In January, the Turkish entrepreneur Murat Ö. signed a purchase agreement for two condominiums in Athens’ hip Gazi district. Now, the 55-year-old is not only the owner of Greek real estate, but also a residence permit for the sunny southern European country. And with it, he can now travel freely within all European Union member states. "It was easier than expected," said Murat Ö., who declined to give his last name. For him, owning property and getting a residence permit in Greece is like an insurance, because it is uncertain "how the situation will develop in Turkey."
He’s not alone. Anyone who invests at least €250,000 in real estate in Greece as a non-EU citizen can apply for the so-called "golden visa." The visa is highly popular because it entitles the owner to travel throughout the EU. Since 2013, when the program was launched, Greece has issued around 2,200 of these visas. Another 2,800 went to spouses and children of the owners.
With the program, the Greek government is trying to revive the crisis-ridden real estate market. During the eight-year-long recession, housing prices in Greece plunged by an average of 43 percent, according to the statistical service Elstat. But now, foreign buyers eagerly snap up properties. The Greek central bank reports that capital inflows for real estate purchases from abroad have risen by a staggering 86.5 percent to €503 million last year. The visa program accounts for roughly half of it.
Chinese buyers lead the pack. They received around half of all the visas issued, followed by Russians and Turks. Many want to protect themselves with property in Greece and an EU visa in case they have to leave their homes for political reasons.
The scheme not only attracts legitimate investors but also fraudsters.
The scheme not only attracts legitimate investors but also fraudsters. In one case in Greece, five Iraqis entered the country reportedly as refugees. The men put together money, each contributing €50,000. With the €250,000 collected, one of the five bought a property and applied for the visa. As soon as he received it, he sold the property. With the proceeds, the next Iraqi acquired another property and also received the coveted visa. Only after the fifth transaction did they get busted.
By law, the visa, which is initially issued for five years, expires when the owner sells the property. But authorities reportedly checked neither this nor the origins of the funds thoroughly.
Other EU countries - such as Austria, Malta, Spain, Belgium, France or Portugal - offer similar programs. The starting prices vary between €250,000 and several million. Often, after a few years, the investor can also acquire citizenship and thus live and work anywhere in the EU indefinitely. Anyone who invests at least €2.5 million in Cyprus even gets citizenship immediately for themselves and the whole family. The island has already granted 2,000 EU passports this way, especially to Russian investors.
Trade in EU visas and often even passports has turned into a multi-billion dollar business. Cyprus brought €4 billion into the country this way in 2016. By comparison, the island earned only €2.5 billion in tourism over the same period.
However, an investigation by the Organized Crime and Corruption Reporting Project (OCCRP) shows how vulnerable the EU has become to corruption and money laundering through such visa programs. In many cases, neither the origin of the funds nor the background of the investor is examined, the report reveals. In Portugal, which many wealthy Brazilians use as a door to the EU, eleven people were arrested in 2014 for allegedly funding their naturalization with bribes.
The security risks associated with such programs in one country affect all EU countries. Brussels is, therefore, looking for ways to regulate it. The European Commission is planning to issue guidelines for passport and visa programs to member states this year. But there isn’t much it can do because the granting of citizenship is the responsibility of the individual member states.
Meanwhile, the Greek government plans to expand the visa program. In addition to real estate buyers, anyone who invests in Greek equities, funds, corporate bonds or government debt securities should also get the golden EU ticket.
Gerd Höhler is a Handelsblatt correspondent based in Athens, Greece. Stephanie Ott in New York City adapted this article for Handelsblatt Global. To contact the authors: [email protected] and [email protected].