by admin Real estate professionals request government intervention for the restoration of overpricing phenomena, which in many cases create a distortion in property values and hinder the attraction of foreign real capital in the Greek real estate market with regard to the Golden Visa program. The president of E-Real Estates, Themistoklis Bakas, describes the golden tricks, which have been devised in recent years by real estate offices or agencies, which aim exclusively at the Golden Visa program, in which Chinese nationals and Greek parties interact.
Cheap renovations for expensive sales
Mr. Bakas suggests that “companies buy low value properties, proceed with minimum renovations, and then resell them to their Chinese compatriots for 250,000 euros, which is the lowest investment limit for the provision of a five-year residence permit with the right to renew to citizens from third countries. There are many cases where properties worth €100,000-€150,000 were renovated at a cost of €30,000 and resold within two-three months to Chinese buyers at a price of €250,000. The additional topping price was pure profit to the intermediary company, which was also the original proprietor. According to Mr. Bakas, a typical example of such sale relates to a property in Pagrati, which was bought by an Israeli investor for 80,000 euros, renovated and sold to a Chinese interest company for 150,000 euros, which, in turn, sold it to a Chinese individual for €250,000.
They buy real estate securing a Golden Visa and a guaranteed profit
As the president of E-Real Estates claims, many foreign investors during the last four years, purchased two or three properties with a total value of 250,000 euros in areas where short-term rental was in great demand. By this way, their investment could have guaranteed significant profit return (e.g. €1,000/month) which was promised to them by the brokerage companies and agencies that mediated for the property purchase. As Mr. Bakas explains, “the next step that was devised by these companies in order to make their offered properties more attractive to foreign investors, was to buy properties of low value, renovate them, lease them to their own management companies at a rent much higher than the usual rent of the area under consideration, and present this as an “investment opportunity” for the Chinese buyer who was expected to pay the amount of 250,000 euros. But, in essence, this process was a fraud”, he explains.
Characteristic example
As a characteristic fraud example, Mr. Bakas recalls a property that was purchased at a price of €100,000, was renovated at a cost of €30,000 (mainly bathroom and kitchen works), leased to a company of own-interests for €1,000/month for three years (meaning a total cost of €36,000) in order to meet the performance property criteria, and was finally sold to a Chinese national for €250,000. The brokerage-owner of the property invested the amount of €166,000 in total, created a virtual profit return for the buyer and made a profit of €84,000.
Buyers-Partners in golden business
Golden businesses does not stop here. Greek real estate market professionals have recorded cases in which brokerage companies, in collaboration with agents in China, and also Greeks who operate in China and know the procedures, became shareholding partners with the foreign buyers themselves. Mr. Bakas says, “let’s not forget that the cases of permanent settlement of Chinese families in Greece are minimal compared to the properties that have been purchased (by the Chinese) in our country. Most Chinese investors wish to obtain a Golden Visa for free movement in EU countries for professional and other business-related reasons. Such (partnership) companies, in cooperation with property agents in China, attract Chinese parties who knowingly agree to buy overpriced properties with the prospect that the middlemen will recoup some of their investment from their other funds in China.” In many cases, properties in areas such as Kolonos and Sepolia, the value of which does not exceed €100,000 – €120,000 and their objective taxation value is €40,000 – €45,000, have been sold to Chinese investors for €250,000.
Measures are necessary in the real estate market
The president of E-Real Estates concludes that “such sales in the midst of a pandemic, when the real estate market is on hold, distort the prices of the respective areas, and once again create fictitious values. In all these transactions, wealth is often produced as the result of cheating the legislative framework”. Therefore, Mr. Bakas calls for measures to be taken, so that proprty investments are conducted with transparency and legal control. More specifically, as he states, an autopsy should be carried out on the property for sale by the tax office with a certified evaluator and a legal real estate agent who will be responsible for declaring the value of the property, if it is a matter of granting a residence permit through Law 4146/2013. At the same time, it is necessary to review the reintroduction of the capital gains tax for the cases of multiple conspicuous transfers and/or purchases and sales taking place. This capital gains tax will operate as a deterrent, and at the same time, the state will benefit from the taxation, as normally such money would have evaded the Greek economy.
Source: Eirini Chatzoglou, 7/10/2020
https://www.iefimerida.gr/ellada/hryses-mpiznes-hrysi-biza-epitideioi-kolpa-me-akinita