Albania has been in the news recently, as the latest country wishing to join the European Union. Greece has always had a complex relationship with its neighbour and Greeks were always a little unsure about Albanians, mainly because so little information seeped across the border from the secretive, Communist state. Now, however, many Greeks welcome this move and believe that their neighbours have earned EU membership; without Albanian migrants, the economy of Greece would be in even worse trouble.
However, whilst Albanians make up a large proportion of the agricultural workers, the main area in which they gain respect is as fine stonemasons. Over the years, Greek builders forgot the art of working with stone as they moved away from building stone houses towards the easier concrete structures. Instead of rebuilding and repairing old traditional stone houses, they simply built a new house on the same plot and let the old house fall down.
Albanian Stone Masons and Traditional Greek Stone Houses
When foreign investors began buying in Greece, many were fixated upon the dream of owning a traditional Greek stone house, a solid construction that fits in with the landscape. However, it became increasingly difficult to find a good contractor – whilst there are some fine Greek stonemasons, they are very hard to find.
Into the breech stepped the Albanians, who initially faced a little resistance when they flooded over the border. However, they brought with them the noble art of stonemasonry and allied it with a solid work ethic – they did not use jackhammers or angle-grinders, but hammers and chisels to break rocks under the hot Greek sun.
Very soon, they earned respect for their skills and hard work and, whilst they were technically illegal immigrants, the Greek authorities turned a blind eye, understanding that the Albanians were providing a service and contributing to the economy. If you are thinking of renovating a Greek house, there is a strong possibility that your workers will be Albanian.
Albanian Stone Masons and Traditional Greek Stone Houses
Albania and the European Union
For this reason, most Greeks welcome Albanians and are fully behind that country’s attempts to join the European Union. Their hard work and skill have earned them that right and the Albanian masons have shown that their country would be an asset to the rest of Europe. There is still some work to be done in strengthening the Albanian economy and tackling corruption and crime, but they have come a long way in such a short time.
If you want to buy or renovate a traditional Greek stone house, and you use Albanian stonemasons, treat them with the respect that they deserve, as skilled craftsmen.
With the current limited supply of residential and commercial units in Abu Dhabi, Al Reem Island and Al Raha Beach come to ease the pressure between supply and demand.
The property market in Abu Dhabi has been the target of much focus since the global financial crisis hit the news. With Plan Abu Dhabi 2030, the government is keen on building up the emirate as a global financial centre by ushering investment into many of its sectors such as infrastructure, energy, education, and real estate amongst others. The aim is to expand the economy and move away from the dependence on oil revenue.
The freehold developments in Abu Dhabi real estate are concentrated on Al Reem Island and Al Raha Beach – both presently under construction with the handover expected to take place during Q1 2010. The major development duo comprises mixed-use communities spread across residential, commercial and retail units. Once finished, these developments should relieve the pressure on the current constrained supply of residential as well as commercial units in the whole emirate of Abu Dhabi.
Freehold properties in Abu Dhabi have witnessed a price drop since a peak was reached in 2008 with many projects withdrawing back to their respective launch prices.
While Abu Dhabi rent prices have reduced slightly in the last few months, these prices are still relatively high when compared to the prices in other emirates of the UAE. A great part of the Abu Dhabi workforce lives in Dubai and commutes in order to benefit from the lower-priced rents and the lifestyle Dubai offers. For 2009, the main accomplishment for Abu Dhabi has been to host the Formula One race on one of its new developments, Yas Island.
The Dubai property market is in a mess right now, but the implications for the small investor are unclear. Although Dubai is world famous for owning some massive real estate developments in Dubai such as the Dubai Palm Island projects, it has also built up a $100 billion portfolio of assets in international property around the world and if Dubai world defaults on her debts, as is seeming more likely, international creditors wilkk be looking at their overseas assest as a way to recoup some losses. The fact is – it is illegal for foreigners to own land in Dubai, so the offshore properties, which include Turnberry golf resort, and numerous other holdings, including P&O, the British based shipping company, are going to look far more attractive. Prime real estate in the U.K. is the more appealing target for creditors than the desolate, undeveloped patch of desert that was earmarked for the Waterfront project near Dubai.
According to the bond prospectus, property consultant Jones Lang LaSalle valued the land at Nakheel’s Waterfront project at 15.5 billion U.A.E. dirhams ($4.2 billion) at the end of August 2006. This could rise to AED43.29 billion when the project is completed in 2018, the consultant said, according to the prospectus.
But analysts now say the real value of the land backing the bond could be 50% lower than the $4.2 billion figure in the prospectus. U.A.E. property laws, which prohibit foreigners owning land, could also prevent international creditors gaining title.
“We need to assess what the fair value of Nakheel’s collateral is today and if it suffices? If not, the bigger question is which other Dubai World assets can be claimed instead,” said Saud Masud, senior real estate analyst at UBS AG.
At the end of 2008, Nakheel had assets worth AED153 billion, against AED64.2 billion of liabilities, according to its financial statement. But a near 50% slump in property prices in Dubai over the past 12 months has hit the value of Nakheel’s assets and developments, which are mainly located in Dubai, putting Nakheel in an extremely tenuous position.
It seems to us as though this is a threat to persuade the Dubai government to go cap in hand to Abu Dhabi – but it may be that the price of losing some overseas assets will outweigh the probably penalties. Still – wealthy Muslims from Abu Dhabi still need somewhere to let their hair down away from rigorous religious rules. 
The staggering amount of Dubai property for sale, along with increased inventory put any small investors very much at risk in Dubai currently. The developers are aggressively pursuing any and all monies owed – almost regardless of whether the payment schedule calls for it or if they have upheld their end of the bargain and it could be years before this mess is sorted out.
We are now well into the silly season as far as Australia and New Zealand is concerned. Most kids seems to be out of school and parents are focused on buying, buying, buying. The slightly unusual thing this year there seem to be a fair few people are buying property not just Christmas presents. So what is the property market like in Australia during the Christmas and holiday season?
Traditionally the end of the year has been considered a terrible time of year to sell property. Everyone is on holidays – well yes – but that in fact can be advantage depending on the type of property, location and whether you are buying or selling.
For example if you are trying off-load a holiday house, particularly property in popular seaside town - you definitely should have a property listed – and with an agent who is going to be actively working over the “dead zone” of the two weeks over Christmas and New Year. Think about it – all these people in town, relaxed, on holiday – what better mood to be in when you decide that you want to make this either a permanent arrangement or at least a regular holiday spot. These people are best placed to make an impulsive, irrational decision – the type that gives you, the seller, a nice selling price!
Christmas Decorations, Flinders St, Melbourne
On the other hand I have done well when buying in a big town over the same period. Everyone is out of town – the agents are all covering for each other, and seem almost surprised you want to view the property, the home opens are canceled and the local real estate advertising is suspended generally to late January. Making an offer with as little competition as possible will see you get a good deal – especially with the uneven and uncertain market at the moment.
Oddly enough the recent Australian mortgage rate rises doesn’t seem to have flattened auction clearance rates in the East – Sydney auction clearances last weekend were 65.1%, while Melbourne’s auctions saw 72.6% of properties listed sold.
However if you are considering buying or selling property between now and mid January you do need to do some homework. Solicitors and conveyancers traditionally took all of January off – its not quite as dire as it used to be, but check if you have a regular solicitor you use to see if they will be available and if not who you should contact.
Banks can be even more problematical when trying to deal with, or indeed find, your usual mortgage manager. Even in the electronic age – a lot of detail never seems to make it to your file. If possible ask for a slightly longer settlement period to get your property professionals off the beach and into the office to help you build your Australian property empire!
As the scale of the Greek national debt becomes apparent, the need for money has fuelled an intense debate over Greek property taxes and the battle lines between Church and State have been drawn. The Church is the largest property owner in Greece and the government believes that it has enjoyed tax-exemption for long enough and that it should pay its dues. The Orthodox hierarchy, of course, have dug their feet in the sand and stated that they are simply going to refuse to pay the one off windfall tax.
On the face of it, the Church’s claim that it is being victimized seems fair and would normally receive sympathy in this very devout country. Bishop Theoklitos, Chairman of the Church of Greece’s financial department, claimed,
“The Church of Greece contributes to the state when it works. There is no reason for any other contribution and the tax would encumber some members of the clergy with excessive debt…there is no war or disaster that requires our contribution. Instead, we are being called on to contribute because of failed economic policies. We refuse to foot the bill for other people’s mistakes!”
Low Sympathy for the Church after the Land swap Scandal
However, sympathy for the Church is extremely low after the Greek investment property scam and the public are largely behind the move, believing that the Greek Orthodox Church should pay its fair share of Greek property taxes. The Church of Greece is the nation’s largest property owner and, in a country with a public spending deficit reaching 12% of GDP, the Finance Minister of the new Papandreou regime will not take no for an answer.
Greek Property Taxes and the Greek Orthodox Church
The Church’s rhetoric continues, pointing out that, whilst it does perform charitable work, it is more than a charity and that “the church operates 800 establishments for the needy.” Both parties have drawn a line in the sand and it looks like the debate will be long and protracted, especially in a country where there is no official separation of church and state and the priests and bishops are classed as public servants and paid by the state.
Greek Property Taxes on the Church and the Inevitable Outcome
This battle has a previous antecedent – in 1999, Prime Minister Kostas Simitis stood up to the church in their quest to have a person’s religious beliefs printed on their ID cards. The government won that one and in a country feeling the financial pinch and with the mandate from the landslide election, it looks as if the state will win this face-off. Papandreou looks ready for the fight and, in fact, may be using it to divert attention away from some of the necessary spending cuts that will bite into the average Greek’s pocket. He has stated that he wishes to move the burden of Greek property taxes onto larger property owners and using the Church as an example will prove that he intends to follow this particular manifesto promise.
Following the announcement on November 25 from the Dubai Government, property developer Nakheel said Monday it has asked for three of its listed Islamic bonds, or sukuk, on Nasdaq Dubai to be suspended until it is in a position to inform the market more fully. “Following the announcement on Wednesday Nov. 25 from the government of Dubai, Nakheel has today asked for all three of their listed sukuk to be suspended until it is in a position to fully inform the market,” it said in a statement on the Nasdaq Dubai. Nakheel is one of two flag ship companies, along with Dubai World, which announced last week that they would seek a debt standstill agreement from creditors, until May 2010.
As Dubai World moves to seek a standstill on the group’s debt for a period of six months, a top official from Dubai Government has made it clear that the government has not guaranteed any of these debts.
The issue gains greater significance now as the nearest repayment falls on December 14 when the $3.5 billion (Dh12.8bn) sukuk matures.
The prospectus of the sukuk issue has said that: “Investors should note that the Government of Dubai does not guarantee any indebtedness or any other liability of Dubai World.”
Fixed income analysts said to Emirates Business that in the case of a sukuk, the Islamic version of bonds, the issue is always backed by asset. With regards to Nakheel sukuk, which is maturing within two weeks, the assets consist of the leasehold interest in all land, buildings and other property known as DWF South and Crescent Lands at Dubai Waterfront.
The offer document has said that the return on the certificates shall be calculated on the basis of a fixed return of 6.345 per cent per annum.
The prospectus has said the proceeds of the issue of the certificates will be used by the issuer to purchase the sukuk assets in accordance with the terms of the purchase agreement.
“No assurance can be given that if Dubai World were to produce and publish audited financial statements on a consolidated basis that Dubai World’s consolidated financial position, including its consolidated assets, liabilities, revenues and cash flows would not be significantly different from the information that can be drawn from the financial statements of Nakheel,” it said in the offer document.
The document invited the attention to the fact that Dubai World is dependent on the operations of and cash flows generated by its subsidiaries, and therefore any claim that may be made by a creditor on Dubai World will effectively be structurally subordinate to any claims made by creditors directly on Dubai World’s subsidiaries.
On the trading of the sukuks, the issuer said there can be no assurances that a secondary market for the certificates will develop, or if a secondary market does develop, that it will provide the certificate holders with liquidity of investment or that it will continue for the life of the certificates.
The issuer used the document to caution the investors that each of the issuer, Dubai World, and each co-obligor has the majority of its assets in the UAE and accordingly its business may be affected by the financial, political and general economic conditions prevailing from time to time in the Middle East generally.
So the emperor with no clothes in Dubai has finally been seen for what it is. News that Dubai World – who brought you such extravagances as “The World” artificial island not to mention the world’s highest skyscraper – has asked its bankers to give it a 6-month holiday from mortgage repayments. (Note to self – must try this with my mortgage provider!). The Australian stock market reacted on Friday with a rather predictable “crash” of some 3%. However by Monday after noon the ASX200 was back up 2.5% Australian investors having discovered that no major Australian bank was exposed to Dubai’s toxic real estate market. And that the United Emirates (of which Dubai is a member state) have come to the party guaranteeing individual states.
It is interesting to discover that Dubai is quite heavily invested in Australian port’s infrastructure and stevedoring services. Anyway the market seems to have settled down in the local stock market. For property investors the whole scenario highlights the risks of investing in any market that you don’t know well and in particular in a place such as Dubai where the law and government system is so different to that of Australia and other commonwealth countries.
Dubai - tough market for property investors
Property investment is always subject to what is known as “environment risk” – that’s the risks you can’t control such as local government changing the law on residency qualification for investors, or the banks deciding that you need to provide an extra 10% by tomorrow. There is also the market sentiment risk – now everyone even slightly aware of the of the world scene probably thinks every piece of Dubai real estate is grossly over-priced. Whether you own a reasonable priced piece of Dubai property or not -that is the perception you will have to battle if you are planning on selling anytime soon, or even in the next 10 years.
One wonders what spin the next Dubai press release will put on recent events?
Even in Australia, holiday homes are always the first to take a battering in an economic downturn, very few of them are actually “essential” when the proverbial hits the financial fan. Investment in tourist resorts can also be difficult to make a good return on because of the high over-heads. Unfortunately for Dubai investors many of the properties there were developed for the second home market (apparently quite a few sun-starved British football players have bought second homes there), and tourism was also a big focus of the last few years.
Fortunately for Australian property investors probably few are exposed to Dubai’s property market, and the lesson of the last few days is that that is a good place to be! Meanwhile local news is more focused on the Liberal’s leadership turmoil than any economic news – so all is back to normal for the lucky country!
Following on from Building a Holiday Home in Greece – Financing and Building Plots, you are now aware of the process of finding a suitable place to build your dream home in Greece. With that taken care of, the next stage in the process is Designing and Building a Holiday Home Greece, finding the right people to make sure that the entire process runs smoothly. The main factor to have in the back of your mind is that building projects take longer in Greece: Whilst you can draft a contract, tying builders to timelines, the entire process will take longer than in the UK or Northern Europe.
Getting to Grips with the Regulations Concerning Building a Holiday Home Greece
Renovating or self-building a house in Greece can be very daunting if you are not aware of some of the nuances of the Greek building regulations. There are, as always, a few things that make sense, a few laws from leftfield, and a mass of red tape. The key is to have the right people in place to help the process run smoothly and ensure that you do not unwittingly break any laws and end up with the extra expense of putting things right. You should already have a good lawyer in place and engaging the services of an architect or reliable contractor is the next step.
Whilst you can manage the construction process yourself, it may be worth looking at hiring a project manager, usually costing around 10% of the total cost of the building project. By asking other Expats, you should be able to find a constructor who is reliable, thorough and speaks English, enabling you to liaise with the building teams.
Designing and Building a Holiday Home Greece
Designing and Building a Holiday Home Greece
A Few Things to Watch out for When Designing and Building a Holiday Home Greece
As with any building project, you should research the local restrictions and conditions before buying a building plot, ensuring that there are no nasty surprises that will eat into your budget. Your architect and contractor will be well aware of these so sit and work through the costs and, as with a building project in any country, add half on again to the projected costs to give yourself some protection from budget overruns.
Building Materials and Restrictions
Many areas insist that you use only certain building materials for your house, especially in areas of outstanding natural beauty or historical interest. This can drastically increase the cost of materials and labor, so make sure that you are aware of these from the start. For example, any house built in the Mani area of the Peloponnese must be clad with local stone and the expertise for this does not come cheap.
Connecting the Utilities
You should always check how easy it is to connect utilities; if the building has no electricity supply, phone line or water inflow, you will have to pay for it to be connected. Due to European legislation, the Greek government is no longer allowed to subsidize this so, if you find a house on the top pf a mountain, the electricity will cost you tens of thousands of Euros to connect or you will have to resort to a generator.
Earthquake Legislation
Due to strict Earthquake planning legislation, you must have the input of an architect or structural engineer into the roof, and it is safer to use a specialist contractor for this, even of you plan to do most of the building work yourself.
VAT and Property Taxes
In Greece, once you have finished the building, you will have to pay VAT and you cannot reclaim this as you can in some other countries. This is 20% of the value of the property, although you should be able to get away with using the tax-assessment figure, which is always significantly lower than the market value.
IKA Payments
The IKA system is the national insurance system of Greece, paying for medical care and pensions. A strange nuance of the law means that you have to pay the IKA of the contractors working on your house, even if you don’t use any contractors! The architect calculates the number of man hours needed to construct the building and you must pay the IKA payment for this, even if you are doing the work yourself or bringing friends over to help. The fines are steep if you fail to take this into account, so make sure that you are aware of how much and factor it into the budget.
Designing and Building a Holiday Home in Greece
Designing and building a holiday home Greece is not a difficult process if you are thorough in your research and ensure that you have the right people in place to ensure that the process runs smoothly.
Photo Courtesy of Dimorsitanos
Australian property is still in short supply and will probably remain so for the foreseeable future. According to the News Limited website on-going issues with larger developers getting financing means that Australia’s rapidly growing population will struggle to be housed for the next few years.
Official estimates that the current Federal Government’s fiscal stimulus will add 20,000 new homes to Australia’s housing stock. Unfortunately Australia needs around 250,000 new homes just to meet current demand. At a countrywide level this sounds bad (if you are looking for a home) or good (if you are an Australian property investor) – but of course at the individual level the situation is worse.
Most buyers don’t’ want a home in Australia – they don’t even want a home in Melbourne – they want a home in Toorak they don’t want a home in Western Australia – they want one in Port Hedland – and as soon as you get down to the individual town or suburb that is where the statistics get quite dramatic.
For example the NSW town of Gunnedah is normally a quiet rural town of 10,000 people around 6 hours drive NW of Sydney. Well it was until one of Australia’s largest underground coal seams was discovered. Gunnedah recorded NSW’s third largest rental increase from $180 to $250 a week. But in fact there is nothing to rent in town – with one rental agency which had only 3 properties available recording 10/15 inquiries a day from potential renters who were prepared to pay up to $500/week for a property. So boom towns, particularly mining boom towns, will continue to push rental, and also property prices sky-high – its all about demand!
Affordable is generally the issue for Australia outside of the mining towns. The lack of funding options for large multi-unit developers is of particular concern for those groups involved with the estimated 105,000 Australians who are homeless. In addition Australia is slowly waking up to the fact the unconstrained urban sprawl may not be a long-term solution to city planning down under, and that higher density housing is disparately required in locations that people actually want to live in. However in 2009 approvals for multi-unit housing hit all time lows.
I suspect though you can’t blame the bank’s lending policies entirely. After that could always be fixed in the Federal Government was prepared to provide the right guarantees, as was proved last year with commercial property. In part the issue appears with the amateurish urban planning as practiced in most of Australia. Town planning rules appear arbitrary, without fixed guidelines. A project which should be approved will often be overturned because of political pressures coming to bare on local councilors. Or just because local councilor happen to own competing business interests.
Unless there is a radical shake up of Australia’s town planning laws I seriously doubt that there will be much in the way of housing affordability or availability in the short to medium term.
Commercial High Rises, Park St Sydney Photo courtesy http://www.flickr.com/photos/chanc/
For many people, wishing to live the dream and spend long summers in Greece, renovation and self-building are excellent ways of making your money go further. Unless you are prepared to live in rural areas, some distance away from the sea, buying property can be expensive. For those with less money to spend, building a holiday home in Greece is a great way of stretching out the budget to own the vacation home of your dreams, without having to compromise on location or size.
Building a Holiday Home in Greece: Finding the Funds
The first thing to consider with a self-build or renovation project is the source of financing, bearing in mind that you generally want to draw the money gradually, rather than receive a lump-sum. Certainly, most Greek contractors are much happier with staged payments, but there is one problem with this approach, the banks. Greek mortgage lenders are very reluctant to release money in stages and prefer to wait until the house is complete and ‘signed off’ before handing over the funds, mainly due to some of the unique hold-ups and bureaucracy that can affect any project. Unless you have access to money from another source, you are best off trying to organize a mortgage in your home country.
Building a Holiday Home in Greece: Urban vs Rural Building Plots
Finding the right sized plot is the most important part of the process and the one where most people fall down. Rules are usually very lenient in urban areas but finding the right sized plot for rural building can be a difficult and tortuous task. The easiest place to build is in designated urban areas, within the confines of a village or town, because the local town hall sets the planning restrictions. They will have bylaws governing the minimum size for the plot and the maximum percentage of that which can be taken up by building. As an example, a town hall might set a 1000m2 minimum with 25% Area Occupancy (also known as footprint), and a Total Construction factor of 0.33. This means that the maximum size for the ground floor is 250m2 and the maximum size of the entire construction is 330m2.
Buying rural land is a much more complicated process and definitely requires the help of a good lawyer and an architect. Across most of Greece, a minimum plot size of 10 000m2 is required, often rising to 20 000m2, although plots with road frontage can have lower requirements. However, this is not the entire story, because you need to ensure that the land is zoned correctly. Protected land is a definite no-no and is protected for environmental or archaeological reasons. Restricted land can often be built upon but you need to seek planning permission, which can be a long, drawn out and expensive process. The final type is building land and, whilst it will cost more per m2, buying this type ensures that receiving permission to build is a formality.
Building a Holiday Home in Greece
Building a Holiday Home in Greece: The Third Way
Therefore, it seems that building a rural property requires a huge plot of land and all of the maintenance that comes with it. 10000m2 is a very large area and will require agricultural machinery or a herd of goats to keep clean! To avoid this, one workaround is to buy a plot that has an existing building upon it, even if it is a ruin. As long as there is a footprint for a residence marked upon the plan, you can build a house there with a minimum of fuss and paperwork. Often, these buildings take up much more than the usual 2%/4% maximum, so it can be an extremely attractive proposition. However, double check that the existing building is marked as residential because planning permission will not always be granted for an agricultural or storage building to be converted.
Hopefully, this will have helped you to find the perfect building plot for building a holiday home in Greece. As always, this is only a very general guide and you must make sure that you find a reputable lawyer, architect and accountant before starting as the land laws are so variable across the country. In addition, buying land is no different from buying fixed property, so follow our guide to buying property in Greece before handing over any money.
Next week, we will look at the process of designing and building a holiday home in Greece.
