By Dr. George S. Atsalakis
and Ioanna G. Atsalakis
This article highlights a significant comparative advantage that our country has in the field of investing in vacation residences. The field in focus constitutes a great demand for northern Europeans and Russians. In fact, Greece has been left behind compared to its competitors such as Spain, Portugal, Cyprus, Turkey etc. Therefore, we should not miss this “opportunity of development”.
In the table below, there is an analysis of annual income, expenses and profits from the development of a twenty-year scheme for the exploitation of state coastal land in order to meet future demands concerning vacation residences mainly from abroad.
A TWENTY-YEAR VACATION RESIDENCES’ CONSTRUCTION SCHEME
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | |
| Year | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
| Number of Residences | 100 ths. | 100 ths. | 100 ths. | 100 ths. | 100 ths. | 100 ths. | 100 ths. | 100 ths. | 100 ths. | 100 ths. |
| Sale price | 200 ths. | 200 ths. | 200 ths. | 200 ths. | 200 ths. | 200 ths. | 200 ths. | 200 ths. | 200 ths. | 200 ths. |
| Sales revenue | 20 bil. | 20 bil. | 20 bil. | 20 bil. | 20 bil. | 20 bil. | 20 bil. | 20 bil. | 20 bil. | 20 bil. |
| Cost of construction | 8 bil. | 8 bil. | 8 bil. | 8 bil. | 8 bil. | 8 bil. | 8 bil. | 8 bil. | 8 bil. | 8 bil. |
| Net profit | 12 bil. | 12 bil. | 12 bil. | 12 bil. | 12 bil. | 12 bil. | 12 bil. | 12 bil. | 12 bil. | 12 bil. |
| Accumulated profits | 24 bil. | 36 bil. | 48 bil. | 60 bil. | 72 bil. | 84 bil. | 96 bil. | 108 bil. | 120 bil. | |
| 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | |
| Year | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 |
| Number of Residences | 100 ths. | 100 ths. | 100 ths. | 100 ths. | 100 ths. | 100 ths. | 100 ths. | 100 ths. | 100 ths. | 100 ths. |
| Sale price | 200 ths. | 200 ths. | 200 ths. | 200 ths. | 200 ths. | 200 ths. | 200 ths. | 200 ths. | 200 ths. | 200 ths. |
| Sales revenue | 20 bil. | 20 bil. | 20 bil. | 20 bil. | 20 bil. | 20 bil. | 20 bil. | 20 bil. | 20 bil. | 20 bil. |
| Cost of construction | 8 bil. | 8 bil. | 8 bil. | 8 bil. | 8 bil. | 8 bil. | 8 bil. | 8 bil. | 8 bil. | 8 bil. |
| Net profit | 12 bil. | 12 bil. | 12 bil. | 12 bil. | 12 bil. | 12 bil. | 12 bil. | 12 bil. | 12 bil. | 12 bil. |
| Accumulated profits | 132 bil. | 144 bil. | 156 bil. | 168 bil. | 180 bil. | 192 bil. | 204 bil. | 216 bil. | 228 bil. | 240 bil. |
The scheme refers to the construction of 2.000.000 vacation residences within the next twenty years 2013-2032 which will bring total revenue of 400 billion € and a net benefit for the state of approximately 240 billion €.
In an attempt to simplify the calculations, prices and sizes are estimated at regular prices. The revenues and the costs have been estimated at an average rate for houses from 70 sqm. to 150 sqm.
Features of the program
The program will have the characteristics below:
Building sites: About 100.000 houses will be constructed per year for the next twenty years on coastal lakes and other public areas of natural beauty, in the form of local traditional villages. The building and the right to use the site for 100 years will be transferred to the buyers. In this way the land will remain the property of the public and the state will not be accused of selling off public assets.
Architecture: The designs and the permits will be issued by the public sector without or little cost for it with a special urban design adjusting to the specific architecture of each area and strict adherence to the creation of traditional villages constituted of only up to two-storey houses.
Construction: The construction will be realized by companies responsible for the infrastructure of the settlements along with local construction companies which will built the houses of each area through the system of small constructions in order to boost local construction activity, as well.
Environment: The villages will be surrounded by large-scale greenery and tree planting. Photovoltaic solar energy panels will be widely used.
Financing: One way will be house selling at the stage of design and paid regularly till the completion of the construction.
Another way will be secured loans for the buyers by the banks, which will enable the buyer to have the loan along with the property transferred.
Sales: The potential buyers will be pensioners along with other interested parties from foreign countries, who wish to have a holiday residence, as well as Greeks.
The buyers will mainly come from European countries, from Russia and other Eastern countries forming a market of approximately 800.000.000 people. Surely, the 0, 25 % of them, namely 2.000.000 people will express interest in buying a holiday residence within the next twenty years.
Motives for the vacation residences’ buyers:
A series of motives will have to be given to the buyers so as achieve the maximum possible number of sales, including:
Α) Free pass (visa) mainly for non-European countries’ citizens (Russians etc.)
Β) Zero or low transfer tax to 2-3% along with a special arrangement regarding a single fixed amount for other transfer costs.
- C) Low electricity cost due to the use of photovoltaic energy sources.
- D) The possibility to rent the house for a specific period of time during the year especially in winter for a stable prepaid in rate income tax.
Ε) Special prepaid insurance card for cases of illness or hospitalization.
- F) Extension of the time needed to arrange tax affairs (submission of tax returns etc) until the end of the economical year due to the fact of their non-permanent residence in Greece.
- G) Since buyers do not work in Greece even though they will stay permanently (for more than 183days), they should not be considered tax residents of Greece regarding their international income.
Η) They should be exempt from any sort of items of income (swimming pool, car, house, extraordinary contributions etc. )
- I) they should be allowed to have their car in Greece prepaying, however, annual circulation taxes.
- J) They should have improved access to the health services.
- K) They should have special licenses from the Ministry of Tourism and also license for the pool for the owners of 2-3 villas.
Economic benefits:
Significant benefits will accrue for the Public sector and the Greek economy as well not only during the construction phase but also during the stay of the owners and tenants.
Regarding the Public Sector:
Apart from the amount of 400 billion Euros which will flow to Greece during the next twenty years, and the approximate 240 billion profits that the public sector will gain, there will be extra revenue on behalf of the public sector coming from transfer tax of about 12billion (400 billions Χ3%), circulation taxes, rental taxes, sales of health care cards etc.
Regarding the National Economy:
There will be creation of thousands of jobs during the settlements construction and many more posts for their maintenance. Thousands of small-scale businesses will be led to development again, whatever that entails in the increase of employment and the relative increase of the tax revenue for the state. There will be stable annual inputs of more than 30.000€ per year for the house owners that are permanent residents and about 5-10.000€ for those who stay occasionally. There will additionally be benefits from the consumption of agricultural products and food as well as from the stimulation of other productive and service sectors since at least 3-4 million more tourists will arrive annually.
The development of a scheme like this can be designed now and the first house sales could be realized in 2013. There is a great deal of suitable public land to be immediately exploited (former military camps and other coastal areas etc).
The successful development of such a program presupposes that all decisions regarding its design and implementation should be taken on the basis of national interest and not of the interest of particular trade unions which operate towards the benefits of their members rather than those of the people and the National Interest.
The whole project should be implemented by a newly-established service which will operate under private economy criteria, with modern management principles and beyond the so far public sector logic that has brought our country to the brink of the precipice. The staff will be capable and properly trained, employees that are in abundance in Greece but are not exploited.