Feargus O'Sullivan is a contributing writer to CityLab, covering Europe. His writing focuses on housing, gentrification and social change, infrastructure, urban policy, and national cultures. He has previously contributed to The Guardian, The Times, The Financial Times, and Next City, among other publications.
Non-Europeans seeking a fast-track route to the EU have a new option – buying cheap Southern European property.
Non-Europeans seeking a fast-track route to EU residency now have a new option – buying cheap Southern European property. As of this year, Portugal is offering super-speedy residency applications to anyone who buys a property over €500,000. Cyprus is offering the same deal with a €300,000 threshold. Both these countries are being undercut by Greece, however, which is giving speedy residency to buyers of any property from just €250,000 and gave out its first property-tied residency to a Chinese man August 8.
European countries have long greased the wheels of visa agencies for high-rolling investors, of course. Britain, for example, speeds up applications for people buying property worth £1 million or more. The difference with these new schemes, specifically targeted at easing their countries out of crisis, is that they are accessible for a far larger chunk of less wealthy investors, who could buy little more than a small second home.
For outsiders, the schemes have clear attractions. Residency permits act as a form of visa to all the Schengen Area’s 26 countries, including all of Western Europe except the U.K. The permits require only token residency in the country where the property is located, meaning that buyers can use it as a springboard to live (but not work – that requires another permit) elsewhere in Europe. Portugal, for example, only asks that buyers spend a minimum of seven days per year in the country for the permit’s five-year duration, meaning holiday homes are also valid. Crucially, literature from real estate agents suggests that if applicants want to move on to full citizenship, they’ll be able to do so before the minimum time limit set for normal migrants.
Prices are also good in many places. While in Greece they’re not as rock bottom as tales of the crisis might suggest, paying out around €250,000 can get you an apartment in one of central Athens' wealthier neighborhoods or a restored house on one of Greece’s islands. These prices compare pretty well to much of the U.S. Eastern seaboard, or to China’s most important cities, from which the countries are particularly keen to attract buyers.
With locals, however, the new rules are more of a hard sell. In Greece, they come at a time when, thanks to other legal changes, the market may soon have a glut of repossessed properties seeking new owners. At the end of this year, the country will scrap a 2009 moratorium on foreclosures for properties worth less that €200,000, potentially causing a new wave of homelessness in the country. The Greek government insists that only 15,000 properties will be affected by the law, which they claim will primarily target people dodging regulations by splitting one single mortgage into two smaller ones. Even if they keep to this level of restraint, lenders will still be faced by a new injection of vacant property for which there is little local demand, hence the hunt for outside buyers.
Critics of the law see it as evidence of the bankers they blame for the crisis selling off chunks of the country to re-balance their books while simultaneously making their victims homeless. The law’s defenders, however, insist that scrapping the foreclosure moratorium is an essential step in re-establishing a healthy banking sector, and that the laws will bring investment.
Certainly, they come when Chinese investment in Greece is growing – a Chinese plan to expand Athens’ port at Piraeus was agreed just yesterday. The exact effect the scheme might have is still unclear, however. If buyers need only be in Greece for a short time annually, they will perhaps be more likely to buy holiday homes on coasts and islands, where a still healthy tourism industry has softened the blow of the crisis. Even if a rush of non-Europeans turn up to pump cash into property, housing stock in Greece’s cities might still go unsold. And should the scheme work, for the many struggling Greeks who are behind or barely keeping up with mortgage payments and now see a new market opening up for repossessed property, it will likely be seen as a bittersweet solution at best.
Top image: A "for sale" sign is seen on a building on the Greek southeastern island of Kastelorizo. (Reuters/Yorgos Karahalis)