Q3 2022 Market Report - Greek Luxury Homes

Q3 2022 Market Report GREEK LUXURY HOMES

Lead Volume increase

Lead Volume has grown from 1.7 billion euros in the first nine months of 2020 to 4.2 billion euros in the same period of 2022 [+151%].

Avg deal increase

The average deal size for GSIR increased to 2.85 mil. Euro versus 2.46 mil. Euro in the same period of 2020.

V/D signals volume drop

Viewings to Deals (V/D) ratio fell to 7.89% in the 9 first months of 2022 (from 14.29% in the same period last year).

Emerging destinations

Record-breaking transactions continued to take place in emerging destinations.

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Q3 2022 Market Report GREEK LUXURY HOMES is published by Greece Sotheby's International Realty. All rights reserved. Full or partial reproduction without written permission is strictly prohibited.

Disclaimer

Although every effort has been made to provide data that is current and verified, the author of this document does not guarantee or take responsibility for the accuracy of any information included in the report. The content is for informational purposes only and it should not be construed as investment advice.

Contact us

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Cover Photo

Cronus, Antiparos by Francisco Nogueira

Although the right to private ownership of a piece of land is rooted in Roman times, the first real estate brokerage company was only founded in 1855 in the United States of America, laying the foundations for one of the most efficient, transparent, and consistent real estate markets in the world.

A glance at the Sotheby’s International Realty reports from the other side of the Atlantic suffices to persuade even the most skeptical of readers: transaction volumes, average prices, availability, and behavioral patterns can be located at a glance, not only on the national or state level but even in much smaller geographical regions, as well. And within this context, buyers, sellers and brokers can operate within a completely transparent market, which allows for educated decisions across the range of properties and through all levels of the spectrum.

Over the past decade, the systematic efforts of our team, especially successful international marketing and the international SIR network’s meaningful relationships in the Ultra High Net Worth Individual pool, have brought Greek luxury properties to a level of international visibility comparable to that of the main foreign markets. Now, the right Greek properties appear in front of the “right international eyes”. The Greek luxury real estate market has come a long way and as it enters its coming-of-age era, it demands and requires the clarity and information background of the mature domestic markets.

Within this context, it is the responsibility and obligation of Greece Sotheby’s International Realty to dedicate its resources in the creation of an informational framework that allows participants in the Greek market to receive educated decisions based on facts and on the trail of clear patterns.

Starting in December 2022, Greece Sotheby’s International Realty will publish regular market reports, which will integrate both data from the Greek market and insights from the wide network of Sotheby’s International Realty offices around the world. Executives from Italy, Spain, the Côte d’Azur, and all markets with a substantial luxury real estate presence, give us their perspective, which we combine with real data from the Greek market and the insights of our own team of analysts.

The scope of our footprint in the Greek market, our strong track record, and our truly rich real estate portfolio enable us to work effectively in this direction. The experience and expertise of our executives lay the foundation for meaningful, unbiased analysis that will allow honest conclusions to be drawn. It is our obligation but also our pleasure.

Savvas Savvaidis

President & CEO, Greece Sotheby’s International Realty

Educated decisions and the importance of clarity

12 quarters that signalled a new beginning

Introduction

When examining the developments in the luxury real estate market segment one has to be cautious: mere observation or data analysis will get you only half way through if attention to detail is missing. One has to read through the lines, study the data at hand while at the same time keeping a bird’s eye view on the broader set of information. Data represents a factual depiction of reality but real estate market niches do not grow in a vacuum. Buyers and sellers across all net worth tiers make their investment and exit decisions on the basis of a broader framework. A framework structured by variables related to geopolitical, monetary and fiscal developments. Each real estate market follows a greater pattern but at the same time evolves in its own trajectory. The number of Leads or Viewings in a mature destination cannot be directly compared to the same data for an emerging hot spot. It is always the combination of data & broader market insights that lead to an educated decision.

Lead Volume growth in 2022

One of the key indicators with which one begins to tap into the data insights of a regional real estate market is the number of potential buyers who have expressed a desire to learn more information about a property (Leads) in combination with the asking price for these properties (Lead Volume). Tracking down this inhouse data set for almost a decade has provided the market analysis department of Greece Sotheby’s International Realty with the ability to distinguish between one-off peaks and midterm market trends.

On this basis, it has been quite clear that the Greek luxury property market has entered a new phase in the past 4 years. Following a steady upward trend (y-o-y) over the last 12 quarters, the absolute number of leads clearly shows the dynamics of the Greek luxury real estate market, signaling, in a sense, its transition to what could be described as its “growing up phase".

If one takes it a step further and combines the number of Leads with the asking price for the requested properties, then the pattern unfolds in the most profound way: over the course of the past 3 years the Lead Volume has grown from 1.7 billion euros in the first nine months of 2020 to 4.2 billion euros in the same period of 2022 marking an increase that exceeds 150%.

At the same time we see a steady increase year-over-year in the Leads to Viewings (L/V) ratio which climbed from 12% in 9M 2020 to over 15% in the nine months of 2022, showcasing a strong portfolio that triggers buyer’s interest.

The context for growth

The key factors that led to this significant growth can be summarized as follows:

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The systematic marketing & sales plans of Greece Sotheby’s International Realty have reaped fruitful results, bringing the top tier of domestic luxury properties in front of the right global pool of Ultra High Net Worth Individuals.

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The gradual improvement in the GSIR portfolio: as price levels grew in 2018, 2019 and 2020 more people were willing to list their properties for sale.

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The behavioral patterns related to the pandemic (work from home, early retirement, leisure-related decisions brought to the foreground) that lead to an increasing amount of UHNWI on the lookout to acquire a property in Greece.

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The extensive liquidity in the markets in 2020 & 2021.

Lead

growth y-o-y | Δ% quarterly basis

Q1 Q2 Q3

2019 102% 78% 50%

There are many intentions but the reality of the current World situation is an obstacle to the smooth realization of our sales.

2020 41% 65% 40%

2021 138% 122% 92%

2022 22% 11% 22%

Following a steady upward trend (y-o-y) over the last 12 quarters, the absolute number of leads clearly shows the dynamics of the Greek luxury real estate market

“

Source: Greece Sotheby’s International Realty

UK & US lead the Leads

When it comes to nationalities, data is quite clear and specific: the US & UK markets lead the way. In fact, they have been dominating the top-2 places for 4 years in a row and the last time that someone challenged their position was back in 2018, when the Greek interest outpaced the US. These 3 countries together (US, GB, GR) accounted for more than 45% of total Leads in 2022, remaining along the same lines of 2021 and 2020.

Following the above, France ranks 4th, followed by Germany, Switzerland, Israel, Canada, Australia and Belgium.

Corfu & Mykonos outpace the rest

When it comes to destinations, Corfu and Mykonos far outpace all other regions, occupying the top of the requests list for more than 5 years. That being said, however, 2022 & 2021 saw a series of record-breaking transactions brokered by our firm in destinations like Syros (3.7 million euros), Lefkada (4.1 and 5.4 million euros) and Paxoi (3.5 million, 5 million and 5.2 million), Skiathos (8.3 million). On top of that, Mykonos marked a record sale of 23 million euros.

Top countries 9M 2022

Source: Greece Sotheby’s International Realty

V/D ratio is lagging L/V growth signaling a drop in transaction activity

Having experienced 12 record quarters in terms of Leads, the interest inevitably turns to the pace of conversions into actual deals in 2022. Are they holding up? Is super high growth sustainable? And this is where the pattern that first emerged in the high-profile real estate markets of the USA and the Mediterranean is confirmed in Greece as well: although high, the number of deals lags the growth of Viewings.

Viewings to Deals (V/D) ratio fell to 7.89% in the 9 first months of 2022 (from 14.29% in the same period last year) signaling an upcoming drop in transaction activity. The extent of this drop is hard to predict at this point.

The key 5 reasons that drive V/D at lower levels vs last year

‣ Seller’s back down from deals: during a high inflation period, sellers hesitate to replace real estate property with cash. This often leads them to reject deals even if the buyers commit to full asking price.

‣ Rare properties are off the table: following 24 months of record breaking activity, a lot of the country’s tier-1 properties [asking price over 5 million euros] have changed hands without equally stunning replacements. It usually takes 12 to 18 months for a similar inventory to build up.

‣ Economic and geopolitical uncertainty: although resilient in economic downturns, Ultra High Net Worth Individuals are highly concerned in times of uncertainty. The current macroeconomic & geopolitical environment is far from the ideal background for an ongoing transaction hyper activity. Decisions are more conservative and this inevitably affects 2nd home deals.

‣ Resales have a supply ceiling: Greece’s luxury real estate market was highly related to tier-1 property resales which inevitably reached a ceiling, leaving a supply deficit until the country’s market matures to a new-developments based model.

‣ Banks are less willing to finance: in quite a few of the high profile real estate markets of the Mediterranean, banks hesitate to support the financing of 2nd home purchases with rejection rates reaching 47% of all mortgage applications.

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Buyers are in no rush: a cooling off in the luxury real estate market creates a spiral effect when it comes to buyers intentions: homes stay longer in the market and there is no rush to close a deal. Paired with sellers' hesitation this creates a short term inactivity phase that although it has limited impact on prices it affects transaction volumes. If the inactivity phase is prolonged, prices are expected to be adjusted.

Market Insights: Côte d'Azur

Peter Illovsky Chairman - Côte d'Azur Sotheby's International Realty

So far, the year 2022 seems very active and is following the trend from the last 2 COVID years. We have just received SIR France and Monaco report which is very positive. You can find a copy attached to this email. Our territory – the French Riviera, spreads from the Italian border on the East to the town of Lavandou on the West. This coastal area is very heterogenous and consists of several submarket zones. We have 5 agencies with approximately 25 brokers. We expect to surpass our performance in the sale revenue of 2021 by 5 to 10% even though this year could be classified as difficult.

The main characteristic is “excitement” on the buyer’s side and a diminishing supply of well-priced, good-quality properties. We are busier showing around and have a high amount of offers emitted by the buyers. Unfortunately, the success rate of transformation is down considerably. Some of our more aggressive brokers are at a ratio of 50%.

We witness a high level of excitability in the behavior of our clients. There are many intentions but the reality of the current World situation is an obstacle to the smooth realization of our sales. Inflation, augmented interest rates, uncertainty about the economic future, and peace in Europe are issues that can easily turn into anxiety.

Interestingly, with the arrival of higher inflation, several sellers have withdrawn their properties from the market. As we are working in the “luxury market” many of our sellers own several estates around the planet. It seems that going liquid isn’t the way to go. I am working in real estate on the

in the same area Saint Tropez to Cap Martin and assisting mostly foreign non-resident clients purchasing a vacation home or realizing an investment (mostly it is a combination of both). We have helped people from almost all parts of the World.

There are many intentions but the reality of the current World situation is an obstacle to the smooth realization of our sales.

Today we totally miss the Russian clientele. This is definitely a negative issue as the Russians love Cote d’Azur. Their absence has been partially compensated by clients from Ukraine. We see a large demand from the Middle East, and the USA, and we are very positively surprised by the French, both residents, and non-residents.

The last most important purchases on the Cap Ferrat and Cap Martin (the most expensive places in our territory) have been made by the French. I’m talking about 9 to 10 acquisitions between 30 to 85 million euros!

Looking at the bigger picture in the luxury 2nd homes’ market

When examining luxury property markets, one should look at the bigger picture; contrary to what one might think, Greece is not the only option when it comes to acquiring a “place in the sun”. Ibiza, Majorca, Phuket, Bali, Saint Barts and the Caribbean are in the same list of options for a global UHNWI audience with spending power high enough to eliminate travel distances.

What’s more, even in terms of the Mediterranean alone, Greece continues to represent a very small percentage of the luxury real estate available in the region. Out of the 74,000 luxury homes that are estimated to be for sale per year in the broader Mediterranean region (Spain, France, Portugal, Italy, Cyprus & Greece) our country represents a mere 4% in terms of units or 3% in terms of value (based on asking prices). With buyers now enjoying a greater array of international options than ever before and on a much larger scale, sellers inevitably suffer from competition.

The luxury properties sector primarily pertains to the purchase of second homes, which is why Mallorca is one of the leaders in the region in this particular category. Sun, sand and sea, what was once a sought-after trifecta behind the purchase of a second home, are no longer the only factors at play. The Balearic island of Mallorca alone, occupying twice the size of Greece's Rhodes, is home to dozens of golf courts and marinas, offering its visitors infinite choices. Additionally, thanks to its privileged location and close proximity to most European capitals, Mallorca ticks the boxes for a desired second home location and tempts its guests with this wellrounded offering.

The future of the Greek luxury real estate market

The Greek market's long-term potential in the luxury real estate market is positive. As the market stabilizes at the lower end of transaction volumes versus its peers, its future potential is more than evident.

The Greek luxury real estate market does not face the key issues that other, peer markets have to tackle in the near future:

‣ There is no oversupply of properties.

‣ There is no price bubble.

‣ The banking system was never a pivotal part of the 2nd home market transactions, therefore interest rates have little impact.

‣ Economic activity picks up after a long period of austerity.

If one was to list the key components that would help cement the country’s position in the luxury real estate market of the region these would be:

‣ Further investments in key infrastructure projects (marinas, airports, golf courses, hospitals and high-end retail locations)

‣ Market transparency enabling all stakeholders to make as much informed decisions as possible.

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Fast deployment of new high–end development projects that will sustain a top-level portfolio of assets for UHNWI.