Omri Barzilay / Forbes
​The news from Greece over the past few years has been quite dire as the country is on the verge of bankruptcy. However, despite seemingly desperate economic conditions there is a real estate market where many properties are being purchased at a healthy rate--in particular purchases by Russian investors.

​There is a twofold reason for this investment: Prices for luxury properties have dropped on average by 50% since 2009 and Russian investors are looking for places to park their money away from Russia’s own current economic crisis in order to protect their holdings. The relations between Russia and Greece are actually quite strong with a $2.27 billion gas pipeline being built to supply Greece with Russian gas. So, it is not surprising that many Russian investors are taking a particular interest in Greece, where they have invested heavily in the past few years just like they have in London and other places across Europe and the US.

​Low Prices Continuing to Fuel Investment
Since the third quarter of 2008, the overall price of real estate in Greece has fallen by an average of 40%. It’s little wonder that Russian investors in particular are looking at Greece as a prime opportunity, assuming it can get out of its current economic woes. However, while investors from many other countries are concerned that investing in Greece may be a losing proposition with the country being threatened out of the Euro, Russian investors have demonstrated a stronger determination to put their money into the Grecian real estate market despite fears of a total collapse.

Recession and Real Estate Prices
​Slide Despite being buoyed by Russian investment in the luxury sectors, the real estate market as a whole continues to slide in large part because the government raised property taxes to help end the budget shortfall that it is experiencing. In addition, apartment prices fell by 5.6% in the second quarter of 2015 which again is not a good sign of the Greek economy. Interestingly enough, Greece has one of the highest rates of home ownership in all of Europe at 80%, ten percent higher than the European average. The combination of falling apartment prices, higher property taxes and tightening credit restrictions have led to a perfect storm of troubles for the Greek economy and the real estate market in particular. If the contraction of Greece’s economy continues as predicted, then it will be virtually impossible

The Growing Greek Debt Crisis
​If it defaults, Greece would be the first European country to do so with Italy, Ireland and Spain not too far behind in terms of their debt. However, one reason that the situation is Greece is not seen as too serious by some economists is that the country only has a relatively tiny share of the global market. So, if Greece would totally collapse the impact, at least in terms of the global economy would be considered minimal. However, the greater danger is that Greece would be seen as a bellwether of other European countries currently in danger of defaulting on their debt. Italy in particular would be devastating because it possesses the 8th largest economy in the world. If Greece succumbs to its debts, the fear is that it would set off a chain reaction that might plunge the world into a recession. It does not help that Greece’s stock market has plunged considerably since 2008 and currently there is no end in sight. Also playing a big role in the economic slowdown is the tightening of credit which has hampered investment to a large degree. Today, the real estate market is roughly 95% cash when it comes to investments which means that it is very difficult for a broad range of investors to buy up properties. This narrowing of the real estate market to mostly those who have cash has meant that many real estate agents in Greece are closing up shop. With such limited opportunities for ordinary people to buy property, that means the real estate market as a whole has dried up considerably. Unless things change for the better quickly, it may be that the real estate market will not recover for a very long time to make it worthwhile for most investors.

Politics in Greece
​Despite heated debate, reelected Prime Minister Alexis Tsipras was able to pass a package of economic changes and austerity measures this week, taking a step toward unlocking the first $2.3 billion slice of loan money from the country’s nearly $98 billion international bailout program. It is Mr. Tsipras’s first real test since his re-election last month on a pledge to enforce Greece’s third bailout as painlessly as possible. This situation will play strongly in Greece’s real estate market, which, despite the great reduction in value over the past several years may plummet further if Russian investors decide to pull out and go to more promising situations.

Article source Forbes

By Matthew A. Winkler / Bloomberg
Remember last February, when former U.S. Federal Reserve Chairman Alan Greenspan said Greece would leave the euro and that the common currency would collapse? Remember that a month later, investor-philanthropist George Soros said Greece was going down the drain? Or that just this July, the president of the German Institute for Economic Research, Marcel Fratzscher, characterized Greece as a "political and economic catastrophe" that would revert to the drachma in desperation?

​Greece isn't out of the financial woods by any means. Yet it's turned out to be a winning investment since the end of 2014, the top debt performer in the euro zone since January and the best of all assets in the world since July. Since the anti-austerity party Syriza was elected, there hasn't been a stock, bond, commodity or currency market that produced anything resembling the return of Greek debt, which earned more than 100 percent in a handful of months, according to data compiled by Bloomberg.

​Greece beat every publicly-traded asset as its bonds increased in value from their lowest point in July to their highest today. Anyone sophisticated enough to buy those Greek bonds while simultaneously shorting, or borrowing the money to sell, the similar-maturing government securities of Dr. Fratzcher's Germany -- the most creditworthy country in the euro zone -- made a big profit on that trade too.

On Jan. 25, Alexis Tsipras swept to power as Greek prime minister with a seemingly contradictory mandate to end five years of reduced government spending while securing the final 7.2 billion euros ($8.1 billion) of 240 billion-euro bailout funds from resistant European Union creditors. Six days later, the interest rate on the benchmark 10-year Greek bond was at a 15-month high of 11.2 percent. Buying that debt then and holding it until today when the yield has fallen to 8.11 percent, driving up the price, would have returned 26 percent.

A few days after Tsipras's victory, Greenspan told the British Broadcasting Corp. that it was "just a matter of time" before Greece abandoned the shared currency of the monetary union and the euro disintegrated. "The problem is that there is no way that I can conceive the euro continuing, unless and until all of the members of the euro zone become politically integrated -- actually even just fiscally integrated won't do it," Greenspan said.

While the outlook improved to the extent that the yield on the benchmark Greek bond had declined to 10.8 percent by March 24, it wasn't enough to convince Soros, the billionaire chairman of Soros Fund Management. "Greece is going down the drain," he said in an interview with Bloomberg Television. "It’s now a lose-lose game and the best that can happen is actually muddling through." Had Soros bought Greek bonds on March 24 and held them until today, his return would have been 21 percent. And anyone who simultaneously bought Greek bonds while shorting German government bonds has a total return of 25 percent.

T​he climax of pessimism came in the first week of July, after Greeks voted to reject austerity policies prescribed by its international creditors. That's when Dr. Fratzscher, the Oxford- and Harvard-educated former head of policy analysis at the European Central Bank, wrote in his blog, "The referendum translates to a political and economic catastrophe for Greece." He also made this prediction: "A Grexit is and remains the worst option for Greece. It is becoming more and more likely."

Investors didn't see it that way. Their enthusiasm for Greek debt reflected in its rising value was a vote of confidence in Greece's future -- and also in the creditors' prescription of harsh austerity medicine as treatment for Greece's economic ills.

Had anyone rejected Dr. Fratzscher's perspective and bought Greek bonds yielding 19.2 percent when he made this prediction and held them until today, his return would have been 101 percent. That means an investment of $100 million on July 8 would have been worth $201 million within two months. Over the same period, the benchmark for all European bonds returned little more than 1 percent. An investment in the same European benchmark since March 24 lost 3.3 percent, according to data compiled by Bloomberg. And while the buyer of Greek debt since Jan. 31 has a 26 percent return today, the European benchmark lost 1.8 percent during the same period.

Since July 8, nothing in the world from stocks to bonds to commodities to currencies earned anything close to the return of Greek bonds. Throughout 2015 there were two things that never changed. Polls showed that Greek citizens consistently preferred the stability of Europe's monetary union to the instability of drachmas. Similarly, no European head of state ever said the EU wanted Greece to leave the euro zone. The euro, which both sides declared their currency of choice, wound up being the instrument that made investors in Greek bonds the winners of 2015.

(With assistance from Shin Pei)
​Article source

Alexis Tsipras, Greece’s prime minister, has made an unexpected appeal to private investors to help revive the struggling economy, promising “it will be mutually beneficial both for you and for our country.” In a speech outlining the Syriza government’s economic priorities at the weekend, Mr Tsipras for the first time appeared to set aside his party’s entrenched suspicion of private enterprise which has delayed the completion of several large infrastructure deals that were agreed by the previous conservative administration.

“I am addressing a call to domestic and international investors to exploit the business opportunities . . . we offer to healthy enterprises and invest without hesitation in the Greek economy,” Mr Tsipras said.

Speaking at the opening on Saturday evening of an annual trade fair in the northern city of Thessaloniki, the premier insisted that Greece “was turning the corner” and would see the economy grow by 2.7 per cent in 2017.

On Sunday he reiterated the need for new investment, saying “the issue now is how to create wealth.” Overall investment had shrunk by almost 70 per cent during Greece’s seven-year recession, he told journalists — and argued differences between the International Monetary Fund and the EU over the sustainability of Greece huge public debt accounted for the prevailing lack of confidence.

​Greek hopes of joining the European Central Bank’s quantitative easing (QE) asset purchase programme this month were dashed by the bank’s decision to wait until after a debt sustainabiity analysis has been approved.

“In my view what is delaying the regaining of trust by markets and investors...is the constant clash and disagreement between the IMF and European institutions,” Mr Tsipras said.

However, potential investors from abroad appear more concerned about government foot-dragging on reform, while senior government officials are reluctant to engage with them. “Even top asset managers haven’t been able to make contact,” said one analyst.

Some in the audience on Saturday were sceptical that the country could make a strong recovery as long as capital controls remain in place, Greek banks are still starved of liquidity and the country’s creditors complain of missed deadlines for implementing economic reforms.

“The obstacles to a turnround were airbrushed out of the prime minister’s speech,” said a northern Greek manufacturer who declined to give his name. ”Where will we find the money to invest when the banks can’t increase lending and the effective tax rate on profitable businesses has reached 50 per cent?”

​Another Thessaloniki businessman said the premier’s plea for investment was unlikely to produce results until bailout monitors from the EU and IMF completed a second progress review of structural reforms due to be implemented in the coming months.

Jeroen Dijsselbloem, head of the euro area finance ministers’ group, warned on Friday that the measures were lagging behind schedule, adding that what was at stake was “trust from the outside world in Greece and the Greek economy.”

Foreign investors have given Greece a wide berth since the Syriza government in January froze a €1bn gold mining investment by Canada’s Eldorado Gold, claiming the company had violated environmental regulations even though Greece’s highest courts had rejected the claims.

Fraport of Germany last year signed a €1.2bn concession deal to operate 14 regional Greek airports that handle the bulk of the country’s tourist traffic. But the company has so far been unable to take over management of the airports because of resistance by civil aviation employees, backed by the hard-left transport minister Christos Spirtzis.

Mr Tsipras’s visit to Thessaloniki, where the unemployment rate exceeds 25 per cent, prompted strong reaction from local trade unionists.

Thousands of people protesting against fresh pension cuts and increases in VAT and property taxes threw firecrackers and scuffled with police in a central square as the premier toured the city.

Greek television stations were unable to broadcast Mr Tsipras’s speech because of a 24-hour strike by journalists and technical staff protesting against an expected 2,000 job losses by the end of this year. Four nationwide private stations are due to shut down after their owners failed to win broadcasting licences in an auction staged by the government.