You’ve got to feel sorry for the Brits don’t you?
The economy’s in the doldrums, it rains 350 days a year, and the cultural culinary high-water mark is a shepherd’s pie. Meat AND mashed-potato… IN A PIE!
But I feel most sorry for the poor old mum and dad British investors. Ignorant, naïve and cashed-up. Everything a scammer could hope for.
And now a text-book guide to everything that can go wrong in off-shore property investing.
You’d think they’d learn. There’s been 20 years of investing horror stories, across the Mediterranean, but they keep coming back for more.
And right now, here in Greece, there are a whole bunch of specialist agencies lining up to market bargain basement Greek property directly to the Brits. Some of them are probably ok. Some of them are probably shamelessly criminal.
One of those organisations is the Greek government itself. Apparently you can now rent out the treasures of ancient Greece – places like the acropolis – for fashion shoots or music videos… for a modest fee.
Maybe if we ever go broke we could do something at the Sydney Opera House, like put on a concert. Oh wait…
But there are shysters out there playing off the British dream of a cute little holiday villa in the Mediterranean. And who’s going to help them do anything about it. MI5?
I’ve been looking around at property since I’ve been here (I can’t help myself. Some people like looking in Galleries, I like looking in real estate windows…) And there are some bargains here to be sure!
I’ve seen places, quality places, going for discounts of 50-70 percent. Premium inner city houses, stunning water-front villas. There are some incredible bargains on offer.
Because the debt crisis has had a huge impact on the Greek property market. And the truth be told, a down turn in property was underway well before the debt crisis hit. Actually it was one of the key causes.
But now property prices nationally are 30 percent lower than they were three years ago.
And in the 5 years leading up to the GFC, an average of 150,000 properties changed hands every year. Now, Greece is lucky to post 10-20,000. Volumes are down an incredible 90 percent!
A 30 percent fall in prices, a 90 percent fall in volumes? That’s a property market that’s been decimated. But it’s also a property market that’s offering up some incredible bargains.
And new taxes on property are pushing even more sellers on to the market. If it isn’t a buyers market, I don’t know what is.
And it’s a market that’s attracting buyers from all over Europe, not just the UK. Snare yourself a piece of paradise at bargain basement prices!
But I wonder if the British mums and dads really know what they’re doing – if they really understand the risks.
It highlights some issues that everyone thinking about offshore property investment should be aware of.
First of all, the Greek property market is not particularly sophisticated – definitely not relative to Australia. There’s still no one website to look at all properties available for example.
So buyers are relying on buyer’s agents to source their properties. But how much can you trust your buyer’s agents? Often, they just work on commission, so unless they think you’re going to be a repeat customer, they don’t really care what piece of crap they flog you.
You think the Brits would have learnt this lesson in Spain. A lot of folks bought there, completely sight unseen! And then it turned out that quaint little villa with water-views was actually a hovel with a garbage tip aspect. And there was nothing they could do about it.
The second issue is the difficulty of navigating a foreign legal minefield. Greece doesn’t have a reputation for being light on red tape. And there’s still a lot of uncertainty around the legality of foreign title.
Again, you’d think their experience in Turkey would have been instructive. There were a lot of cases there of transactions that lacked the proper documentation, which meant that down the track they were null and void. There were also cases of Brits rocking up to find that the title had actually been put into the name of the buyer’s agent’s cousin.
And how many do you think had the pockets or the wits to try and drag someone through the Turkish legal system? You’re a long way from home.
The other thing I wonder is how many of them are hedging, or even really understand the currency risk involved…
There’s always the Pound / Euro risk. It’s not really clear which way that might go. There’s a lot of factors to consider.
But what about the risk that Greece exits the Euro? That still remains a possibility. Those Brits could find themselves with a euro-based mortgage against an asset denominated in next-to-worthless drachmas… scary.
And then there’s sovereign risk. Foreign property owners (with no vote!) would be tasty targets for tax hikes to try and fill the budget black-holes.
It’s a minefield.
Now I’m not saying Greece is a no-go zone. I’ve been keeping an eye out myself. There are some incredible bargains. And if you could afford it, and you bought well, a piece of paradise is a piece of paradise, no matter what happens to the economy.
But you really need to know what you’re doing if you’re going to invest off-shore. Or at the very least, you really need to partner with someone who does, and who is someone you can trust!
Get that in place, and Greece could be an incredible opportunity.
But if you don’t you’re just a lamb to the slaughter. Makes me wonder how many unsophisticated Brits are being led up yet another Mediterranean garden path…