By Art Patnaude
Even while international investors shun Greek stocks and bonds,
there are a smattering of Greek assets still drawing interest:
vacation properties on the island of Mykonos.
At this point, it's only interest. The escalation of the Greek
debt crisis in the last week has drawn a rush of bargain hunters to
the sunny playground of the global elite and A-list celebrities,
but sales have largely dried up amid the increased uncertainty
about the country's future, local estate agents say.
Greece and its creditors are scrambling for a solution to its
five-year debt crisis after the Greek public voted on Sunday to
reject tough new bailout terms. Given the political standoff,
"people are mainly surveying the market [in Mykonos] rather than
discussing specific properties," said Dimitris Manoussakis, head of
Savills in Greece.
"There are limited transactions at this point. Nobody knows what
is going to happen next, so there is very little confidence," Mr.
Manoussakis said. Savills completed four high-end property
transactions on Mykonos in 2015 before the recent upheaval
ignited.
Still, home prices on Greek islands remain more resilient than
everywhere else in Greece, where prices have fallen for six
consecutive years and show no signs of letting up.
In Greece, estate agents estimate house prices have been cut at
least by half since the 2007 peak. Official data from the Bank of
Greece show a 40% decline since 2007, but given the very small
number of transactions in the market, the figures "may understate
the degree of actual value declines," according to Andrew Currie,
managing director at Fitch Ratings.
Fitch doesn't break out numbers by island, but in Mykonos, local
agents say prices are still down about 30%, having stabilized, and
by some accounts picked up slightly, during a tentative recovery in
2014.
"Buyers haven't completely backed off yet" in Mykonos, said Roi
Deldimou, manager of Beauchamp Estates office on the island. Ms.
Deldimou is currently working to close two sales in the low end of
the Mykonos market--deals valued at a bit more than EUR500,000
($555,750)--for an Italian and a Greek American. The political
upheaval has thrown a wrench into the works, but "they're still
trying to figure it out," she said.
Luxury housing developer Euroterra Capital--based in London and
founded by Greeks--is planning to open an office in Mykonos in
September, said Pantazis Therianos, managing partner at the firm.
Strong demand from tourists for rental homes on the island
"supports prices in this market, " Mr. Therianos said. Euroterra
plans to sell its developments to its clients in London and
Asia.
Mykonos--immortalized by visits from Jackie Onassis in the
1960s, and just 35 minutes from Athens by plane--attracts the same
ilk of foreign buyers as other European vacation spots, from the
French Riviera to Tuscany and the Swiss Alps. Many of these markets
have also suffered significant drops in prices since the financial
crisis.
While more stable than elsewhere in the country, prices aren't
shooting skyward in Mykonos. As transactions dry up amid the swift
re-escalation of the debt crisis over the past month, the tentative
recovery on the island could be extinguished, agents warned.
Bargain hunters have swooped in looking for cheap deals, but
most sellers, unwilling to relinquish their stunning Mediterranean
vistas for a song, are standing firm on asking prices.
The bargains are also relative. Homes listed in Mykonos are
typically more than EUR1 million, said Robert Guy Danon, managing
director at Danon & Co., an associate of Chestertons
International.
Part of the reason there are so few sales at the moment is
because "people know they can always rent [their houses] out," Mr.
Danon said.
Ms. Deldimou at Beauchamp said one client who couldn't sell his
villa, listed at EUR4 million, decided to rent it out for EUR6,000
a week. Even with money tight, "he just rented it instead of
selling it," she said. The home remains on the market at the
original asking price.
Buying property at this point in Greece isn't for the
fainthearted. For one, there is the risk the property at some point
might be valued in drachmas, Greece's currency before it joined the
eurozone, if the country exits the single currency.
Greek property taxes and transaction costs also can hit buyers.
For instance, on a EUR250,000 property, "the total amount at the
end of the story when you added stamp duty, taxes, and everything
else goes up to EUR400,000," said Ana Vukovic, managing director of
Greece and Serbia for U.S.-based real-estate firm Colliers
International.
"When you see an attractive property price, you need to be aware
of how much you need to pay to the Greek state," Ms. Vukovic
said.
Write to Art Patnaude at art.patnaude@wsj.com