Neatly balanced on the border between the Aegean and Libyan seas, Crete offers one of the mildest and healthiest climates in Europe. Crete property currently attracts players from Eastern Europe, Scandinavia and Britain, now picking up extra buyers in the 40-50 age bracket who might otherwise have plumped for Spain. Charmed by the benefits Crete offers over the UK – better weather, lower cost of living, home grown food – most potential buyers of Crete property are looking to spend at least three to four months of the year on the island, seeing their investment as a good way to cut living costs.
The cost of living in Greece has actually risen by 4.9% since this time last year, according to the latest consumer price index, while its economy is only set to grow by 3% in 2008. Staples such as bread and pasta now cost 18 and 26% more respectively this year than last, a price hike Greek prime minister Karamanlis blames on the turbulent world economy.
But Crete still remains a vastly cheaper alternative to the UK – a couple can expect to achieve a good standard of living on an income of £12,000 a year. Crete property commands no rates if less than 150 square metres in total, while water bills and electricity and heating will cost £200 and £500 per annum respectively, says John Batty, managing director of Anglo-Greek agency Aegean Blue. “Equally, Ctrete property prices are less, even in urban areas – buyers should expect to pay between EUR200,000 to EUR300,000 for holiday homes. With so much fruit, vegetables, oil, wine and meat produced on the island, most food costs are also very low.”
Long-term prospects for capital appreciation are also good, adds Robert Key, director of Cluttons’ Greek branch. “Unlike Spain, there has been no crisis in the Crete property market. Planning permission is much stricter than in Spain (building within 50 metres of the coastline is now banned under new building regulations) so the great sprawling messes that many Spanish villages became will not be repeated in Greece.”
But the current world economic climate is likely to limit Crete property price growth to a minimum of 5% on the island in the short-term, Batty continues. “One spot likely to appreciate is anything located near and to the west of Chania, rather than in the east, particularly in the Apokoronas region where price rises were the sharpest in recent years.”
Chania, located on the island’s north-west coast, has long been a firm favourite with buyers, thanks to its seaside location and evocative mix of ancient buildings, revealing the town’s roots and history in an eclectic fusion of Byzantine, Venetian, Turkish and Greek styles. EasyJet’s recent decision to run weekly flights to Chania is testament to its growing popularity as a destination. Still well preserved despite intensive German bombing during the second world war, renovation work to restore the town’s ancient streets and walls is afoot, while the east side of its old harbour is undergoing a chrysalis from ruined dockside to trendy, loft-style water hotspot.
One project worth keeping an eye on is Leptos Estates’ Canea Corniche scheme, a refurbishment of the island’s first olive oil treatment plant building, which was set up by a French chemist in the 1880s. Minutes away from the town’s old Ventian harbour, and located just west of the centre of the old part of Chania, the project is currently one of the few city centre schemes available in Crete, one of the few parts of the western world not suffering from an oversupply of apartments. Each of the 200 flats on offer will feature a sea view, while the site’s original features, two factory chimneys and a series of ovens, will be restored as part of a plan to create a small museum with artefacts and tools on the site’s original use. The finished product will be flanked by olive trees and landscaped gardens. Construction work on site is set to start in October, when prices will be released.
A more traditional project on offer is Leptos’s Aphrodite Villas scheme, a cluster of 64 villas and flats surrounding a communal pool, located just a few metres away from Pyrgos Psilonerou beach slightly to the west of Chania. Prices here start at EUR434,000 (£344,000) for a three-bedroom villa and EUR174,615 (£138,000) for a one-bedroom flat.
Heading west out of Chania into Maleme, Cybarco Real Estate Development has also recently launched the Maleme Project, a beach front development in the Platanias area made up of 16 two-bedroom flats and eight three-bedroom maisonettes located 17 kilometres out of the city. Each home has access to communal gardens and a central pool, while some maisonettes come with private pools, while the beach is located a few hundred metres away. Designed for both holiday home makers and permanent residents, the homes come with lots of storage space, making it a multi-purpose home and holiday let investment – rental returns in this area can be as much as EUR1,500 (£1,200) a week during high season.
Similarly, Cypraaegean Properties’ Artemis Gardens project in Maleme, a two-minute walk from the beach, is set around a series of landscaped gardens, bordered by orange trees and centred around a communal pool. A mix of 18 one and two-bedroom bungalows, townhouses and flats, the firm is currently guaranteeing rental incomes of 5% for two years. Prices range from EUR130,000 (£103,000) for a one-bedroom basement flat to EUR230,000 (£182,000) for a two-bedroom townhouse.
Buyers after Crete property renovation projects on the resale market (wrecks can still be purchased for as little as EUR35,000) have typically been put off by the difficulty of working through the island’s complex land ownership system, under which a single plot of land may have multiple owners who cannot all agree to sell. But now Greece has set up its own land registry, the process is set to get a lot simpler, says Key. “It’s now just as safe from an ownership point of view to buy resale property as new-build. A good lawyer and surveyor are necessary to check legal and technical details before the purchase is made. All property sales take place by signing a contract in the presence of two lawyers and a public notary. The contract is then deposited at the title and land registries under the name of the new owner.”
As a member of the European Union, Greece allows overseas buyers to buy in the country and live there permanently, although a visa and residence permit is required after three months, but only if you want to buy a car or obtain a Greek driving licence. Contact the Greek Embassy in London for further information.
Money matters As the credit crunch continues to bite, it’s impossible for most buyers to even consider purchasing an overseas home without first having a mortgage offer in place. But help is at hand, with Greece’s banks offering a range of mortgages at favourable rates.
Leptos Estates offers loans with up to three years interest free credit for buyers who can cough up an initial down payment for off-plan properties, making stage payments throughout the construction process and then stumping up the final amount on completion. “But Greece has good banking facilities anyway, which have improved considerably in recent years,” says Christos Pateras, the firm’s marketing manager. “Most banks prefer to offer mortgages of between 75 and 80% of a property’s value, which are normally repaid over a maximum of 30 to 40 years, and are available to buyers up to the ages of between 70 and 75.”
Piraeus Bank UK (PBUK) currently offers packages with rates starting at 6% interest on repayment loans and collects sterling from the borrowers’ UK bank accounts, slashing costs for the buyer by converting the monthly instalments without charging commission, and offers market rates to help buyers convert the sterling amount of the Euro deposit required for purchase. Standard Piraeus packages offer loan to value rates of 80%, repayment mortgages with interest rates from 1.75% above the Euro Interbank Offered Rate (EURIBOR) for between five and 25 years, and interest-only mortgages of up to ten years. “Buyers must try to let their overseas home for at least some of the time to offset some mortgage and maintenance costs,” says Irini Tzortzoglou, PBUK’s head of retail banking. “Crete with its longest season and mature tourist market is one of the best locations in Europe for generating rental income.”
Most banks prefer to offer mortgages of between 75 and 80% of a property’s value, although some will happily lend up to 100%, adds Key. “There are a myriad of mortgages on offer with fixed-rate deals starting at about 3.7% and tracker mortgages starting at 5.25%. Several banks are also offering mortgages in Swiss Francs, starting at an interest rate of 2.46%, while it’s also possible to obtain mortgages in pounds sterling or dollars, which may be a good bet due to lower interest rates in these countries as a result of the currently economic situation.”