The Fallout for Real Estate From the Crisis in Greece

Global markets fell on Monday after Greece closed its banks and confirmed it would miss a crucial debt repayment on Tuesday. The moves could signal the country's exit from the eurozone. “The Greek tragedy opened a new act over the weekend,” said Mark Haefele, global chief investment officer for UBS Group AG’s wealth management division in a statement on Sunday. “Although our base case remains that Greece will remain in the currency union, the lack of a resolution will create volatile markets.” The Wall Street Journal reported that on Tuesday Greece will be cut-off from international rescue loans for the first time in over five years. It will also default on its $1.73 billion of debt repayment to the IMF, whose deadline is the same day. The crisis presents a major risk for Greek property investment. The real estate market was already in a tailspin even before prime minister Alexis Tsipras' decision Sunday to close Greece's banks and stock market. Investment in Greek housing has been in decline for over two years, down by 51% in 2014 after a 28% dip in 2013. Residential property investment this year fell 30% during the first three months, compared with the first quarter last year, according to a report released by Alpha Bank earlier in June. Despite the country's debt-ridden woes some foreign buyers are said to be keen on Greek properties due to their attractive lower price points. The average price of a five-room villa with sea views in Rhodes, a popular island destination, is roughly $1.68 million compared with a similar property in Ibiza, which costs around $4.49 million, according to Engel & Völkers. The Greek government has also tried to attract foreign real estate buyers, granting residency visas to non-European Union buyers who spend over $281,125, or €250,000, on real estate in Greece. More: Tips for Americans Buying Real Estate in Mallorca