This feature article in The Land Development in Greece column series focuses on The Holiday Homes Market in Greece. Tekmon Geomatics speaks to experts in the field who share their insights on this industry.
Land Development for Holiday Homes.
An obvious relationship, one may think. Despite its small size, it turns out that Greece has the 11th longest coast line in the world, stretching at 13,676 km (or 8,498 miles) in length. Greece’s virgin landscapes are so vast and yet, so ignored. With an inconceivable size of unspoiled land, not to mention its excellent geographic location, why have these lengthy coast lines not been developed into attractive tourist resorts as are often encountered in other Mediterranean destinations such as Spain, Malta and Cyprus? Tourism being a key sector in Greece’s economy, one might expect the place to be flooded with holiday home developments. However, this isn’t the case.
Why the delay in growth?
Robert Key is Director of Ionian Capital, an active private equity firm that negotiates both equity and debt finance for real estate investment and development projects. Based on Robert’s professional experience three main obstacles have deterred the holiday homes market in Greece from flourishing.
1. Because of the international financial crisis which hit the country in 2008 the development of second homes in Greece did not have enough time to truly take off, and since then development has been pretty much non-existent.
2. There is a lack of market research to determine what second home buyers from abroad are truly looking for in terms of both location and the size and design of the built product.
3. Complex legislation demotivates second home buyers who would otherwise want to purchase a property in Greece.
Turning obstacles into opportunities
Nevertheless, Robert tells me that Greece’s competitive advantage is encapsulated in her unsurpassed natural beauty and the immense history and culture. He further explains that in more recent years developers have started to become more specialised in second home design and as such newer developments tend to be well suited for second home buyers.
One such example is Europa Real Estate based in Crete. Established in 2002, Europa Real Estate builds customised holiday homes for its clients, particularly catering to Northern Europeans. Its founder, Evert Isaksen, points out that the surest, safest, most sustainable way to develop vacation properties is to do it from scratch based on what the client wants. As Evert puts it this is the reason that Europa Real Estate is still active while many of his competitors are out of the market. In other words to offer turnkey properties ready for occupation, as is conventionally done, is presently risky because returns on investment are uncertain. In fact, he explains that many investors of large developments in other Mediterranean destinations are now stuck with unsold properties. To avoid this effect, he states that by involving the client in the building process, this ensures long lasting relationships, client satisfaction and safer investments.
Quality control in construction has improved significantly in the last 15 years as a result of stronger regulations in obtaining building permits. Some may argue that while strong regulations can ensure better quality homes they also complicate matters for large scale developments and therefore halt the industry’s growth.
Adding to strict legislation, environmental lobby groups have a voice in Greece and locals are known to be protective of their land. The last thing they’d wish for are endless rows of high sky rises along the country’s lush coastline and long stretches of golf courses impacting the country’s eco-system. Important to note is that this push for land conservation may pave the way for environmentally responsible development projects.
Greece’s potential holiday homes market can finally learn from the Spanish and Maltese experience. Noel Azzopardi and Alan Micaleff from RCS Surveyors in Malta sum it up really well. They make the point that bigger isn’t always better and quality should not be compensated for quantity. Economic reforms now aim to restore investor confidence by directly tackling the problems that have stagnated growth in Greece. But if building regulations for holiday homes are to become flexible, they should ensure sustainable instead of rapid growth.
Time of course is always a key factor in such matters. The country’s economic and political stability is the obvious prerequisite for attracting investment in the longer term.
* For their time and expert insights, a special thanks to Robert Key from Ionian Capital in London, Evert Isaksen from Europa Real Estate in Crete, Noel Azzopardi and Alan Micaleff at RCS Surveying Company in Malta.