicitor if time limitations are present;

(5) Local bank account must be opened;

(6) a pre-agreement must be signed that details the terms of the sale and the payment schedule along with a reservation deposit to remove property from the market;

(7) Following completion of all legal work and title searches the individual must return to Greece unless they have alternatively give Power of Attorney to their solicitor to sign on their behalf) to sign the final contract. The final contract is generally signed approximately two to three months following purchase agreement;

(8) Upon completion and at time of final contract signing all fees and taxes are paid. (Zakynthos Services, 2009)

Contracts in Greece at signed as a Notary Office since the notary public is a government-appointed lawyer who processes and certifies all real estate transactions including the following:

(1) drawing up official documents;

(2) reviewing official documents; and (3) ensuring legal transfer of property. (Zakynthos Services, 2009)

When purchasing a property in Greece, the individual will require an accountant since as a non-resident, once a purchase of property has been made in Greece, the accountant is needed to assist with the property declaration in the year of the property purchase and following on the annual tax return to explain the taxation obligations of property owners in Greece. (Zakynthos Services, 2009, paraphrased)

A Tax Registry Number (AFM) or a Greek tax number is mandatory for all those who buy property in Greece and this includes both local and non-local individuals and entities. The local tax office issues the AFM and it is free-of-charge. Applicants are required to present that passport along with personal details and married couples are required to show a copy of their marriage certificate if they will be filing a joint tax return each year.

The solicitor may be granted full Power of Attorney and may then apply to the tax number on behalf of the purchaser of the property. Upon becoming a property owner in Greece the individual must file an E9 tax form along with the basic Income tax form E1. Failure to declare a property will bar transfer of that property later on and further may result in a tax penalty. (Zakynthos Services, 2009, paraphrased)

III. PARTICIPANTS in the PURCHASE of an ESTATE

The participation of the seller in the purchase of real estate in Greece is compulsory as is the participation of the buyer. Real Estate Agency participation is optional as well as is participation of the bank in the real estate transaction in Greece optional. There are no housing inspectors in Greece and participation of a notary is stated to be compulsory. However, participation of a lawyer in a real estate transaction in Greece is optional. (Koukplolou, 2005) it takes 23 days in Greece to complete a real estate transaction with the cost of the sale of property per capital being 13.7% in Greece. Parcel value is calculated by the notary in Greece and the taxation office calculates the tax.

The typical real estate transaction in Greece involves the following actors along with the duties that are stated:

(1) real estate brokers -- act as intermediaries between contracting parties;

(2) lawyers -- carry out the due diligence of the real estate and over a certain threshold regarding the transaction value, are compulsorily present in front of the Notary Public and co-sign the notarial deed (Article 42 (1) of the Greek Code of Lawyers);

(3) Notaries -- all transactions regarding… [END OF PREVIEW]

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