ARENCORES MAGAZINE September - December 2018

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ARENCORES A CHANIA REAL ESTATE MARKET MAGAZINE

FOR PROPERTY INVESTORS AND BUYERS

ISSUE NO. 05 SEPETMBER 2018

Chania Old Town House to Buy Lessons learned for real buyers

Real Estate Trends in Chania Farewell to a great year and looking forward to an even better one

CHANIA REAL ESTATE

REDEVELOPMENT PROJECTS ARE MAKING MONEY IN GREECE

Interviewing a Chania real estate agent How to deal with real estate agents in Crete

Why demand for hotels in Crete is set to rise? Discover the opportunities in Chania property

CHANIA PROPERTY MARKET OUTLOOK FOR 2019


Contents 10 New revision of objective values is planned

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REICs seize opportunity to invest in tourism property

Chania Old Town House

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Are you considering to buy a Chania Old Town House?

ENFIA shift with polls in mind

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REDEVELOPMENT PROJECTS ARE MAKING MONEY

Chania real estate trends

Selected properties from ARENCORES listings.

Real estate assets in Chania, Apokoronas, Platanias and Kissamos

Discover the latest trends in Chania property market

Features Topic 12

Interviewing a Chania real estate agent

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Why demand for hotels in Crete is set to rise

Whether buying or selling, it’s critically important that you ask the right questions

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The effect of currency fluctuations on foreign property prices Currency and property prices share a mutual relationship. With currencies devaluating, investors put their properties on sale.

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What You Need to Know Before Buying Property in Crete. ARENCORES MAGAZINE SEP-DEC 2018

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Editor’s Note

CHANGING THE WAY PEOPLE UNDERSTAND REAL ESTATE Welcome to the fifth edition of ARENCORES Magazine. The third issue of this year is dedicated to the residential and commercial real estate market prospects of Chania, with a look at the market and investment opportunities and challenges. There’s a piece of paper in my work desk that’s become extraordinary to me. It’s a faded printout of an email sent in 2013, written by a client of ARENCORES who had just lost his job. He and his family needed to drastically shift the course of their lives in order to live a life they love and truly be happy so they moved to Chania, Crete —the city that was recently named as one of the most wonderful places to live. “We are pursuing our dreams, because greatness is a journey, not a destination” he wrote. I kept that story in mind as me and Stavros worked on this issue. Where you choose to live or spend your holidays is an important decision, one that impacts your life in every way. So many factors should be taken under consideration.

Maria Gkika ARENCORES FOUNDER Maria studied Civil Engineering in Building Constructions in the Higher Technological University of Piraeus in Athens and she has attended MSc courses in Architecture and Energy saving in buildings in the Technological University of Denmark (DTU). Her experience in the property aspects is beneficial in the Real Estate sector where she leads the role of a Real Estate Agent-Consultant and a Property Valuer. She is a member of the Technical Chamber and the Chamber of Commerce and Industry. Maria is the founder and management director of ARENCORES. Since 2018 she is a member of the Board of Chania Real Estate Agents Association.

This year, our methodology at ARENCORES is as vigorous as ever. Our new RESTful™ Intelligent platform aims to fulfil the requirement for instant and continuous information on Chania’s property market trends with an in-depth, scientific, factbased overview. Moreover, for the first time, we partnered with realestatechania.com, leveraging its rich data and understanding of every trend in the Chania real estate market. I’m proud that our Chania Property Market Outlook for 2019, which you can find here, represents a paradigm of our capability to innovate and transfer the numbers to valuable information. This research paper provides information on places that offer economic opportunities around the Prefecture of Chania, highlights the trends and uncertainties of the market and identifies how these influence the economic viability of real estate projects, operations, investments and the associated capital values. But ultimately, your best place to live is up to you. I hope the fifth issue of ARENCORES Magazine inspires you to think about your own dreams, and what decisions you can take to help achieve them. Thank you for reading, and please let us know what you think by writing to info@arencores.com.

ARENCORES REAL ESTATE EXPERTS

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CHANIA PROPERTIES AND LESSONS LEARNED

Chania Old Town House Are you considering to buy a Chania Old Town House? Do you discover an exceptional property in Chania’s most presetigious location? Read the stories and discover the big picture .

S

ome Chania Old Town houses in no-so-great states of restoration can be great investments, if you’re willing to put the additional time, sweat equity and money into them. However, because of their construction characteristics and age, Chania Old Town houses can be costlier to fix and renovate than newer ones. You may find that generations of homeowners have made repairs and additions with varying levels of expertise, and old walls and wooden floors can hide some big surprises. If you’re thinking about buying a Chania Old Town house, you need to make sure you’re up for the challenge – financially, technically and emotionally.

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MEET THE PANEL David, a professor at University of Tel Aviv, Israel bought an 1897 townhouse in Chania Old Town in 2000 with his wife. The house had most recently been occupied (and vandalized). The couple spent 8 years restoring it, documenting the project on a blog. Annie and Tom are currently restoring a Historic Venetian stone house in Chania Old Town, Crete. They had already worked on similar properties from the 1890s and 1900s, and were living in one from 2002 when their current came on the market after a foreclosure.


CHANIA PROPERTY BUYERS Another point on which the Chania Old Town homeowners agreed is that your renovation project will almost definitely take longer than you expect. I thought we’d be done in 16 months,” “I had this confidence, and I kept repeating to myself: ‘Just one year and two months, just one year and two months.’ I couldn’t submit that optimism, and it drove me.”

Ken’s restoration of a 1910 late-Victorian-style home in Chania Old Town, led him to a career and location change from engineering to historic preservation and from Copenhagen to Chania, Crete. He has worked for the renewable energy industry and is now a consultant helping other owners of historic properties with their projects. All of the homeowners surveyed agreed that restoring an old house brings value that can’t be measured just in financial terms. “People have an emotional connection to suck kind of properties,” Ken said. “People knock on our door and tell us about when they lived here. It was broken up into three apartments at one point. So Greek families with lot of members lived here, and they bring photos when they come to visit. The history of the people who lived here was remarkable.” “We’re not just restoring this Chania Old Town house for us,” she said. “We’re restoring it so other people can continue to love it.”

A view to the magnificent Old Harbour

HISTORIC DESIGNATIONS MAY LIMIT SOME OF YOUR CHOICES If a Chania Old Town house for sale has a historical designation or has some archaeological restrictions, you may have to follow certain procedures when making restorations to the exterior spaces. David was already planning to keep a historically accurate color palette on the house’s external walls, but the local archeological service did hesitate when considering their plan to turn a porch into part of their new living room.

“There were three windows about a foot above

If we had wanted to change a window on the front of the house, they probably would have said that wasn’t allowed.

the floor, and when we wanted to move those windows so we could put cabinets in, there was a little pause,” David said. “But they decided that because [the porch] was an addition and not part of the original house, it wasn’t a problem.” “If we had wanted to change a window on the front of the house, they probably would have said that wasn’t allowed,” David said.

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Chania Old Town House for Sale Pro: You’ll learn a lot Annie and Tom acknowledged that they didn’t have a lot of home-restoration experience going into their first old house in Chania, but they’ve picked up a lot of expertise and lessons learned along the way. “We’ve learned how to do a restoration that will help preserve our historic building, and I don’t want people to be hesitated of a renovation project and think they can’t do it,” Annie said. “It’s easy to get overwhelmed, but you’re not the first to take on a project like this,” Tom added. “People take these on and are able to get it done.”

“I thought we’d be done in 16 months,” Ken’s said. “I had this confidence, and I kept repeating to myself: ‘Just one year and two months, just one year and two months.’ I couldn’t submit that optimism, and it drove me.” In the end, the Ken’s renovation took almost two years. They started with a bank loan to fund some of the immediate repairs like replacing the roof and plumbing, renovating floors and making electrical repairs. But they had to slowly save up for additional costs like custom-made, hand-turned balusters to restore structural damages.

Chania Old Town House for Sale Con: You may have to sacrifice some creature comforts During the renovations, you’ll have to put up with a lot of mess and maybe should re-prioritize some of your Chania Old Town house normal amenities to facilitate your renovation project. While Annie and Tom said they were able to go without a fully functional kitchen for four of five months, the overall situation was more complicated. “We were basically living in squalid conditions for two years, living with broken and damaged objects and structural components for years,” Annie said. Tom advised Chania Old Town homeowners to create at least one “clear” room during their renovation project where they can rest from the renovation procedures madness. It doesn’t have to be a completed room, but it should be clean and free of tools and building supplies.

What you’ll find behind the walls is anybody’s guess You never know what you’ll find behind the old walls of a Chania Old Town historic home. Annie and Tom were in their home for about a year-and-a-half before they realized they had some serious structural problems: They had water damage and an addition a part of the house had been built without a concrete foundation.

Chania Old Town House for Sale Con: Your project will probably take longer and cost more than you expect Another point on which the Chania Old Town homeowners agreed is that your renovation project will almost definitely take longer than you expect.

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Through the years, a lot of people in most historic homes in Chania Old Town have been making repairs and “enhancements” of sometimes-dubious quality. That’s why it’s so critical to hire a professional engineer to look carefully for potential issues before property’s acquisition. “I think with all houses, especially here in Chania and particularly a Chania Old Town house, you should discover something you weren’t aware of, even after the inspection,” David said. “I wish we had been better prepared for that emotionally and financially.“


ARENCORES CHANIA REAL ESTATE EXPERTS

FIRST PROPERTY RESEARCH THEN PROPERTY LISTING

ADDRESS 25 K. Mitsotaki Street, 73132, Chania, Crete PHONE +30 2821112777 FAX +30 2821112777 EMAIL info@arencores.com WEBSITE www.arencores.com

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WHY DEMAND FOR HOTELS IN CRETE IS SET TO RISE

Maria Gkika, a real estate agent and a civil engineer professional who heads ARENCORES’ asset-management practice, presents the hotel-investment market prospects in the island of Crete. Based in Chania, Maria works closely with local and foreign investors to originate, structure and manage real estate development and asset-management investments in commercial and hospitality sectors in Chania, Crete, as well as high-yield opportunities in real-estate owned (REO) portfolios.

1. How would you describe the hotel investment market in Crete now? How do you see it evolve in the coming years? Crete has had some very good hotel investment years in the past three years. Heraklion and Chania (second largest

Maria Gkika FOUNDER OF ARENCORES AND CO-FOUNDER OF ARENCOS

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city in the island) have attracted investment capital and operators targeting not only the upgrading, repositioning and luxury upscaling of existing hotel real estate assets but also the creation of new boutique city hotel projects.

Chania and Rethimno also have seen investment in resort developments and upgrades of the existing infrastructure. Moreover, Chania has also started attracting investors’ and operators’ interest in luxury resorts and hotel operating projects for all the year around – not only during the peak season (roughly mid-June through September). In general, the hospitality market in Crete has matured (in terms of business activity and management) and is ready to accept sophisticated international capital and significant investments from key-players and operators. There also is increased interest during the last 12 months in the local hotel NPL market as many global investors see the NPL portfolio auctions by major Greek banks as an opportunity to enter the local hospitality real estate sector. We envisage that the demand for the hospitality product in Crete will continue to rise in the foreseeable future given that the supply has not reached its peak yet.


It is also worth mentioning that tour operators (TUY, Hays, Virgin, and Thomas Cook) are selecting each year new destinations in the island of Crete to discover. In the coming years, we shall see completion of large hospitality resort developments, increase of branded luxury residences and further investment in high-end five-star and quality four-star resort hotels. Nonetheless, we also expect competition to attract tourists and also investment capital to intensify in the Mediterranean market, especially from Turkey’s five-star hotels and resorts due to local currency devaluation - despite its political instability - and from other non-European markets (like Tunisia, Egypt and Morocco) as their economy and political environment stabilizes further and new tourism infrastructure projects come to the market.

2. In what destinations within Crete you seeing the most activity, and what types of assets are attracting investors? For sure the prefecture of Chania has led the real estate market not only in investments in greater hotel assets but also in fashionable city hotel boutique projects and Airbnb-style investments (due also to lack of available building stock with larger surfaces). It has attracted local and international interest, the latter mainly from Germany, Israeli, Gulf and Chinese investors and a wide range number of real estate funds. A lot of these investors have acquired commercial buildings, standalone properties or a portfolio of residential apartment units. The same goes for Rethimno with more than five new small hotels expected to be launched. In addition, Chania Old Town, Apokoronas and Kolimbari (Kissamos) have welcomed also investors searching for private-villas, residential complexes for seasonal rentals - and old traditional properties in the Old Venetian Harbour. In Akrotiri, investors have sought small villas with sea views or unfinished developments. There is, of course, notable activity in luxury villas and boutique hotels in other areas, such as Platanias or Kandanos.

3. What are the major challenges to overcome in resort investment and development in Crete or in Greece in general? The main challenges are somewhat common across the Mediterranean region this period of time (summer 2018). The most important in Greece relate to the lack of investable hotel stock, lack of a reliable land registration framework, planning regime and tardiness in [the] building-permits process (property legalization), tourism infrastructure-licensing bureaucracy, taxation (business and insurance) and broader macroeconomic and political aspects and uncertainties affecting the wider real estate prospects. Obviously, we should not ignore the competition from the neighbouring countries and other newly established and much promising markets.

4. What resort development or brand do you find the most interesting in the market of Crete right now? Difficult to choose one real estate development project among many high-end investments taking place or [that] are scheduled to come to the real estate market of Crete within the next 6-12 months. Perhaps a project standing out in the island of Crete is the former US military base in Gournes, outside Iraklio, which has been likened to a “mini Elliniko,� (referring to the plot of a disused airport in Athens that is earmarked for a luxury resort project). Investors will be able to build up to two luxury hotels and some 80 holiday homes but also other tourist, commercial and conference facilities. Also, noteworthy could be the upcoming real estate project in the area of Akrotiri, a joint venture between corporate investors and real estate funds. The appetite of luxury-brand operators in the wider area of Chania is continuing and new projects are to be announced shortly.

5. If you were to give one piece of advice to an international operation or investor looking to enter the Chania market, what would it be? It is important to have a trusted operating partner in the market-and

also to work with a knowledgeable, professional real estate consultant, who understands well the commercial, legal, engineering and technical complexities of the local market, like ARENCORES.

6. If you could have a second home in any Mediterranean destination, where would you choose? I would go for a family house or villa in the area of Apokoronas, Akrotiri, or Platanias as well as in certain Kissamos villages. The most important for me is to discover e destination in which flight and ferry connections with the mainland are frequent, all year long and fast. Furthermore, I would chose a destination in Crete with a well-developed infrastructure networks and good connectivity with the main airports in Europe, especially during the summer months - like Chania.

7. What is keeping you busy at the moment? A plethora of assignments and challenging projects I would say. Both in ARENCOS and ARENCORES we have been working on some new exciting projects involving international real estate investors and funds looking at existing hotels and greenfield development projects in Chalepa and Chania Old Town. There is also a lot of work in relation to the commercial and technical due diligence consultancy and engineering services to our clients.

8. What are you most looking forward to at ARENCORES this year? We are looking for very exciting events and accomplishments. An opportunity to understand the lessons learned from leading real estate players. We are also very exciting to assess and review the major real estate trends in the market of Chania, Crete and establish a reliable and effective property market outlook framework for our clients. Chania is our home, real estate is our passion, bringing people and property together is our objective. Our professional real estate services have been consistently recognised at an international level as the only one real estate research consultancy firm in Crete. We are looking forward to meet new clients this year to come and provide them dedicated services with a great quality.

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Contributor by PROKOPIS HATZINIKOLAOU

New revision of objective values is planned The Finance Ministry committee responsible for the adjustment of property prices used for tax purposes – known as “property objective values” – will head back to the drawing board after the summer holidays.

for property age, floor, facade etc, while factoring in supply and demand in the real estate market too.

Before the property objective values announced in June have had the chance to sink in, the committee is having to readjust the taxable rates, with the new ones that have yet to be determined scheduled to apply from mid-2019.

The adjustment of property objective values both in 2019 and in 2020 was announced by the European Commission in its compliance report for Greece in June without taking into account the values the government had just announced – obviously, considering that they did not match reality.

The adjustment may not only concern the zone rates but also the commerciality factors. The committee further intends to revise the way it calculates property objective values, aiming at the optimal approach to achieving the real property values by modifying the coefficients

Property objective values did not match reality

The report noted that Greek authorities have conducted extensive changes to objective values with the aim of reducing the difference with market rates by 50 percent next year and fully aligning them with the going rates in 2020.

Estate agents report that objective values in some parts of Crete are still higher than market prices. In contrast, fresh hikes should be expected in some areas.

Property objective values Vs Property Tax (ENFIA) This means that more changes should be expected in the calculation of the Single Property Tax (ENFIA), as the rates to be used for this year will change again next year and again in 2020, adding to the load of some households and easing the burden on others. Estate agents report that objective values in some parts of Crete are still higher than market prices. In contrast, fresh hikes should be expected in some areas.

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This development is set to force the Finance Ministry to recalculate ENFIA payments from scratch so as to avoid fresh tax hikes on low-income districts.


REICs seize opportunity to invest in tourism property Real estate investment companies (REICs) are increasing the share of hotels in their property portfolios, with investments reaching 50 million euros so far in 2018. This figure does not take into account the debts and loans of those hotel businesses. The trend of investing in hotels serves multiple purposes for REICs as they are expanding their activities into a promising industry with potentially higher returns than conventional property categories such as retail spaces and office buildings.

It also gives them access to the tourism industry – foreign investors’ top choice – and the opportunity to secure significant future capital gains, both for the REICs and the hotel businesses According to data released by the Hellenic

The latest move involved Dolphin Capital’s transfer of an 85 percent stake in luxury Amanzoe resort in Porto Heli to Grivalia Hospitality, the tourist investment arm of Grivalia Properties. The price paid was 5.8 million euros, but the buyer will also assume all of Amanzoe’s existing loan liabilities, which stand at 76.5 million euros.

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NBG Pangaea Real Estate Investment Co has also paid 18.2 million euros this year for two hotels in Thessaloniki and Nicosia, both of which are leased to companies owned by Zeus International, which is responsible for their operation.

Several foreigner buyers are scrambling to complete their acquisitions within the year, sensing that the window of opportunity may shut in the coming months, as there already are cases of owners who are raising their asking prices in view of the spike in demand. Franceska Kalamara, the head of the Franceska Properties estate agency that is active in the Myconos market, tells Kathimerini that “the buyers from abroad are interested in sizable and luxurious properties, from 400 square meters upward, and at very favorable locations, as close to the sea as possible. These are mostly individuals from Egypt, Lebanon and Israel, but also from the US, while there has recently been particular activity by Cypriot buyers.”

NBG Pangaea bought Lazart Hotel in Thessaloniki for 7 million euros and acquired 100 percent of Lasmane Properties in Nicosia, a real estate firm which manages a hotel that used to be a Holiday Inn. The Grivalia-Dolphin agreement includes the latter’s separate holiday resort in Ermionida, Kilada Hills. Grivalia, through Amanzoe, will acquire the hotel and 20 privileged plots in the resort for 10 million euros.

Among the recent well-known buyers of luxurious homes on Greek islands are Israeli entrepreneur Teddy Sagi (owner of

Hoteliers Federation (POX), Greek hotels’ revenues increased by 12 percent during the first five months of the year, the average occupancy rates reached a record at 70.4 percent and overnight stays rose by 2.8 percent. Furthermore, tourism revenues reached 1 billion euros between January and May.

Insert Your Subtitle Trastor picked up a 700-square meter property in Chania on Crete for 1.3 million euros.

Camden Market in London) who bought a series of properties on Myconos, according to estate agency sources, and Egyptian businessman Naguib Sawiris, buyer of two villas on the same island costing a total of some 11 million euros. It should be noted that the actual volume of the funds invested in the Greek holiday home market is far greater than reported by the Bank of Greece, as the majority of sellers ask buyers to deposit the money in bank accounts abroad. This trend has grown considerably since the imposition of capital controls three years ago.

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A CHANIA REAL ESTATE AGENT

INTERVIEWING

ARE YOU CONSIDERING HIRING A CHANIA REAL ESTATE AGENT TO ASSIST YOU WITH BUYING OR SELLING YOUR PROPERTY? THIS IS A BIG DECISION, AS THE SALE OF A REAL ESTATE ASSET INVOLVES LARGE AMOUNTS OF MONEY AND PERSONAL EFFORTS AND THERE IS ALWAYS A LOT OF THINGS TO KEEP TRACK OF. Hiring the wrong Chania real estate agent can be a disaster. Whether buying or selling, it’s critically important that you ask the right questions when you visiting a real estate agent to sell or buy a property. How To Interview A Chania Real Estate Agent Are you a Full-Time real estate agent? Are you available on short notice to show me homes for sale (or handle potential buyers for my house)? Do you have time to work with me now? Not all agents work full time, many have second jobs or other things they prefer

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doing. As a Chania property buyer or seller, you’ll have to decide what level of service and profession of things, to know what’s going on and how to negotiate. Availability can make a vital difference. This is the time to find out about preferred communication methods and for the agent to tell you what you can expect. Everyone understands that no one is available 24/7, find out how they plan to handle things if they can’t be there themselves. 2. How long have you been in the real estate sector?


This doesn’t mean a new real estate agent can’t or won’t do a great job. There are real estate agents and realtors who have been in the business for years and perhaps or perhaps not do a great job. The most critical thing here is the number and effectiveness of transactions. How your Chania real estate agent can demonstrate the successful property transactions? How many transactions have you closed in the past 12 months? You can ask for the number of transactions any real agent should be able to easily generate a report showing their current, past listings and sales. Chania real estate market can vary greatly with other major real estate markets in Europe. Thus, there’s no magic number of transactions to look for but 5-10 or more closed transactions a year is absolutely fine. Do you have any other experience or skills that would be helpful to me as a home Buyer/ Seller? Is the agent technologically and educated adept? Do they have specific experience in negotiation, engineering, consultation, property marketing, design, energy efficiency or sales?

ARENCORES

Show me your online presence For property sellers this is significantly important. You want your property professionally displayed on all major digital real estate portals both in Greece and abroad. Does the real estate agent has a website and how professional is it? Is it one that actively attracts buyers and investors on its own? How many websites or digital media do they distribute to? If you Google their firm what do you find? Check online reviews and testimonials. What will it cost me to work with you? How long will the contract be for and what happens if I’m unhappy with your service? Without doubt, these are important questions regardless of whether you’re a property buyer or seller. There are no set prices or terms and different real estate firms have different policies and agreements. You should be clear on what their policies are and what you’re expect to pay. The Association of Real Estate Brokers in Chania Prefecture (SYMENOX) should always be the point of reference for you.

Things to Consider as a Property Seller

CHANIA REAL ESTATE EXPERTS What is the commission rate and what do you get for it? Do you need to sign an agreement? Selecting a Chania real estate agent or listing with ARENCORES means that your property will be promoted and published via intelligent marketing tools, professional consultation, property valuation and professional photography which may include aerial photography. ARENCORES provides an integrated approach to real estate consultancy and property management services. We are focused on building a diversified portfolio of high quality residential, commercial and rural properties in Chania,, Crete that deliver constant and growing cash flows over the long term.

ARENCORES also includes virtual tours and youtube videos created to promote your property in a professional and reliable way.

Buyers need to understand if there any fees to the agent that they are responsible for. Is there a minimum commission your agent expects to receive? If so, how much and what happens if the seller side doesn’t pay it? What happens if you end up buying a For Sale By Owner? What happens if there are bonuses offered as an incentive to the buyer’s agent? Again there’s no one magic formula, what matters is that you understand your obligations with your real estate agent.

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ARENCORES CHANIA REAL ESTATE EXPERTS

I’m going to be selling and buying, can you help me with both? Do you have any policies about this? What happens if I want to buy one of your listings or if one of your buyers wants to buy my home? Every state allows a real estate agent to “represent” both a property buyer and seller within a single transaction. There are different names for this form of representation but in the Greek rel estate market this is referred to as Dual Agency. You need to be clear on what the real estate agent’s policy is and what the obligations from the agreements- if any. What happens once I’m under contract? Will you personally be keeping me on track regarding the important dates of the contract? Will you be at my home inspections? (for the Buyer) What about the closing? Can you help me with inspectors, lenders, contractors, attorneys, and anyone else I may need throughout the process? Again, it differs among real estate agents, some use various assistants or services to help with some of these tasks, some expect you to take care of these things, others are more hands on. At ARENCORES we commit to being with our clients from start to finish and beyond. We know that this is what the job requires to make the process as low stress as possible for our buyers and sellers.avoiding stress and problems the main reason for hiring a Chania real estate agent – professional in the first place? Think smart. Think ARENCORES.

ARENCORES CHANIA REAL ESTATE EXPERTS ARENCORES provides an integrated approach to real estate consultancy and property management services. We are focused on building a diversified portfolio of high quality residential, commercial and rural properties in Greece that deliver constant and growing cash flows over the long term. Consistent with the critical values of loyalty, excellence, integrity, satisfaction and respect we act as a trusted adviser in helping our clients identify thorough, cost-effective solutions. ARENCORES dedicated real estate professionals combine an exceptional global perspective with local presence and business execution know-how to ensure investment intelligence and excellent opportunities.

Can I see your reviews or speak with recent buyers (or sellers) you’ve worked with? If you still have any questions about a Chania real estate agent or firm you need to find out what others property buyers or sellers think of them. With luck they have a strong online presence with sufficient number of ratings and recommendations, if not they should be able to provide you the names of people you can speak with. Asking these questions to a Chania real estate agent is the best way of making certain you get a topnotch, professional who will do a great job getting your home sold and/or helping you find a great property in Chania, Crete. Having the right professional Chania real estate agent on your side will make the entire process more enjoyable, reliable and less stressful.

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SERVICES We have been at the heart of Chania real estate since 2013. Crete. With a dedicated team of experts in Greece and abroad ARENCORES has diversified to provide a diverse range of property services including: • Residential sales • Real estate management • Property appraisal • Land and new homes • Commercial property • Chartered surveyors • Research • Mediation • Property Search Intelligence


ARENCOS ARCHITECTURE ENGINEERING & CONSULTANCY SERVICES

25 K.MITSOTAKI STREET CHANIA, 73100, CRETE

E: info@arencos.com W: www.arencos.com

Magazine Tempate

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REAL ESTATE TRENDS IN CHANIA

Real Estate Chania This article is provided by realestatechania.com

Real Estate Chania investigates the ways to increase the competitiveness of the Chania property market by evaluating the scope and diversity of existing and potential real estate investments; Even if you compare one real estate market to one that is located only a few kilometers away, they can be much different. Real estate markets become drastically diverse once you start comparing a real estate market in one municipality to another, or even more drastic, from one region to another. While most of the attention paid to house prices focuses on the big markets of Athens, Thessaloniki and the Aegean islands, there are other cities in Greece.

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ARENCORES, a Chania based real estate firm, looks at four smaller markets across the island of Crete that are being affected by the current economic conditions. It may come as a surprise to many investors that for several years the hottest real estate resource economy in the island wasn’t Chania but Heraklion and Lassithi. Propelled by a boom in tourism and billions in agriculture and infrastructure investments, the economy of Chania has grown roughly 50 per cent since 1990.


The Real Picture Behind Chania Property Market Yet there are plenty of reasons to be cautious about whether the jump in home sales in Chania property market is really a reliable indicator that the city’s economy is in the midst of a resurgence. The housing market has seen its share of false starts in the past. Commercial and residential real-estate sales have picked up this year (2018), Maria says, but not nearly at the same pace as the housing market before 2008, and the city still faces new challenges. The road network that connects Chania with the other major cities of Crete is still problematic and the accessibility routes to and from other major cities in Greece and abroad are also limited. “It’s certainly not that more real estate investors have come into Chania property market,” she says. Bank of Greece recently research points out that home prices have fallen to among the lowest in a decade. The shortage of homes for sale is some areas is helping to drive up resale prices. Still, Maria thinks this time the housing market in Chania may have finally started to turn a corner to the future and growth. “Chania went through its real-estate correction two years ago and now I think we’re one of the safer real estate markets in Greece,” she says

Jobs and wage hikes quickly followed. Real estate investors from other provinces and as far away as Israel poured into the market, buying up holiday homes, hotels and other commercial properties. Home prices boomed, more than doubling since 2000 and rising 35 per cent in one year through 2007 and 2008. Such furious growth was bound to come to an end eventually. Greece’s debt crisis and the associated uncertainties dramatically slowed Chania’s (and Crete) economic growth. Unemployment hit 24.8 per cent in December 2015, the highest level since 2013. Several shops have closed, while the bulk of construction has finished on several major infrastructure projects, meaning less demand for construction workers and civil engineers. Several restaurants have shut down and the closure of a large number of Chania real estate firms have left an abundance of retail space.

The slowdown has effectively cooled Crete’s overheated property market. The volume of resale home sales across Newfoundland fell 45 per cent in May 2015 compared to a year earlier, while average prices dropped 24.6 per cent. “The heat went out of the housing market,” says real estate agent and civil engineer Maria Gkika. “Multiple offers from foreign real estate investors have slowed down. We were down to where properties in Chania old town were selling in a month. Now we’ve gone back to a normal real estate market, where you put a house in Chania Old Town for sale and 90-120 days later it sells.”

read more at realestatechania.com If Athens’s housing market serves as a proxy for the health of the country’s real estate industry, then Chania’s real-estate market is perhaps the best gauge of the strength of the Cretan real estate market. These days Chania property market appears to be in the midst of a remarkable turnaround. Home sales were up nearly 30 per cent in the first quarter of the year. Average resale prices are up 5 per cent from last June, making Chania property market one of Greece’s hottest real estate markets. “Any decent home in Chania Old City in particular is selling fairly quickly and is getting multiple offers from domestic and foreign investors,” says Maria Gkika. “A lot of them are going over the asking price.”

economic developments: lower interest rates, tourism industry booming and uncertainties mitigation. Restaurants, small hotels and hostels are staffing up and new players-real-estate investors are now involved in several real estate projects in Chania property market. Many of the investors who had been sitting on the fence over fears and because of the uncertainties are starting to return to the Chania property market. Mrs. Gkika has also seen an increase in foreign investors looking to buy property in Chania that remains one of Greece’s most affordable and promising real estate markets.

The property market in Chania, Crete is being helped by a trifecta of favourable

You can read this article online at: https://www.realestatechania.com/chania-property-market/

Magazine Tempate

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ENFIA SHIFT WITH POLLS IN MIND The government has planned changes to the Single Property Tax (ENFIA) with an eye to the upcoming election, as the 30 percent reduction announced for 2019 will only concern owners of real estate assets valued at up to 60,000 euros. The majority of property owners however will either see a smaller reduction to their ENFIA dues or no change at all, as owners of real estate assets adding up to at least 200,000 euros – i.e. medium-sized and large properties – will not enjoy any cuts at all. According to the plan that was presented to the representatives of the country’s creditors this week, the reductions to ENFIA will be as follows: Owners of assets valued at up to 60,000 euros will see a 30 percent cut; properties between 60,001 and 100,000 euros will see dues drop 21.08 percent; assets between 100,001 and 150,000 euros will have their ENFIA cut 9.54 percent; and those from 150,001 to 200,000 euros will only experience a marginal 2.72 percent decrease.

Further reductions are planned for 2020, but no agreement has been reached with the creditors yet on the amount of the primary budget surplus overrun and the reduction of ENFIA in 2019. The information coming from the government raises many questions, such as what will happen to the supplementary tax imposed on real estate valued at over 250,000 euros. It remains unknown whether the supplementary tax will be maintained at all or whether the rates will be increased, whether the taxable rates of properties (known as “objective values”) will be revised next year and in 2020 (as the recent agreement with the creditors provides for), whether farmland will be included in the supplementary tax or whether a Large Property Tax (FMAP) will apply. These parameters are particularly significant, as they will determine whether the reductions to the main ENFIA rates that the government is promising will trickle down to the taxpayer or will be curtailed or absorbed by the adjustment of the objective values.

Property Taxation

20 ARENCORES MAGAZINE SEP-DEC 2018


THE EFFECT OF CURRENCY FLUCTUATIONS ON FOREIGN PROPERTY PRICES Currency and property prices share a mutual relationship. With currencies devaluating, investors put their properties on sale. Foreign exchange fluctuations are affected by a number of factors, including monetary policy, inflation, consumer confidence, GDP dynamics and balance of payments. Usually, property prices increase and yields fall (and vice versa) when a currency strengthens.

Currency devaluation provides foreign property buyers with interesting opportunities Such conditions may prompt extraordinary demand or even change the stage the market is at if foreign investor presence is strong. However, a weak currency where the property is located poses risks for international landlords as this reduces rental income. For instance, according to The Financial Times, in June 2016, the pound hit a 31-year low against the dollar following the announcement of the United Kingdom’s decision to leave the European Union (EU). This decline alone boosted the purchasing power of people with dollar-denominated incomes by 11 percent.

When a currency grows, it’s better for international investors to sell and not buy property Property maintenance may become too expensive in this case. For example, in 2014–15, the ruble fell by 60 percent against the euro and 50 percent against the dollar. Before the crash, a US$500,000 property cost 17.5 million rubles, but after devaluation, the same property cost 35 million rubles. The fall of the ruble had

a negative effect on the behavior of Russian investors. According to the Russian Central Bank, in 2015, Russians spent less than half of what they spent in 2014 on foreign money transfers for purchasing foreign properties.

The growth of the Euro and London’s falling property prices International real estate broker Tranio has analyzed the property market in Athens, Barcelona, Berlin, London and New York for buyers with incomes denominated in 12 currencies. Eurozone residents have the most favorable market entry conditions, adjusted for foreign exchange fluctuations and property price dynamics, in London and New York City. London is also the best market for Malaysian nationals to enter. Clients from these places are now able to buy property 1–4 percent cheaper. At the same time, Barcelona and Berlin property became significantly more expensive for all categories of buyers—not only did the euro strengthen against most currencies, but property prices in these cities also grew by about 10 percent. The price per square meter in New York City grew, but the weakened dollar cushioned price growth for most international investors. The rial and lira fell the most among the currencies considered in 2017. Consequently, it became less advantageous for Iranian and Turkish nationals to buy foreign property as the price they had to pay grew by 20–30 percent.

Tax limit has been reached The only thing the leftist-led government can hope to achieve by implementing its plan to squeeze even more taxes out of the middle class and people with large property holdings is to increase the number of the state’s real estate assets. After so many years of crisis and overtaxation there is simply no more room for new taxes or increases to existing ones. Unless, of course, this is a deliberate process aimed at taking real estate assets away from private owners and passing them to the state, which is exactly what will happen if these plans are put into force. Another phenomenon that we will most certainly see is a fresh wave of people turning down their inheritances when it comes to property simply because they cannot afford to pay the tax on them, something that will also lead to more real estate assets for the state.

DISCLAIMER: This article expresses our own ideas and opinions. We encourage any reader to do their own diligent research first before making any investment decisions.

ARENCORES MAGAZINE SEP-DEC 2018

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Vamos Family House for Sale Charming Modern & Comfortable

ARENCORES SELECTED PROPERTY

PROPERTY SIZE: 103 SQ.M PLOT SIZE: 674 SQ.M

Price:

PRICE:

â‚Ź 320.000 â‚Ź320,000

An exeptional detached modern family home, offering substantial accommodation, in a sought after village location.

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Property ID: HC1203 This truly beautiful property offering spectacular views to the Cretan Archipelagos and the White Mountains. Vamos family house has been designed specifically in advantage of its stunning location with a large terrace, spacious backyard and a completely private 26.80 sq.m swimming pool. The top quality design and architectural features of the property allow its residents to enjoy their privacy, dive in the magnificent swimming pool, and enjoy the view to the emerald sea and the breath-taking sunsets.

Learn more at: https://www.arencores.com/property/vamos-family-house-for-sale-apokoronas/

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ARENCORES SELECTED PROPERTY

PROPERTY SIZE: 74,00 SQ.M PLOT SIZE: 10,000 SQ.M

PRICE:

â‚Ź375,000

Neo Chorio Marvellous Farm Property ID: HC1502 Unique estate for sale in the centre of Apokoronas region. Neo Chorio farm for sale is located in one of the most impressively scenic and historically rich areas in Chania, Crete. This stunning property is set in nearly 10,000 sq.m of land and consists of a magnificent children’s farm, two bedroom villa, house boat, and a delightful olive store.

ARENCORES is delighted to bring to the market this mafnificent property situated near the centre of the picturesque village of Aremnoi, Apokoronas.

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The property also offers a unique opportunity either for the property as it is now, with 100% privacy, or as an investment property, with the possibility of further development. The spacious farmhouse offers a great opportunity for a couple or family to own their own extensive land and house with high return of investment potential.

Learn more at: https://www.arencores.com/property/neo-chorio-marvellous-farm-for-sale/ Magazine Tempate

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Kokkino Chorio House For Sale Bright & Colorful

ARENCORES SELECTED PROPERTY

A stylish family home with exciting space and features, and a generous roof terrace with magnificent panoramic views.

PROPERTY SIZE: 74,50 SQ.M PLOT SIZE: 162,00 SQ.M

PRICE:

â‚Ź150,000

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Property ID: HC1206 Unique estate for sale in the centre of Apokoronas region. Neo Chorio farm for sale is located in one of the most impressively scenic and historically rich areas in Chania, Crete. This stunning property is set in nearly 10,000 sq.m of land and consists of a magnificent children’s farm, two bedroom villa, house boat, and a delightful olive store. The property also offers a unique opportunity either for the property as it is now, with 100% privacy, or as an investment property, with the possibility of further development. The spacious farmhouse offers a great opportunity for a couple or family to own their own extensive land and house with high return of investment potential.

Learn more at: https://www.arencores.com/property/kokkino-chorio-house-for-sale-apokoronas/

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YES


ARENCORES SELECTED PROPERTY

PROPERTY SIZE: 111,00 SQ.M PLOT SIZE: 1195,00 SQ.M

PRICE:

€104,000

Enjoying quite stunning, unrivalled moments of peace just three minutes walk from the famous beach of Almirida. If you’re looking for a family home, this property is a must view especially if space is important. Property ID: HC1204 Unique estate for sale in the centre of Apokoronas region. Neo Chorio farm for sale is located in one of the most impressively scenic and historically rich areas in Chania, Crete. This stunning property is set in nearly 10,000 sq.m of land and consists of a magnificent children’s farm, two bedroom villa, house boat, and a delightful olive store. The property also offers a unique opportunity either for the property as it is now, with 100% privacy, or as an investment property, with the possibility of further development. The spacious farmhouse offers a great opportunity for a couple or family to own their own extensive land and house with high return of investment potential.

Almyrida semi-detached Family House 2

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Learn more at: https://www.arencores.com/property/almyrida-house-for-sale/ Magazine Tempate

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Chorafakia Plot for Sale: Exceptional Views PROPERTY SIZE: 20,500 SQ.M

ARENCORES SELECTED PROPERTY

This wonderful 20.500 sq.m Chorafakia plot for sale is definitely a fantastic real estate asset in an upscale area. Close to popular beaches of Akrotiri and Chania summer nightlife, but quietly situated and with potential to be completely private this brilliant plot for sale in Chorafakia offers a plethora of potentials to the buyer.

Property ID: PC0609 An exceptional and unique Chorafakia plot for sale is now available from ARENCORES. This prime piece of land in Akrotiri, Chania has great potential and is located in an exceptionally advantageous position overlooking the magnificent Stavros beach and to the spectacular White Mountains. The views from here can only be described as impressivse. Located in advantageous position, between the village of Chorafakia and Stavros, this 20.500 sq.m Chorafakia plot for sale would suit a variety of uses from luxury high-end villas to hotel development or even a top of the range golf course. Due to its size, the owner of Chorafakia plot can benefit from the Fast Track Strategic Investments Law which facilitates the licensing and procedures for large scale investments in industry, energy, tourism and high technology in Greece.

PRICE:

â‚Ź230,000

Learn more at:https://www.arencores.com/property/chorafakia-plot-for-sale-akrotiri/

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ARENCORES SELECTED PROPERTY

Pithari Plot for Sale: Prime Location

PROPERTY SIZE: 1542.00 SQ.M

Property ID: PC0608 This beautiful Pithari plot for sale is definitely one of the very best property investment opportunities available in Akrotiri area. The plot provides panoramic views over the Souda Bay and the White Mountains and is idyllically located in a very private and charming area just 12km away from Chania. The 1542 sq.m plot in Pithari represents a currently rare opportunity to acquire an exceptional real estate property in Chania Municipality

PRICE:

â‚Ź160,000

A quite stunning, charming plot tucked away from passing traffic, in a short unadopted road, within a level walk of the main road leqading to the airport.

Learn more at: https://www.arencores.com/property/pithari-plot-for-sale-exceptional-views/ Magazine Tempate

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Alikianos Family House

PRICE:

â‚Ź230,000

PROPERTY SIZE: 121,00 SQ.M PLOT SIZE: 465,00 SQ.M

Property ID: HC2201 This marvelous, beautifully finished and spacious family house has an internal area of 95 sq.m and a veranda of 26 sq.m with gorgeous views over the countryside and the White Mountains. It comprises of two large bedrooms, two bathrooms as well as a common living room and kitchen area. The structure has been built on a private plot of 465 m2 with its own private pool and several orange trees, Mediterranean flowers and local herbs.

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The carefully crafted concrete and wood ceilings of this beautiful Alikianos house, provide an aesthetic element that truly embraces the inhabitants for whom it is intended. The traditional furniture and interior decoration along with the extensive terraces seem to blend seamlessly into the background, allowing the building fundamental elements to take center stage of the owners’ holistic living.

Learn more at: https://www.arencores.com/property/beautiful-alikianos-house/

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Kissamos Villa: Pure Landscape Aesthetics

Already having a tourism license, of Kissamos Villa is an outstanding tourism investment opportunity. No wonder, with its modern design and located in such a peaceful area, this villa provides unique ambiance of hospitality, relaxation, tranquility, coziness and wellness.

Property ID: HC3101

4 1 PROPERTY SIZE: 200,00 SQ.M PLOT SIZE: 2005,00 SQ.M

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YES

PRICE:

â‚Ź350,000

Encompassing an area of 200 sq.m. of luxuries and lavish comforts within a plot of 2005 sq.m., this exquisite villa provides a world of sensations beyond the ordinary. Set in two different levels, the villa enhances all comforts contributing to comfort living and relaxation. The front facade of the villa has wide glass openings and allows superior sea, mountain and sky views, whilst flooding the interior spaces with natural light. The 104 sq.m ground floor consists of a wide open plan living and dining area with a fully fitted, modern kitchen complete with all appliances that ensure an efficient functionality and a timeless design. On the same level there are two bedrooms and a bathroom both offering fine aesthetics, amenities and an unobstructed view to the surrounding fields. Internal stairs lead to the upper 88 sq.m floor where your eyes are attracted to the magnificent surrounding views through the big glass windows. The upper level of Kissamos Villa consists of a charming and spacious master bedroom with canopy bed, an en suite bathroom/shower, a spacious walking wardrobe and a private balcony with spectacular view. One more bedroom with en-suite bathroom and balcony and a small hallway complete the layout of the second level. All the bedrooms have floor to ceiling wardrobes. The villa has fully integrated air-conditioning in all rooms. A 45 sq.m swimming pool invites you to refresh and relax, whilst a rock carved pathway that circles the villa draws you through a small, neat garden in front and behind of the property and the BBQ area. Complete privacy is insured as the property is walled, fenced and gated. There is an open space parking area suitable for cars or boat.

Learn more at: https://www.arencores.com/property/kissamos-villa-pure-landscape-aesthetics/ Magazine Tempate

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REDEVELOPMENT PROJECTS

ARE MAKING MONEY IN GREECE According to Tranio analysts, the country that offers the most attractive opportunities for investors in redevelopment is Greece.

Rental yields have been declining in Europe in recent years despite the opposite phenomenon that appears in Crete. The short-term rental market in Chania has ballooned in recent years. According to ARENCORES, Airbnb listings in Chania increased by almost 300% between 2016 and 2018. And while attention has mainly focused on the problems this is causing in tourist hotspots such as Chania City, Platanias, Agia Marina, Akrotiri and Apokoronas, several cities in Crete such as Heraklion, Agios Nikolaos and Rethymno are also feeling the effects. ARENCORES’ report found that in Chania a 10% increase in Airbnb listings would lead to a 0.70% - 1.20% increase in rents and a 0.90% increase in home prices on average, meaning neighborhoods with listings are becoming more valuable. These significant changes have opened the door for local and foreign investors to buy and develop more projects, which in turn increases the scarcity of housing, prompts landlords to raise rent, threatens community bonds and stretches neighbourhood services. Moreover, “intelligent“ real estate

30 ARENCORES MAGAZINE SEP-DEC 2018

investors have focused their attention to redevelopment projects which have projected returns of 15–30 percent per annum. Such projects typically involve the purchase and repair of a property in poor condition before leasing or reselling it for profit. According to the European Association for Investors in Non-Listed Real Estate Vehicles (INREV), the share of investors ready to put their funds into Value-Added projects shrank from 59 percent to only 26 percent during the 8-year period from 2008 to 2015. However, this figure almost doubled to 51 percent in 2017.

WHAT SEGMENT TO INVEST IN Many of the most interesting real estate investment opportunities in Crete involve “value-add” conditions — renovation or redevelopment projects that aim at moving a property to a higher price level. The value-add strategy is often considered to have medium to high risk exposure, but the return of the investment (ROI) can be potentially high as well. For such projects properties of any type can be targeted. Nevertheless, properties that can be used

for short-term rentals are attracting an increasing number of investors. According to a survey conducted by PwC, more than half of real estate investors are considering niche segments in 2018, with hotels (chosen by 28 percent of respondents) and serviced apartments (17 percent) among the five most popular options. The main reason behind the demand for such properties is the growth of tourists in Greece. The tourism sector has evolved into a driver of the economy with Greece receiving almost 27.2 million tourists in 2017, who generated a total of approximately 14 billion euros, accounting for more than 18 billion euros in direct contributions, according to SETE Institute’s (INSETE) latest report. More specifically, the study found that the sector marked an 11.4 percent rise in revenue from abroad at 1.45 billion euros last year compared to 2016 with the total increase in tourist activity estimated at 1.56 billion euros. Direct contribution to GDP came to 18.3 percent in 2017 from 16.7 percent in 2016.


Foreign tourist arrivals in Greece rose by 14.6 percent year-on-year to 3.164 million in June 2018. Tourist Arrivals in Greece averaged 1109105.64 persons from 2007 until 2018, reaching an alltime high of 3491724 persons in July of 2017 and a record low of 140107 persons in February of 2013. Euromonitor International expects the worldwide number of international arrivals to increase to 2.3 billion by 2030. Several investment funds recommend buying apartments that can be leased to tourists for investors who want to receive a passive income for a large period of time. Hotels are not recommended properties as most often, investors want to buy a small (10–30 rooms) hotel but do not plan on moving and participating in the management of the business. Serviced apartments, studios or one-bedroom apartments, typically 15-30 percent larger than hotel rooms— occupy a unique space between conventional rental residential properties and hotels. The main differences are the availability of a kitchen and limited range of services (e.g., meals or breakfast are not always provided). The minimum budget recommended for purchasing such apartments in Europe is €100,000. They can be purchased separately or in packages, and a property management company can handle maintenance, operation, booking requests and tenancy matters. The average yield investors can get from such a property is about 5–7 percent per annum after taxes and expenses—almost twice higher they typical return with long-term rentals.

THE FACTS IN NUMBERS

FOCUS ON GREECE

According to the most recent survey of Tranio - a leading real estate firm, the country that offers the most attractive opportunities for investors in redevelopment is Greece. This is one of the last European markets where property prices have still not recovered from the crisis, and it has strong growth prospects. Prices for property in Greece are about 40 percent below their peak in 2008.

According to the most recent survey of Tranio - a leading real estate firm, the country that offers the most attractive opportunities for investors in redevelopment is Greece. This is one of the last European markets where property prices have still not recovered from the crisis, and it has strong growth prospects. Prices for property in Greece are about 40 percent below their peak in 2008. Moreover, Tranio analysts predict that property prices will grow in the next two to three years for two reasons. First, Greece is experiencing a boom in tourism. According to the Bank of Greece, the number of international tourists, who create short-term rental property demand, grew from 15 million in 2009 to 30 million in 2017. Second, the Greek economy is in recovery.

Discover more articles like this at: www.realestatechania.com

Gournes US Military Base Crete is set to see its own Elliniko project as Greece’s privatization agency TAIPED draws closer to initiating an international tender process for the development of two large real estate properties on the island. The former US military base in Gournes, outside Iraklio, has been likened to a “mini Elliniko,” referring to the plot of a disused airport in Athens that is earmarked for a luxury resort project. Investors will be able to build up to two luxury hotels and some 80 holiday homes but also other tourist, commercial and conference facilities

The country’s GDP grew for four straight quarters in 2017, and the European Commission expects the economy to grow by 2.5 percent per annum in 2018 and 2019. The number of tourists visiting Chania has also significantly increased.

A SAMPLE PROJECT Tranio is offering investors an opportunity to take part in its own project in Greece—the redevelopment of a 500 m² building located on Kodratou Street, a two-minute walk from the nearest metro station and a thirty-minute walk from the Acropolis. The property will include seven to 11 apartments that can be leased as short-term tourist rentals via a property management company. The investor and the investor’s family can also get a residence permit in Greece for the whole period of property ownership. The cost of the building inclusive of purchase and redevelopment expenses is €750,000. According to Tranio’s estimates, the investor can expect the property’s value to increase by 50 percent within two years. Such returns can only be obtained now, as prices are currently low. Such returns can only be obtained now, as prices are currently low. Athens offers probably the most beneficial price/yield combination in the property market today. However, other markets such as the property market in Chania, the South Aegean property market and the property market in Peloponnese are also present exceptional prospects. The net annual yield an investor will get from the short-term lease is seven percent per annum (€50,000) after taxes and expenses. In contrast, redevelopment projects in Barcelona and Lisbon are 30 percent more expensive on average and have yields below four percent per annum.

ARENCORES MAGAZINE SEP-DEC 2018

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WHAT YOU NEED TO KNOW BEFORE BUYING PROPERTY IN CRETE

A guide to the basic legal framework and the main points potential investors should know about the acquisition and ownership of real estate in Greece. Greece has become a favorable investment destination in the last few years, mainly because of its natural beauty, mild climate and geographical position, but also because of a significant drop in prices following the financial crisis that emerged after 2010. Investors from all over the world are now looking at Greece as the new “hot� investment destination and rushing to benefit from the abundance of quality real estate available at affordable pricing. Many buy as end users and others with the aim of letting. LEGAL FRAMEWORK A. Rights in real estate Real estate owners in Greece may have different rights. Full ownership (absolute or joint) Bare ownership (absolute or joint) Usufruct (absolute or joint) It is essential that the buyer establishes which (among the aforementioned) is the right of the seller to be transferred in every transaction, in order to ensure that the value of the real estate is reflected in the rights that come along with the sale.

32 ARENCORES MAGAZINE SEP-DEC 2018

B. Acquisition of real estate in Greece There are various ways of acquiring real estate in Greece. For investors, these mainly concern the two following: Acquisition by contract: The buyer and seller appear before a notary public and sign a deed which is subsequently registered at the local cadaster or land registry. Acquisition of property through public auction: As of 2017, the Greek State has conducted electronic auctions. Greeks and foreigners (whether natural persons or legal entities) can subscribe online. The procedure is open to the public and the properties offered are easily accessible via a weekly journal. THE PROCESS OF ACQUIRING REAL ESTATE: 1. After selection of the property, the buyer appoints a lawyer to perform all the necessary legal searches. The title search takes place at the Land Registry and ensures that the asset in question indeed belongs to the seller and that it is clear of any encumbrances (such as mortgages, liens, foreclosures

Buying in Greece etc). The lawyer also checks the suitability of the asset and if this is located in an area where prohibitions or restrictions apply. 2. Issuance of a tax number. It is a requirement of the Greek State that every transacting party (natural person or legal entity) has its unique tax number before acquiring real estate. 3. Technical survey of the property. This is not a compulsory stage, but it is highly recommended as planning and or structural issues may occur that could render the sale invalid or the investment poor. 4. Payment of stamp duty (transfer tax). Currently at 3% of the value of the transaction. 5. Completion of the acquisition contract before a notary public. The buyer gets the title deed, which is the first step to ownership of the property. 6. The registration of the title deed takes place at the local Land Registry and is the absolute proof of ownership. 7. Registration of the property online with the tax authorities.


Avoiding scams As is the case anywhere, you may run into real estate scammers in your Greek property search. While the exact scams change every day, there are a few things to keep in mind to help ensure you’re not taken for a ride: Never send money or a deposit before you have met the seller, seen the property or have a working set of keys. Ask for an up to date property inspection. The seller should provide this. Do a thorough walk through with your real estate agent with your inspection document in hand. Ensure that the seller has the legal right to sell the property, i.e. they’re the real property owner. Double check on your rights to the property-- if it’s designated Alpha by the Greek Government (a historic home) you may have little to no ability to make updates or changes.

property as a foreigner TAXATION A. Ownership of real estate in Greece is subject to an annual tax (ENFIA) which is calculated based on the value of each property and in conjunction with the total value of the assets one may have in their portfolio. Currently the annual tax is payable in 5 installments and it is applicable in all types of real estate assets – including cases of rights on properties. This kind of tax applies to both natural persons and legal entities regardless of whether they are resident and/or have their registered seat in Greece. B. Property-based income (short or long-term rentals, Airbnb, long-term leases etc) are subject to taxation. Natural persons who benefit from rental income are taxed at various rates (thresholds are in place depending on the amount of revenue produced). Legal entities owning real estate assets are taxed differently as the rental income is regarded as revenue and is subject to 29% corporate tax.

OWNERSHIP OF REAL ESTATE IN GREECE IS SUBJECT TO AN ANNUAL TAX (ENFIA) WHICH IS CALCULATED BASED ON THE VALUE OF EACH PROPERTY AND IN CONJUNCTION WITH THE TOTAL VALUE OF THE ASSETS ONE MAY HAVE IN THEIR PORTFOLIO. IMPORTANT PARAMETERS FOR CONSIDERATION PRIOR TO THE ACQUISITION A. Acquisitions in forest areas: Subject to the Hellenic Constitution, land uses in areas regarded as forest cannot be changed. B. Acquisitions of real estate in regions close to the border: There are specific prerequisites for acquisitions in areas close to the borders. In these areas, foreign investors can acquire real estate upon receipt of special permission by joint ministerial approval. A publicly available list identifies such areas. Strict restrictions apply and investors should conduct thorough research into such plots prior to purchase. C. Acquisitions outside urban zoning: Special attention must be paid to plots which happen to be outside urban or residential areas as they often have limitations with regard to the development capacity they offer and in most cases plots cannot be divided

in smaller segments. D. Acquisitions on the coastline: Development of real estate that is situated close to the coast may be prohibited or allowed under very specific terms set by the State. E. Acquisitions in areas where antiquities are located: Development may be prohibited or allowed under very specific terms in areas where historic monuments may be located. In most cases, special permission is required by the Ministry of Culture’s competent directorate. F. Acquisitions in areas of outstanding natural beauty (Natura) or under a special environmental protection regime. Both acquisition and development of real estate in such areas may be blocked by the Ministry of Environment due to restrictions that may apply.

ARENCORES MAGAZINE SEP-DEC 2018

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MARKANTONAKIS FURNITURE ELEFTHERIOU VENIZELOU, 73100, CHANIA, CRETE

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Try our unique unforgettable Chania Old City Tours and discover the soul of Chania by bike!

We offer guided chania bike tours and wonderful Chania cycling sightseeing experiences. 25 Episkopou Chrisanthou Str. Venetian Port, Chania 73100, Greece Phone: +30 2821008695 Mob: +30 6944597159 Email: info@chaniabiketours.com

Learn more at: http://www.chaniabiketours.com/ Magazine Tempate

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ARENCORES CHANIA REAL ESTATE EXPERTS

25 K. Mitsotaki, Chania, 73132, Crete, Greece PHONE # +30 2821112777 FAX # +30 2821112777 Email info@arencores.com Website www.arencores.com

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ARENCORES RESEARCH

CHANIA REAL ESTATE MARKET OUTLOOK 2019

ARENCORES CHANIA REAL ESTATE EXPERTS www.arencores.com


INTRODUCTION

Real estate markets in Greece and aboard are buzzing with innovation and intelligence. A new class of property seeker is rethinking the real estate segment by using technology to provide a broader range of services, more flexibility and a greater sense of trust. These “synergistic” operators have yet to be fully “cycle-tested,” but they appear to facilitate the beginning of a new era in real estate, investment due diligence and property management. Within the tourist & logistics sector, which in Crete remains blisteringly hot, foreign investors and

MARIA GKIKA ARENCORES FOUNDER

investment funds are racing to build economically viable real estate assets and services that can handle same-day fulfillment and high investment returns as efficiently as possible. Innovative real estate services, property valuations and access to local real estate data continue to change what is feasible, reasonable and trustworthy. Within Chania real estate market, the luxury property sector has seen revival in 2017 and 2018 and continue to thrive by offering a combination of choice, magnificent design options and leisure services.

Investor activity in 2018 surprised on the upside in Crete and the rest of the Aegean islands and moderated slightly in the mainland. The long-term benefits of investing in real estate remain in play—specifically, good income return, long-term capital safety and prospects to add value by investment. Change, intelligence and innovation only add to the strategies that can be adopted by real estate investors. At ARENCORES, we are realistic about the likelihood of short-term volatility and market uncertainties but optimistic about the future. For us innovation is purposeful and focused changes that produce novel or improved potential for creating wealth via exceptional Chania property market opportunities. However, the roots of true innovation in ARENCORES lie even further back from being able to identify an exceptional property. Truly meaningful innovation comes from being able to identify unmet or latent needs before property seekers and investors even realize those needs are not being met. To predict, provoke, support, and inspire change and not just selling a property. To imagine rather than simply make an agreement.

That is the challenge we set for ourselves every day at ARENCORES, to ask the question: where can innovation take us to deliver truly meaningful real estate solutions that provide better experiences and results?

In this report, we provide our outlook for the year ahead and describe the factors that are driving the real estate in Chania. We look forward to helping you achieve your real estate objectives in 2019.

Don’t hesitate to contact us for further advice.

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CHANIA REAL ESTATE MARKET OUTLOOK 2019 2

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ARENCORES CHANIA REAL ESTATE EXPERTS

FIRST RESEARCH THEN DISCOVER EXCEPTIONAL PROPERTIES

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info@arencores.com

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ARENCORES RESEARCH


CHANIA PROPERTY MARKET OUTLOOK FOR 2019

ARENCORES

GREECE GDP FORECAST

ECONOMY Positive outlook, with improved growth and modest rises in inflation and interest rates

Corporate acquisitions will continue to shape the investment market in Chania

For the first time since the 2008 Global Financial Crisis, Greece’s economy is in fine form. The economic recovery should continue to broaden gradually over this year and next, driven by a stronger labor market and improving sentiment. The long-term outlook, however, partially hinges on the country’s ability to maintain fiscal discipline and minimize debt risks following its bailout exit. Our research team sees GDP expanding 2.0% in 2018, which is up 0.1 percentage points from last month’s forecast, and 2.0% again in 2019.

ARENCORES analysts see the Greek economy gradually gaining steam in the coming years amid a recovering labor market and improving sentiment. While the country is returning to normality after years of crisis, many challenges still exist including a high level of nonperforming loans and elevated unemployment, particularly among youth. Our research team sees GDP rising a moderate 1.9% in 2018, which is unchanged from last month’s forecast. In 2019, our team sees growth at 2.1%. As the cycle matures, demand for real estate transactions is expected to grow, as investors are increasingly resourceful in finding real estate opportunities.

COMMERCIAL MARKET

PROPERTY PRICING

Leasing fundamentals positive; constrained by tight labor supply

Prime yields stable overall in 2019, supported by positive investor sentiment, positive market prospects and capital availability Overall, cap rates will largely be stable in 2019 for the real estate sector in Greece, as strong investor sentiment, capital availability and economic growth offset slightly rising interest rates. Cap rates may rise or fall in specific locations (Crete, Cyclades, Dodecanese), but moves will be small either way.

The Greek seasonally adjusted unemployment rate fell to 19.5 percent in May of 2018 from a downwardly revised 20.0 percent in the prior month. It was the lowest jobless rate since September of 2011. Unemployment Rate in Greece averaged 16.14 percent from 1998 until 2018, reaching an all-time high of 27.90 percent in July of 2013 and a record low of 7.30 percent in May of 2008. Three factors will influence Chania commercial property market more strongly in 2019: the growth of the tourism sector, limited new hiring due to high unemployment rates, and the low development completions in the island of Crete.

For the full list of developments featured in this research and access to a range of ways to view the data, please contact ARENCORES at: info@arencores.com

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CHANIA REAL ESTATE MARKET OUTLOOK 2019 4

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CHANIA PROPERTY MARKET OUTLOOK FOR 2019

GREECE ECONOMIC OUTLOOK Positive outlook, with improved growth and modest rises in inflation and interest rates. The economic recovery should continue to broaden gradually over this year and next, driven by a stronger labor market and improving sentiment. The long-term outlook, however, partially hinges on the country’s ability to maintain fiscal discipline and minimize debt risks following its bailout exit.

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CHANIA REAL ESTATE MARKET OUTLOOK 2019

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CHANIA PROPERTY MARKET OUTLOOK FOR 2019

For the first time since the 2008 Global Financial Crisis, the

Ease of Doing Business in Greece has received a great

economy in Greece is in fine form, with the eurozone, the U.S.

deal of attention because of its potential contribution to

and

long-term

China

growing

at

or

above

trend.

Falling

business

efficiency

and

its

short-term

unemployment and rising house prices have pushed

stimulation of the economy. Greece is ranked 67 among

investors ‘confidence to its highest level since 2004.

190 economies in the ease of doing business, according

Businesses, encouraged by higher stock prices, are

to the latest World Bank annual ratings. The rank of

responding with higher levels of capital expenditure.

Greece deteriorated to 67 in 2017 from 61 in 2016. Ease

Economic growth in most countries will be higher in 2019

of Doing Business in Greece averaged 81.50 from 2008

than in the past three years (Figure 1).

until 2017, reaching an all-time high of 109 in 2009 and a record low of 58 in 2014 (Figure 2).

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CHANIA REAL ESTATE MARKET OUTLOOK 2019

7

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CHANIA PROPERTY MARKET OUTLOOK FOR 2019

Political instability may weaken real estate investors' belief

Political instability in Greece may be easing, but it

in property rights, putting the investors in fear that part of

remains a key issue for 2019 among property

the investment may be wasted due to poor protection. As

players overall. Interviewees express particular

a result, the investors are unwilling to pay a premium for

concern over the political risks to business and

the security of rights when facing political uncertainty.

investment in Greece. When it comes to social issues

in

2019,

the

threat

of

Almost omnipresent for well over a decade, the level of

international

political instability in the world today seems extraordinary.

instability is by far the biggest concern among

From Middle East conflicts, Chinese actions in the South

survey respondents and interviewees. “We try to

China Sea, North Korean nuclear ambitions, BREXIT and the

listen to the market, to understand and to

recent crisis in Turkey the world is a very unsettled place

anticipate potential consequences. However, we

which leads to investor anxiety. There are no signs that

are just managing our projects and real estate

political instability is going to ease any time soon.

investments in a more and more uncertain and unpredictable environment,” says an investment manager with focus on Chania property market.

ARENCORES through a comprehensive market research, provides a systematic monitoring of real estate market developments and prospects in Chania to identify reliable data and prospects for both, buyers and sellers. To this end, ARENCORES compiles the Greek Real Estate Price Indices by using primary data/assessments about values, market indexes and quality parameters of both residential and commercial properties.

FIGURE 3 SOCIAL ISSUES IN 2019 1 % International political instability

% National political instability

% Availability of reasonable priced properties

19

1

%

European political instability

%

Read more at:

Social inequality

https://www.arencores.com/chaniareal-estate-market-research/

% Environmental issues

% Mass migration

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CHANIA REAL ESTATE MARKET OUTLOOK 2019

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CHANIA PROPERTY MARKET OUTLOOK FOR 2019

According to the Chania Real Estate Market Outlook

And since the law was revised in 2015, Greece’s Golden Visa has

Survey conducted during this summer (2018), 68

become still more attractive to foreign investors, comparing

percent of respondents believe the new real estate law

favorably with similar programs in countries including Cyprus

will be good for real estate investments although

and Portugal. A stepped-up promotion program has also helped.

nearly a third (32%) are unsure. Around a quarter of

Greece’s Golden Visa program grants a permanent residence

respondents say they cannot see a support to real

permit – and access to 26 Schengen-area countries – to

estate investments in Greece from the new law.

individuals and their families who invest a minimum of 250,000 euros in Greece, for example in real estate or other productive

The full impact on commercial real estate remains to

investment. According to the latest data from end-November, a

be seen but the three main fiscal levers are: foreign

total of 2,170 Golden Visas have been issued directly to foreign

investors will be able to invest and repatriate profits

investors – and more than 5,000 when family members are

more easily than before; local real estate players that

included – up from 1,522 at the end of 2016.

until now parked some of their profits overseas at lower corporate tax rates can repatriate those earnings

Are

into the Greek real estate market.

occupation of real estate? Do any formalities permit or

on

foreign

ownership

or

restrictions on foreign ownership or occupation of real

economic crisis, the Golden Visa program is now

estate. These concern only foreign individuals or legal

coming of age amid a new wave of investor interest,

entities of non-EU states and EFTA member states who are

particularly from countries such as China, Russia and

interested in acquiring a personal right in immovable

Turkey. There are several reasons for this, from

property located in border regions (Article 24, Law

Greece’s sunny Mediterranean climate and high quality

1892/1990). These individuals or legal entities can request

of life, to its low property prices. A budding economic

the lifting of such restrictions regarding borderline areas

recovery plays a role for some investors, while for

through a petition indicating the purpose of the property's

others it's political uncertainty abroad.

© 2018 ARENCORES RESEARCH

restrictions

notification requirements apply? Greek law imposes mild

Launched five years ago, at the height of the country’s

YES

there

use.

NO

UNSURE

CHANIA REAL ESTATE MARKET OUTLOOK 2019

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NO ANSWER

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CHANIA REAL ESTATE MARKET AND AIRBNB Corporate acquisitions with focus on tourism infrastructure will continue to shape the investment market in Chania for 2019


Renovations dominate new starts The prevalence of property renovation schemes is

Chania Prefecture: New build vs Renovation

86%

% of new start volume

54%

highlighted

in

this

survey

(Figure

5).

Approximately 86% of the property schemes in

67%

Chania is related with renovation projects mainly in Chania Old Town and Apokoronas. As property renovations are generally of a smaller

46%

scale than new developments, the influence of these schemes cannot precisely indicate the

33%

prospects

of

the

Chania

property

market.

However, the majority of the respondents say

14%

that

they

have

already

consider

property

renovation schemes hoping to cash in on Airbnb's success. 2004

2008 2017

2017

FIGURE 5: CHANIA PREFECTURE: NEW BUILD VS RENOVATION

The majority of the respondents say that they have already consider property renovation schemes hoping to cash in on Airbnb's success.

Airbnb Is Changing the Market Chania Residential real estate is a hot ticket these days, with the property market once again approaching the same level of home values and rates we saw before the housing collapse in 2012. Individuals are now purchasing or restore small apartments and family houses to turn them into Short Term Rentals — creating a business — to the considerable detriment of their neighbors. Some short-term renters turn these locations into party houses, creating noise, traffic, and a public nuisance. In such instances, neighbors who need a night’s sleep to work the next day or who have school-age children are disturbed. In one of the small, yet beautiful villages of Apokoronas, a home owner rented his property to someone he believed was occupying it, only to learn he listed it on AIRBNB as a “party villa.” When the property owner was alerted, he was


shocked

and

started

eviction

Do you consider a next door short term rental property as a barrier for your property selling price?

proceedings. At ARENCORES we are curious about how this

61%

could affect real estate investors and the housing market in Chania as a whole. Since our last

Chania

Property

Market

Survey

NO

in

2017, we have taken a range of steps to reinforce our understanding on the factors that influence the attractiveness of a property or a destination and what the future may hold for this latest real estate investing trend (Figure 6).

FIGURE 6: STRs AND PROPERTY PRICE Is Optimism Returning?

The real estate industry is caught in the middle

Since 2015, business and political landscapes in Greece

of a fight between those who oppose Short

have endured a rollercoaster ride of uncertainty. It has

Term Rentals and the property owners and

been no surprise that the level of optimism amongst

companies promoting them. Nevertheless, real

real estate investors has been in short‑supply, as

estate owners should keep this in mind: A

highlighted in ARENCORES Survey. The latest results

family home or an apartment next door to a

show that the share of real estate investors who are

short-term rental — where the occupants

optimistic about future financial prospects in Greece

change every few days — will take longer to

has increased, although not yet a return into positive

sell and bring in lower offers. You never know

territory and are back to the same level as Q2 2008.

who your neighbours could be, and that’s a classic situation of property stigma. Without this protection, property values will decline and

cause

neighbourhood

stress

and

disruption. In the near future, real estate agents could be required to disclose to a property seller or long-term renter the existence of a nearby Short Term Rentals.

50% 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% -70%

2017 QA

2017 QB

FIGURE 7: BUSINESS OPTIMISM

2017 QC

2017 QD


CHANIA PROPERTY MARKET SURVEY KEY FIGURES

For the full list of developments featured in this research and access to a range of ways to view the data, please contact ARENCORES at: info@arencores.com


ARENCORES CHANIA PROPERTY MARKET OUTLOOK 2019

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Planned acquisitions / dispositions Whilst this year was a recovery time for real estate investment in Chania,

Figure 8: Compared to 2018, do you expect your purchasing activity in 2019 to be...

Obstacles to investing in Chania real estate

Figure 9: Compared to 2018, do you expect your selling activity in 2019 to be...

Figure 10: What is the biggest obstacle to acquiring real estate assets in Chania, Crete? Private Investors

investors expect to deploy more

Venture Capitalists

capital in 2019.

Corporate Investors

Looking at the replies to this question in the survey conducted on June 2018, real estate investors have always indicated that they expected their real estate purchases to exceed the previous

23

%

19% IN 2017

HIGHER

40% HIGHER

0

It is not surprising that asset prices,

34% IN 2017

10

20

30

may pose challenges to investors trying to acquire real estate assets, it

43% 44%

willing to acquire a real estate asset. This may explain the increase in investors expecting to sell more in

20%

Transaction costs

18% 34%

2018.

investors are more optimistic about 2018 as on balance 35% expect to spend more

35

%

BALANCE

26

%

IN 2017

39

%

LOWER

15

%

IN 2017

BALANCE

IN 2017

8% LOWER

Market risks

7%

0%

16%

Source: ARENCORES RESEARCH SURVEY, 2018

9%

Availability

IN 2017

1%

obstacle for investors seeking to deploy Source: ARENCORES RESEARCH Survey, 2018

2% 1%

Availability of product also remains an Respondents’ greater appetite for real

16% 13% 17%

Taxes

29%

compared to 26% in the previous year.

14%

Political instability

capital and this is the biggest obstacle

estate investing poses a concern in

for 34% of all respondents. Neither asset

relation to the market stability cited as

pricing nor availability of product are

one of the main obstacles to investing

unique to EMEA, so this finding reflects

in last year’s survey conducted by

concerns that apply globally.

AREBCORES. On a positive note, investors are more tending to sell than

Investors also expressed competition from

last year: on balance 40% of investors

other investors as a barrier to investing,

expects to sell more than in 2018 (see

which touches on the asset pricing and

figure 9).

product availability concerns.

Low market transparency

Currency risk

1% 2% 1% 1% 3% 1% 1% 2% 1%

other

In line with the stage of the cycle, real estate investors perceive market uncertainty as the main obstacle to deploying capital in the current market environment. However, from an analysis of our investment decisions database we see that the economy is turning around but it’s not a robust trend yet. 4 | ARENCORES Research

© ARENCORES CHANIA PROPERTY MARKET OUTLOOK

50

60

58%

Asset pricing

is a favourable factor for investors

year.

Relative to last year’s survey results,

40

property taxes and transaction costs

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ARENCORES CHANIA REAL ESTATE EXPERTS

ARENCORES Disclaimer 2018 ARENCORES confirms that information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt their accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and completeness. This information is presented exclusively for use by ARENCORES clients and investors and all rights to the material are reserved and cannot be reproduced without prior written permission of the ARENCORES Research Team. To learn more about ARENCORES Research, or to access research reports, please visit the Research page at: https://www.arencores.com/arencores-research/

CBRE Disclaimer 2018 CBRE Limited confirms that information contained herein, including projections, has been obtained H: www.arencores.com E: info@arencores.com T: 0030 2821112777 L: K.Mitsotaki 32 Chania, Crete, Greece from sources believed to be reliable. While we do not doubt their accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and