The True Carrying Cost and Hidden Pitfalls in the Greek Real Estate Market

Greece currently witnesses a vigorous “housing reform movement” which the government has allocated 300 million Euros in subsidies for this purpose according to the mainstream Greek media Forum News. Apart from significantly increasing renovation costs, this movement has once again sparked a debate on housing price fluctuations. Many prospective real estate investors in Greece are paying close attention to whether this indicates the emergence of a large number of “brand-new houses” in the Greek real estate market, driven by the stimulus of the new property immigration policy, and whether prices are continuously rising.

The answer is no.

The Impact of Greece’s Housing Reform Movement and EU Energy Regulations on Property Renovations

Firstly, the “brand-new houses” are largely inflated because Greece’s “housing reform movement” is actually a repackaging of a large number of second-hand houses, commonly known as “old house renovation.”

The main reason for this “housing reform movement” is that all Greek properties have permanent ownership rights. Therefore, a large number of aging building infrastructures that have been inherited for several generations cannot meet living standards, leading to thousands of properties being uninhabitable and urgently needing renovation. Whether for aesthetic, functional, or energy-related reasons, renovation is imperative.

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This is also directly related to the energy upgrade law passed by the European Parliament two years ago, and it can even be said to be the main reason for this mandatory housing upgrade. The law stipulates the following:

• All residential buildings, including houses and apartments, in EU countries must reach the E level by 2030; by 2033, they must be upgraded to the D level.
• Starting from December 31, 2025, energy certificates must follow the unified model of the European Union.
• Buildings rated as energy class G, which is the lowest in the energy performance ranking (accounting for approximately 15%), will be phased out of the market if their energy performance is not improved.

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Navigating New Energy Efficiency Regulations in the EU Property Market

This law also means that in the future, all properties available for sale or rent in EU countries must bear the mandatory cost of energy upgrades. Owners must upgrade their buildings for energy efficiency before selling or renting them out. If the energy rating still does not meet the D level standard by then, the property will be prohibited from being rented out or sold, or even occupied, and will become abandoned.

Energy rating is an assessment of a building’s energy consumption efficiency, similar to the energy labels on appliances, representing the building’s energy efficiency. Energy certificates are typically issued by certified engineers authorized by the Greek government after an on-site inspection of the property is completed upon construction or renovation. The assessment report is then submitted to the relevant authorities for approval and issuance of the certificate.

In the European Union, energy ratings are assessed based on a building’s energy performance, including heating, hot water, ventilation, lighting, and other electrical appliances. The ratings range from A+ (highest and most efficient) to H (lowest). Simply put, the higher the energy rating, the more energy-efficient the building is, resulting in lower energy consumption. H-rated buildings, common in many older Greek properties, are highly energy-consuming and outdated. New construction projects generally achieve a minimum rating of B or higher. This is also one of the criteria Globevisa uses to select properties, as they only recommend new properties.

For example, if an apartment in central Athens currently has a G energy certificate, it must undergo mandatory energy efficiency upgrades, costing approximately €15,000 to €20,000. However, upgrading the energy rating is often not a straightforward process as it involves redesigning and re-planning all pipes and wiring, and considering whether the overall municipal facilities in the area can support the necessary upgrades. Therefore, a property with only a G rating can usually only be upgraded to an E rating within the stipulated period. Starting in 2033, the minimum standard will be set at D, so further investment in renovations will be required, or the property must be abandoned. It is far more cost-effective to purchase a new property with a high energy rating.

The Hidden Risks of Single-Unit Renovations in the Second-Hand Property Market

As previously mentioned, due to the rapid rise in construction costs, many owners of second-hand properties opt for lower-quality materials to manage the high expenses. This has led to a market flooded with cheaply renovated single units marketed as new properties. It is crucial to distinguish between single-unit renovations and full-building renovations.

A single-unit renovation is essentially an internal refurbishment, such as repainting walls and furnishing, making it look good in photos and videos. However, such properties often suffer from low energy ratings due to their age, making them less appealing in both the rental and resale markets. Additionally, these properties may have unclear ownership, multiple heirs, existing mortgages, and incomplete documentation, posing significant risks to buyers, especially those applying for residency through property purchase.

Before launching a property project, Globevisa conducts a thorough project approval process. This includes verifying clear property ownership, complete documentation, and ensuring that the developer has a clean record. Developers must also guarantee that the property meets the required energy ratings, ensuring that all investors can secure their residency and enjoy a hassle-free experience.

Understanding Full-Building Renovations in Greece’s Real Estate Market

Another type of renovation is full-building renovation. This involves the developer purchasing the entire property and registering the relevant construction permits and other related documentation with land registry authorities. While retaining the original structural framework, they demolish all non-load-bearing walls, reinforce the foundation and stairs, and re-lay and re-plan the internal water, electricity, and gas pipelines. During the renovation process, materials that meet the latest EU energy-saving standards are used, such as waterproof and thermal insulation coatings and insulated glass, to ensure that the property achieves a high energy rating (B level or above) upon completion. Once completed, the property is equivalent to a new building, with everything except the skeleton being new.

In the local real estate market, prime location properties developed by major developers are often sold out during construction, such as the first phase of Dansheng Residence in the northern suburb of Agia Paraskevi, which Globevisa has previously recommended to investors. The gated garden community was sold out before construction began. The second phase of Dansheng Residence in the northern suburbs, currently available for sale, is the only large-scale, gated luxury garden community next to the affluent northern area of Athens. If a property claims to be newly completed and available for sale, it is crucial to verify its status carefully, as unsold properties after completion often have issues.

With the new policy coming into effect on August 31, the Greek real estate market is a mixed bag, with many “renovated” properties being marketed as new. Investors eager to invest may easily make wrong choices, not only facing high future energy upgrade costs but also potentially missing the chance to obtain Greek residency for €250,000.

All Globevisa’s selected exclusive new properties in Greece undergo strict scrutiny by lawyers, are provided by well-known local real estate developers, and meet all energy standards, ensuring comprehensive protection for Globevisa investors. Investors can choose properties that best suit their needs; with all-inclusive services, the investment can be as low as €200,000, allowing the whole family to obtain Greek residency!