Sunday, June 23, 2024

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Greece: More and More Greek Islands Placed Up for Sale As Result of Financial Crisis

It’s a buyer’s market in Greece, where an increasing number of private islands are entering the market as island owners continue to feel the pinch of the European financial crisis.

Little Lesbos - Courtesy of Vladi Private Island

Little Lesbos – Courtesy of Vladi Private Island

It was one of the most talked-about moments of the European financial crisis – as Josef Schlarmann, a senior member of Angela Merkel’s Christian Democratic Party, proposed that Greece sell of its islands to relieve the burden of its spiralling debt problems. “Those in insolvency have to sell everything they have to pay their creditors,” explained Schlarmann in a controversial interview with Germany’s Bild newspaper. “Greece owns buildings, companies and uninhabited islands, all of which could all be used for debt redemption.”

The proposal (perhaps understandably) went down like a lead balloon in Greece, where Tourism Minister Pavolos Gerounalos wrote off Schlarmann’s proposal in the bluntest way possible, dismissing the politician’s suggestion as nothing but “a dumb idea.” Explaining that rather than selling-off their land, they want to develop it, Gerounalos emphasized that whilst a handful of private islands can certainly be found on the market, the government itself would not be putting a single state-owned island up for sale.

Yet several years down the line, it looks like Greece’s politicians are considering a change of tact. Whilst the cash-strapped country’s hundreds of state-owned islands have so far been yet to enter the market (the country currently prefers to lease them out), a report published by the USA’s respected Wall Street Journal suggests that the market is witnessing a higher level of demand than ever before, with a glut of Greek private islands attracting the attention of high-flyers throughout the world.

According to a recent edition of the Wall Street Journal, international investors are clamouring to invest on the Greek private island market, thanks to the combination of falling real estate prices, new tax laws and an overhaul of the much-maligned property acquisition laws which has created a perfect storm for the scores of multi-millionaires with dreams of becoming the next Aristotle Onassis – the famous former owner of Skorpios Island.

Indeed, it was the sale of the iconic Skorpios Island (and, to a lesser extent, the nearby Oxia Island, which was purchased by the Sheikh of Qatar in 2013 after he offered a three billion dollar loan to the cash-strapped country) which kick-started the renewed interest in Greece’s island gems. As Private Island News reported earlier this year, the island was bought by the 25-year old Ekaterina Rybolovleva, the daughter of Russian billionaire Dmitry Rybolovlev for an incredible USD 158 million.

The sale served as a turning point for the Mediterranean island industry. Up until 2013, many investors had been forced to give up on their island dream due to the complicated purchase processes. As Vladi Private Islands’ founder and CEO, Farhad Vladi, explained to Private Island News, non-native would-be island owners have traditionally had to overcome a total of 32 hurdles to finally get to the object of their desire, as well as obtaining permits from the likes of the Defense Ministry and the Agriculture Ministry.

Vladi Private Islands’ Vice President Pedro Arez added: “We frequently receive requests for Greek islands from time to time, but given the bureaucratic difficulties, a completed transaction was a rarity.” Trying to assess the value of the Greek islands traditionally presented a further hurdle for the Hamburg-based brokers, firstly because of a lack of comparisons and secondly because of “unrealistic” prices. Discussing a Cretan island with a value of EUR 180 million, Arez explained in 2002: “Greek sellers really need to bring their prices down if they want a sale”

Twelve years and one financial crisis later, it seems that the island owners are starting to take note. According to the recent Wall Street Journey (WSJ) report, property prices are down overall, in some cases down as much as 30% compared to pre-crisis levels. In several cases, this price drop is a result of a combined pinch from the financial crash and new taxation laws (the country’s first permanent tax on real estate) imposed as a direct result of pressure from the International Monetary Fund.

With island owners desperate to sell before the new tax burden leaves its mark, could this be the beginning of a brand new private island boom? Whether the current market situation sees a return to the golden era of Greek island glamour remains to be seen, but it’s certainly a step in the right direction. Vladi Private Islands for one is optimistic, and currently lists five Greek islands, ranging from the EUR 800,000 Little Lesbos to the EUR 45 million Greek Island in the Ionian Sea as well as an impressive off-market island collection for their elite clientele.

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