Estate agents report flood of Greeks paying cash for £1m-plus houses in UK as Athens desperately tries to raise revenue.
Greeks taking fright at the fiscal crisis enveloping the debt-stricken country are snapping up properties in Britain as part of a desperate flight of capital.
British homeowners may still worry about the resilience of the British economy but from Athens it appears as a relative haven and prime real estate in London, the traditional home of Greece’s wealthy shipping community, is being bought at an unprecedented rate by rich Greeks desperate to transfer their bank deposits.
The land grab has astounded estate agents, with many referring to the new homebuyers as “cash Greeks” because of their willingness to part with large sums of money in record time to secure £1m-plus properties.
“They are all cash buyers, serious players who are only interested in the high-end market around Regent’s Park, Mayfair and Marylebone,” said Panos Koutsoyiannakis at the central London estate agents Fraser & Co.
“The other day I had one come in who said ‘I don’t have a budget’. Another bought a two-bedroom flat for £1.6m and didn’t bat an eyelid. They’re closing deals in record time with many not wanting to even take out a survey.”
Koutsoyiannakis should know. As a Greek Australian, it is he, more often than not, who is called upon to screen clients. In recent months, he said, Athenian investors have deluged estate agencies on Baker Street, where his own office is located.
“Normally,” said Koutsoyiannakis, “you’ll get a Greek inquiring about property every two to three months. Recently, we’ve had up to 15 a week and some even laugh about taking the money out because of the crisis.”
Many want to buy properties and put them in their children’s names as a way of diversifying assets, he said.
“There are nine estate agents on our block and when we bump into each other or meet to swap keys we talk about how it’s no longer the Arabs but the Greeks who are rocking up wanting to buy, well, anything really.”
Historically, Greece’s super-wealthy elite has kept its holdings in bank accounts overseas, with Switzerland and Luxembourg among the favoured destinations.
Shipping remains one of the top contributors to the country’s €240bn (£210bn) economy with shipowners – who first made fortunes running the British naval blockade in the Napoleonic wars – long settling in the UK where their vast fortunes have enabled them to acquire some of London’s finest properties, send their offspring to some of the best schools and even bankroll their favourite politicians.
Sir Stelios Hadji-Ioannou, who founded the budget airline easyJet with £1m given to him by his shipowner father, is among the many Greek and Greek-Cypriots who moved to London partly because they like it – and partly because they consider it Europe’s natural entrepreneurial hub.
But with the sector also losing its preferential tax status in the City of London, a growing number of the community had increasingly returned to Greece. Following the precarious drachma’s consignment to the dustbin of history when Athens joined the eurozone in 2001, many transferred their wealth to Greece as well.
Much of that money – though certainly not all – is estimated to be among the €10bn believed to have been removed from Greek banks in the first two months of the year.
The outflow, which has underscored fears of bankruptcy among Greeks, also followed a threat by the socialist government to raid millions of local bank accounts as part of a determined drive at revenue collection.
In an eerie replay of the mass flight of money abroad in the run-up to Argentina’s defaulting on its debt in 2002, vast sums are also said to have been transferred to Greek-owned banks in Cyprus, mostly by corporate companies fearing the knock-on effects of the financial turmoil.
“I have even heard of savers moving their money out of accounts into bank safety deposit boxes,” said Yannis Stournaras, who heads the Foundation for Economic and Industrial Research.
“But I have also heard that the situation is not alarmist because a lot of the money has gone to buy Greek bonds and has been kept in the Greek banking system. We’re not talking about a run on the banks,” he said.
Nevertheless, the financial sector is clearly feeling the pinch of the debt crisis. Last week, the Greek finance minister, George Papaconstantinou, announced that four of the country’s largest lenders had asked for government support to offset the mass exodus of funds. The banks are expected to be given up to €17bn in loan guarantees as part of a €28bn package passed by the previous conservative government to ensure capital and liquidity during the global credit crunch.
The cash exodus has infuriated ordinary Greeks, who have seen their incomes slashed by up to 30%. With the country embroiled in its first recession in 15 years and the effects of the socialist government’s draconian austerity package beginning to be felt, the empty cafes, restaurants and shops are redolent of a place starved of cash – a far cry from the posh streets of London where Greece’s rich are flocking to in a determined effort to escape the crisis lapping the shores of their own country.
How very patriotic of them.
