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Wealthy Greeks invest in East German properties

24 November 2014 / 17:11:29  GRReporter
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During the first phase of the economic crisis, the inflow of Greeks, who wished to acquire real estate abroad, e.g. in the UK capital or in some larger cities in Germany, was ostentatious, according to the Greek daily Kathimerini.

Today however the Greeks’ readiness to buy seems to be withering. There are three reasons behind this: the hike in prices, fierce competition on behalf of other potential investors and the lack of financial liquidity.

Pavlos Anastasiadis, from Ellune Property, a UK brokerage, says the inflow of Greek potential buyers of real estate in London has slowed down to a trickle. He told Kathimerini there was one more reason on top of the three mentioned above: lending by British banks to all potential overseas property buyers has tightened. The banks have introduced stringent requirements and only dish out loans to their top-tier customers – most of all those who use private banking. This implies that loans have been reduced to a privilege for wealthy capital owners.

Not that the banks have entirely given up on retail lending, but interests on mortgage loans are not particularly inviting. This policy has actually been imposed by the Bank of England and is designed to ward off a property market bubble. And it has already yielded some results: the headlong growth of London property prices and the exorbitant markups are already a thing of the past. "All forecasts show the process of normalising and stabilising of prices despite some seasonal fluctuations. London however is still a market targeting investors from all over the world, and is one of the most secure investment havens," adds Anastasiadis.

This is why the few remaining Greek investors are unmistakably headed there. Anastasiadis believes that they are attracted to areas outside London's centre, which are expected to see economic growth over the next five or ten years. The Greeks, who are interested in investing, are mostly self-employed, like lawyers or doctors, earning somewhere between €350,000 and €700,000.

The German real estate market has seen similar developments, with prices much less inhibiting than London ones. According to Konstantinos Folbach, consultant for the property broker ImmoConsult, competition from other potential buyers has discouraged Greek investment across bigger German cities. Meanwhile, the last few years have seen a substantial hike in prices, e.g. a newly-built apartment in Berlin now fetches €3,200 per square metre instead of €2,800, and in Munich – €4,000 instead of €3,000.

"We already direct our customers to housing in eastern Germany, e.g. places like Dresden or Leipzig, where prices are much more reasonable," says Folbach to Kathimerini. A new apartment there would be priced €1,700-1,800 per square metre while an old one might sell for merely €700 per square metre.

Tags: economy markets wealthy Greeks properties London East Germany
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