ARENCORES – REAL ESTATE EXPERTS IN CRETE 1

IS NOW THE RIGHT TIME TO TO BUY

IS NOW THE RIGHT TIME TO TO BUY BUY A PROPERTY

IN RETHYMNO, CRETE?

ARENCORES – SEPTEMBER 2019 RESTful N.8

ARENCORES – REAL ESTATE EXPERTS IN CRETE 2

CASE STUDY:RETHYMNO PROPERTIES

Is now the right time to buy Is now the right time to buy

RERTHYMNO PROPERTIES: CASE STUDY

ARENCORES

ARENCORES – REAL ESTATE EXPERTS IN CRETE 3

James Eddie has just bought her first property in

Crete, Greece. After months of searching, the 55-

year-old, together with his wife, Lott, has found a

large plot in Rethymno, Crete. The couple

completed the property purchase process on July

2019. The price: just under € 300,000.

“The property sellers had a lot of interest and we had

to go to sealed bids,” says James, a civil engineer

and entrepreneur in the United Kingdom. “With the

help pf our real estate professionals, we moved

quicker than we would have liked because the

market was a little sparse and we were worried

about how many more similar properties were

going to come up for sale in Rethymno. But we liked

it,” he says, “so we went for it.”

If James had waited, would he have got a better deal?

“Property prices have risen much faster than

property prices across Greece in recent years. In

2018 alone, plot prices rose an average 2%, while

residential property prices rose a more modest 3%.

In 2019, however, the roles have reversed. While

residential property prices continue to climb, plot

prices have lost steam. Essentially, plot (with

building permission) prices are no longer rising, with

the rate of increase falling in Rethymno in

particular.”

According to the latest figures from RESTful, plot

prices fell close to 1.2% in June 2019, while

residential property prices rose 0.3% from the level

in June 2019 – and a number of indicators point to

this trend continuing into the autumn. In the first

three months of this year, prices were up 2.5 per

cent on the first quarter.

Greece emerged from a decade of bailouts in

August last year and is now relying on financial

markets to cover borrowing needs. The recent

elected government fully lifted remaining capital

controls earlier this month. Its economy remains way

below the size it reached before the crisis, when

national economic output was around 242 billion

euros.

The newly elected conservative government is keen

on accelerating the country's economic recovery

through promised tax relief and investment friendly

policies.

In its spring forecasts, the EU Commission projected

the economy would remain resilient and expand by

an annual 2.2 percent this year. The country's central

bank sees growth remaining at last year's pace,

around 1.9 percent. If that were to happen, property

prices could increase 5-20 per cent in the next three

years, according to the Bank of Greece.

Lott is very excited about their first real estate

investment in Greece. “Neither of us are particularly

concerned about the crisis,” she says. “This is our

first property purchase in Greece and we’ll probably

be here for three to five years at least, so we were

more concerned that we wanted to buy in an area

that was going to come up.”

Many property agents and real estate experts agree

with her. Speaking at a property market conference

earlier this year, Bank of Greece Deputy Governor

Theodoros Mitrakos said the Greek real estate

market was transitioning towards stabilization,

showing significant signs of recovery and mobility in

both the residential and commercial property

market which is expected to continue into the next

year. This, of course, is exactly the kind of thing

estate agents like to say, so how can we be sure?

The answer depends on your circumstances, but let

us look at the evidence to help you decide whether

to make a move — or wait it.

ARENCORES – REAL ESTATE EXPERTS IN CRETE 4

Request more information about this property at

info@arencores.com or visit www.arencores.com

A rare and unique find – a large plot of 3,177.00 sqm (2 plots of 1075.00 sq.m and one plot of

1027.00 sq.m) in Rethymno, Crete. This is a great investment opportunity for anyone interested

in possibly building a hotel or apartments, as you can build up to 1200.00 sq.m. on this property

if you are going to use it as business premise. Alternatively, even if you're interested in building

your own home, you will have up to 400.00 sq.m allowance for building your residence.

Think Thinking about buying a property in Rethymno, Crete?

ARENCORES – REAL ESTATE EXPERTS IN CRETE 5

What the data show

The seasonal nature of the property market makes

spotting and predicting short-term trends difficult,

and the real estate framework makes it even

harder. Still, there is some evidence the market in

Rethymno should be follow a path of growth. The

Greek economy grew by around 2% in 2018,

according to the European Commission(EC) – an

improvement from last year’s 1.5% expansion and

the highest growth since 2007. After a short-lived

recovery in 2014, Greece’s economy returned to

recession in 2015, with GDP contracting by 0.3%

and by another 0.2% in 2016, amidst the imposition

of capital controls and the closure of most of its

banks. Before this, the country’s real GDP had

contracted by 3.2% in 2013, 7.3% in 2012, 9.1% in

2011, 5.5% in 2010, 4.3% in 2009 and 0.3% in 2008.

The EC expects the Greek economy to grow by 2%

this year but the International Monetary Fund (IMF)

is more optimistic, projecting 2.4% growth.

The country’s debt is expected to fall to 174.9% of

GDP this year and to 167.4% of GDP in 2020,

ARENCORES – REAL ESTATE EXPERTS IN CRETE 6

according to the European Commission, down

from 182.5% of GDP in 2018.

Unemployment was 18.6% in September 2018,

down from 20.8% a year earlier, according to the

Eurostat.

Inflation was 0.6% in 2018, from 0.7% in 2017, zero

inflation in 2016, according to the Hellenic

Statistical Authority. According to the Bank of

Greece Inflation is projected to accelerate to 1.2%

this year.

However, there are two important elements that

the report of the Bank of Greece and other reports

cannot display. First, the fact that all the figures and

numbers would be completely different if the

market was allowed to operate properly without

government intervention. That means allowing

auctions to happen without any restrictions.

Secondly, the last three years have seen a lot of real

estate investment related to the increase of

tourism.

This is affecting the numbers and the market

dynamics, which is not representing the correct

market outlook for the residential and

commercial/office properties around the country.

Another reason that we are observing a small

positive change in the market is the mandatory

increase of the tax values which has been

implemented over the last few years. This increase

is completely artificial and does not change or

affect positively the market values.

The reality of the Greek property market remains

misty. There are some areas such as popular islands

where holiday houses show an increase in demand

based on the impressive current status of Greece

as a popular tourist destination in the region as well

as the golden visa program.

In reality, the core section of the housing and

commercial market around the country is still

suffering from low demand and lack of affordability

as the average purchase power of the Greek family

has been weakening year after year since the

beginning of the recession.

What the agents say

After such a large adjustment — even greater in

international currency terms — Rethymno is

starting to look like pretty good value for property

investors. “And very good value in comparison to

its competing cities in Crete, Chania, Heraklion and

Agios Nikolaos.

In the first quarter of this year, Maria Gkika, owner

of the ARENCORES real estate agency firm says her

agency received the highest number of offers on

properties in Rethymno for 5 years, and in July, it

reported 3.2 new buyer registrations for every

ARENCORES – REAL ESTATE EXPERTS IN CRETE 7

research article in Rethymno property market —

the highest ratio for 4 years.

“Property buyers have been watching the market for

value and holding off,” she says. “But only up to a point

can they hold out. Now they want to make a decision

— and they’re looking for opportunities.

“People are a little bit bored of talking about crisis,”

says Nikos, an estate agent based in Rethymno. “I think

that the hard times currently appear to have passed for

the domestic property market… and if there are no

turnarounds in the near future, it may be safe to say

that overall the property market reached its lowest

point in 2015-2017 and from then on is beginning to

recover.

Property market professionals say that the main

drivers behind this growth – besides the economic

stability and the conclusion of the bailout programs

– have been the expectations for significant returns

from the utilization of properties through short-

term holiday rental websites such as Airbnb and

HomeAway, and the successful program granting

five-year residence permits to non-European Union

citizens who invest at least 250,000 euros in Greek

realty.

Out of the estimated 70,000 houses and apartments

leased through the online platforms in Greece, a

considerable share belong to foreign owners. Many

of them are Chinese, who also choose to buy

apartments in the southern suburbs of Athens for

their own use.

Other nationalities act differently in the market: The

Russians don’t just focus on the center of Athens but

also opt for holiday homes and the region of

Halkidiki in Central Macedonia.

Middle Eastern buyers, such as those hailing from

Lebanon, Saudi Arabia and the United Arab

Emirates, also prefer properties in the capital’s

southern suburbs, but they tend to put them up for

long-term lease to Greek households, not through

the online platforms.

It should be stressed that last year the

Golden Visa program led to buyers being

awarded 1,399 residence permits – up 46

percent from the 961 permits issued in

2017, according to data from the

Migration Policy Ministry.

ARENCORES – REAL ESTATE EXPERTS IN CRETE 8

What the developers say

Residential construction in Greece is rising again,

after almost a decade of declining activity. In 2017,

building permits rose by 9% y-o-y to 13,785 units,

after annual declines of 5.3% in 2016, 0.6% in 2015,

18.2% in 2014, and 28.1% in 2013. Despite this, it

remains far lower than the 70,000 to 80,000 permits

issued annually from in 2004 to 2007.

The recovery extended last year. During the first

nine months of 2018 (based on figures

from Hellenic Statistical Authority):

Number of permits: 10,817 units, up 9% from a year

earlier.

Floor space: 2.35 million sq. m., up 17.9% from a

year earlier.

Volume: 10.17 million cu. m., up 15.7% from a year

ago.

So is now the right time to

buy property in Rethymno?

The property market recovery is gaining

momentum as buyers, buoyed by better borrowing

conditions, stake their claim in a smaller pool of

properties on the market.

Some real estate professionals say that Greece’s

real estate recovery is a tale of two markets. They

say that key cities and tourism hot spots –like

Chania and Rethymno are enjoying a fresh boom,

fueled by interest rates that are still near historic

lows, an economic recovery and a banking system

that’s finally cleaning up its act.

However, if you travel out of the main centres to

the outskirts of smaller villages, and there are still

ghost constructions with once ambitious

developments still stand half finished, unable to

find a buyer.

Property experts expect strong demand from

domestic and foreign buyers. They predict that

popular locations such as Rethymno, Chania,

Elounda, will continue to attract buyers, particularly

from Germany, Israel and France.

However, despite there being the general belief

among estate agents that benefits will trickle down

— because that is what happened after the

financial crisis, the last time property prices

slumped — that may not be the case this time.

There has not been any real correction in the wider

property market of Rethymno. In fact, it looks like

more of a stagnation that correction. The big

transaction falls happened a couple of years ago

and now the number of sales are just bumping

along at very low levels and property price growth

is kind of going sideways.

After such a large adjustment, Rethymno is starting

to look like pretty good value and, thanks to stamp

duty reforms, and the reduction of certain property

taxes for landlords, (ENFIA) there some great

prospects than there were five years ago.

However, some investors and property byers are

still waiting. But waiting is not right for everyone.

James Eddie and his partner would have certainly

lost out on a property they loved if they had not

committed to buying it. They can afford the

mortgage repayments and they intend to stay for a

while. If you put your life on hold in the search for

conclusive proof that the property market has reset

itself, be prepared to wait for a long time indeed.

ARENCORES – REAL ESTATE EXPERTS IN CRETE 9

Rethymno

Basking between the commanding bastions of its 15th-century fortress and the

glittering azure waters of the Mediterranean, Rethymno is one of Crete’s most

enchanting settlements. Its Venetian-Ottoman quarter is a lyrical maze of lanes draped

in floral canopies and punctuated with graceful wood-balconied houses, ornate

monuments and the occasional minaret.

Ribbons of mountain road wind through

the timeless interior, passing fields of wildflowers and traditional hamlets cradled by olive groves. Descend into the spooky darkness of grotto-like caves; explore steep, lush gorges; and rest in the shade of lofty Mt Psiloritis, Crete’s highest peak. Visit enduring monasteries, Minoan tombs and Venetian strongholds. Rethymno is also a magnet for artists, many practising age-old trades with modern twists.

Crete's third-largest centre has lively

nightlife thanks to its sizable student

population, some excellent restaurants and

a worthwhile sandy beach right in town.

The busier beaches, with their requisite

resorts, line up along a nearly

uninterrupted stretch all the way to

Panormo, some 22km away.

ARENCORES – REAL ESTATE EXPERTS IN CRETE 10

ARENCORES RESEARCH REPORTS

The information contained in any research report

does not constitute an offer to sell properties or the

solicitation of an offer to buy, or recommendation

for investment in, any property in Greece or any

other jurisdiction.

The information in any research report is not

intended as financial advice. Moreover, none of the

research reports is intended as a prospectus within

the meaning of the applicable laws of any jurisdiction

and none of the research reports is directed to any

person in any country in which the distribution of

such research report is unlawful.

Any research report provides general information

only. The information and opinions in each research

report constitute a judgement as at the date

indicated and are subject to change without notice.

The information may therefore not be accurate or

current. The information and opinions contained in

research reports have been compiled or arrived at

from sources believed to be reliable in good faith,

but no representation or warranty, express or

implied, is made by ARENCORES as to their accuracy,

completeness or correctness and ARENCORES does

also not warrant that the information is up to date.

Moreover, you should be aware of the fact that

investments in undertakings, securities or other

financial instruments involve

risks.