You are viewing post 12 measures towards the “restart” of Greek Real Estate and construction

By Alexandros Mavvidis*

According to experts, we are currently at the peak of the pandemic, and, while impatiently waiting for the gradual repeal of the restraining measures, it is necessary to take immediate action to restart the real estate and the branch of constructions, in order to promptly prevent – in the extent possible – the potential consequences of coronavirus in the Greek real estate.

Real estate constitutes a significant pillar for the growth of the Greek economy. Consequently, the governmental policy of the following months shall include, not only the intense attempt to restrain the negative consequences of the coronavirus but also the practical support of this section, in order to achieve its dynamic development in the immediate future. The investments in construction will conspicuously support the economy’s recovery. As we say, to kill two birds with one stone!

Therefore, the below-mentioned twelve measures are suggested, as supplementary to the already existing ones, which will result in a positive outcome for the real estate market and the construction industry. The measures will be of limited duration in order to actuate investors in immediate actions, overcoming their fears and current negative psychology. The measures can be implemented gradually; however, only the total implication of the package will result in an actual “positive shock”. The financial benefits shall be offered with specific commitments, and in case they are not met, the benefits shall be repealed retrospectively and shall be returned –with interest- to the State. At the same time, investments from the state shall also take place.

The measures will be in force during the years 2020 and 2021. It is obvious that the cost of the measures, the benefits for the economy, as well as the potential negative consequences shall be analyzed (profit and loss). In addition, the implementation of the measures shall be audited, and sufficient resources shall be secured, even though the recent decisions by ΕCB (European Central Bank) will significantly facilitate the discovery of the resources. In any case, the potential “Economic bubbles” and large distortion of the market shall be avoided. Therefore, once again, the accurate fine-tuning of the measures is crucial. It is obvious that the beneficiary will not be able to use multiple measures at the same time.

Let’s take a look at the measures, then.

  1. Establishment of a special real estate team (correspondent to the pandemic team)

This team will be monitoring, until the end of 2021, the progress of the real estate and construction field and will suggest amending or supplementary state actions, where and if necessary. Unfortunately, during the current circumstances, action-interventions by the state are considered crucial. The team shall be of limited members, and only special advisors shall be part of it, with a deep comprehension of the Greek real estate market and its financial aspect.

  1. Loans with low interest for new properties, new constructions, and renovations

The banks shall offer loans up to 100.000 euro for each beneficiary, with a ten-year duration and interest below 1,0% and with a government guarantee. The condition will be either the purchase of a building or apartment, always as the first residence, newer than five-years and of energy class A, or to construct a new building, with the same energy standards. As long as the investment exceeds the amount of 100,000 euro, the remaining cost shall be covered by the investor with his own funds or with an additional bank loan.

For constructions outside of urban centers, ex. in suburbs or villages near cities, larger loans could be predicted, ex. of 120,000 euro, supporting in this way the decongestion of cities.

These low-interest loans could be offered for building renovations as well, only when including energy upgrades and resulting in the building’s promotion to, at least, energy class B+. The loans for the renovations shall not exceed 25.000 euro, whereas sponsored loans for the purchase of old properties will not be granted. However, this measure will indirectly enforce the purchase of old properties, due to the fact that their upgrade will be supported.

In any case, the continuance of granting loans in this market is considered essential. I do not want to remind the consequences in the real estate market, ten years ago, when the banks completely interrupted the origination of the real estate market.


  1. Public Works – infrastructure

The state shall immediately initiate a generous program of public investments for the years 2020 and 2021 with 20 billion euro. Half of it shall regard “mature” infrastructure works and the other half various smaller-scale public works around the country. The smaller-scale works shall be assigned promptly and therefore will immediately provide work positions in the field and money in the real economy. However, it is my estimation that, public areas and roads in lot of cities are in urgent need of maintenance. The same applies to hospitals and public buildings. This is the perfect chance!

  1. New Development Law – NSRF (National Strategic Reference Framework)

Α a few weeks ago, a cycle of the development law (L.4399/2016) ended. The suggestions shall therefore be approved with fast track procedures in order to immediately start the works. Suggestions that include building-construction works shall be prioritized. A budget increase in this program may be necessary, as well as the initiation of a new submission cycle. Ideally, advanced payments could be provided in order to speed up the materialization of these works.

Additionally, a special program of approximately 1 billion euros shall be announced, ex. through NSRF, which will fund smaller construction works of businesses, ex. up to 300,000 euro, emphasizing on specific areas, such as agricultural product processing and industries with the significant exporting operation, not including tourism though. Therefore, with a subsidization percentage of 50% (maximum funding: 150,000 euro) more than 6.500 works will be funded. The correspondent folders, speaking as an Engineer, may be prepared within a few weeks.

  1. Investment Liquidity

In times of uncertainty, the maintenance of operation liquidity in “reassuring” levels is crucial. At the same time, however, the growth process of each business shall not be interrupted. If we combine the possibility of deferral of the payment obligations towards the state (excluding VAT), with investment in new construction works, it will motivate the materialization of works, and more, if the work is necessary for the business development. Therefore, for each euro invested by a business in construction work up to 100,000 euro, which will be approved until the end of following September and materialized until 31.12.2021, will be able to defer equal payments, interest-free and with correspondent regulation, beyond the year 2021.

  1. Acceleration of licensing

Due to the pandemic, the state is currently in a self-protection modus. During the period of under function, a large number of folders will be accumulated, which shall be immediately approved in order not to stall the initiation of construction activity.

Especially for Urban Planning offices, the state shall take action in order to prevent additional delays. Transitional participation of private Engineers may be potentially helpful, as it currently happens with building inspectors. The Engineers will be able to inspect the folders and draw inspection reports, which will be approved, only at their final stage, by the building services of Municipalities.

The general acceleration of licensing procedures and reduction of bureaucracy would definitely result in the attraction of investments.

Let’s mention the pending final approvals of large-scale works. These works could raise significantly the activity in the construction field.

  1. Tax exemptions

It is obvious that tax exemptions can always motivate investments. Consequently, the legislator, for each Euro invested by a business in construction work up to 500.000 euro, from now until 31.12.2021, shall grant tax exemptions (excluding VAT) of 25% percent of the investment, which shall be immediate and already in force during the year of the work completion, while the reversal (profit tax of businesses minus tax exemptions) shall take place until three years after the year that the work was initiated.

  1. VAT reduction

For the following months and until the end of 2021, the VAT shall be decreased at 13% for all construction works, building materials, and services of Engineers and Consulters regarding the construction. This will significantly reduce the construction cost and, I estimate, it will motivate investments within the above-mentioned timeframe. Again, this tax reduction shall regard the time of expense materialization and not the time when they are certified. Obviously, this will balance the potential –due to coronavirus- decrease in construction activity for the following time period.

  1. Fast depreciations

For investments in commercial properties, which will acquire building permits from 01.05.2020 and will be completed until 31.12.2021, a faster depreciation period shall be predicted, equal to five (5) years, as an exception.

  1. Protection of the first residence

Due to the current extreme circumstances, some owners may not be able to cope with their loan obligations. In order to avoid significant issues in various levels of the residence market, the legislator shall predict a special regulation for borrowers, protecting appropriately, for at least one more year, the first residence. It is self-evident that strategic bad payers are excluded and the inability to pay shall be proven accordingly.

  1. Interest-free loans for viable business rents

Following the lockdown, some businesses may cope with liquidity issues, even though the state has already predicted significant supporting measures. Therefore, for the businesses proven to be viable, the state shall predict interest-free loans for rent payments of six months. In this time period, the business shall have the opportunity to return to “normal” conditions. The repayment of the loan shall be in 12 interest-free installments, starting on 01.01.2021.

With this measure, the business will be supported, whereas at the same time, a potential situation of empty shops and offices which would negatively affect the real estate market, will be avoided.

  1. Go digital – funding of digital presentation and promotion of real estate properties

The past days have proven that the internet has an increasing effect on everyday life after the coronavirus era. Therefore, the government shall support all actions towards the presentation-promotion of properties to potential buyers, specifically from abroad. Special funding by NSRF could be predicted, covering 50% of the related expenses, with a limit of 5.000 euro for each beneficiary.

It is self-evident that some of the above measures could be considered “Extreme” taking into consideration that the pandemic is currently in progress and we do not have evidence for the potential consequences yet. However, the extreme circumstances as the ones we are currently experiencing, demand extreme answers and need a powerful “positive shock”. I consider it necessary to apply the above measures, even in a preventive way, even in a gradual way, viz. firstly with small budgets, rather than waiting to see the results and acting afterward. The cautious, immediate and dynamic response for the confrontation of the virus at the epidemic level is justified until now, as the number of deaths remains limited. Correspondently, let’s not risk a lot of “dead bodies” in Greek real estate!

*Alexandros G. Mavvidis is Architect Engineer and General Director of Mavvidis & Associates.


12 measures towards the “restart” of Greek Real Estate and construction
Greek Real Estate
CategoryGeneral News
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