This one will be shorter. In addition to the other problems related to property in Greece, a major parameter, closely linked to urban €co-systems (see what I did there? :-)) is commercial property. Now, commercial property is as badly regulated as residential is, with the additional complication that everything that goes wrong with it hurts the economy more than potential damage in same square footage of residential property. The money that is invloved is more, it is linkled to employment, growth and so on. Nevertheless, the same problem that affects residential properties (no link between supply and demand) is now obvious to all. Commercial streets are full of abandoned shops, available to let or buy even in the most sought after areas of the early 00’s. Shops in central Athens, including Ermou str, Kolonaki, Kifisia and no doubt Glyfada (even though I haven’t been there recently) but also on the islands are ‘available’. Now, a few things here. By available I only mean that they have a ‘to let’ sign on the window. My experience (and please take my word here, I know quite a lot on the topic, future post!) is that on many ocassions the available properties come with a lot of baggage. They will have unpaid bills from previous tenants that the landlord may expect a new tenant to pay. The rent requested may still be too high. There may be problems with the nature of the property as it may have illegally operated as a business that by law couldn’t be ‘accommodated’ in that property (for example, a bar in a placew where by law there couldn’t be one) – this worked with the tolerance of authorities who were often handsomely rewarded for this tolerance, brown envelope or any other color you like. New tenants of course, under the current climate, won’t be able to make profit – unsustainabilty = empty shops. Landlords used to make money out of tax evading on the amount of rent paid. Rent of (say) 1000 Euros was verbally agreed, 500 Euros was in contracts, and so on. In an environment that not paying became norm, the 1000 euros started not to get paid, but of course the landlord couldn’t take legal action as the amount was not in any legal document. 6 months or a year go by, non-paying tenant gets away with it having only to deal with a pestering but legally powerless landlord who has to put up with it until things get out of hand and legal action actually makes financial sense. Yeap. Maybe in another universe. Because once legal action starts, it takes forever. It can take up to a year or more to get rid of a non-paying tenant – even though recently new laws came in to make this a quicker procedure (Amen and Halelluja but I have not seen the proverbial pudding yet – I will keep you posted, quite literally) Would you like chips with that? If the tenant doesn’t have any money they walk. If they do, the landlord only gets what is owed after everybody else to whom this tenant-business owes money, including taxes, pension contributions, and bank debts. Then, if there is any money left, the landlord gets their money and the property back. (Note to non-Greek readers: There is no credit check in Greece! By that, I do not mean it is not obligatory, I mean there is no mechanism for it. You can’t do a credit check on yourself if you wanted, let alone a potential tenant. Basic due diligence is done by lawyers, but can only go as far as revealing whether potential tenants are property owners themsleves and what is the legal status of that property -now worthless as discussed in other post. Almost nothing can be found out about previous payments – debts – loans)
So, end result, people will take tenants that they either personally know or at random.
Now, problem number 2: There are far too many shops in Greece. Far too many. I will avoid the comparison between London and Athens because it is very problematic. I will however compare two cities that I have lived in for many years and know their demographics quite well. One is Xanthi, in the north of Greece – my hometown and one is Canterbury, in the SE of England, where I now work. Both are university cities and their population is roughly 50,000 people. The number of students is very high for both, and while I have no number for Xanthi, in Canterbury there are 3 institutions with university status and some others with college status, with an overall student population of about 30,000 of which however I would imagine only about 20,000 live in town. Xanthi’s economy is within Greek standards one of a provincial town that is not far from average, maybe slightly better than others. Canterbury is in many ways living ‘next to London’ which is 55 mins away. And now for the punchline. Xanthi has about 5 times as many shops as Canterbury. I mean clothes shops, shoes, retail in general, but also bars, restaurants, and other such like. As regards offices, the numbers are similar and just by the way of illustration, Xanthi has about 200 registered lawyers and Canterbury has 24 law firms and now that I think about it, not a sinlge independent solicitor that I know or have ever heard of, but there may be some – they did not come up when I searched. Similarities between this comparison and other cases around Greece are available, as BBC would say.
The story has two morals:
a) Greece has far too many enterpreneurial people and I argue here that they are not good at it. Most of them, and I do admit that I don’t know them all, wouldn’t even be good as emploees somewhere, let alone run their own business. A well-regulated economy wouldn’t allow them to keep running a business losing money. Greece has too many shops, too many offices, too many self-employed people and too many bosses. My guess is the country needs about 20% of them, but I may be off with it. I fully understand that this sounds very liberal, but hey-ho, look at the alternative. It was like that always, it was just ‘dressed up’ with the borrowed money for the last 30-odd years. In socioeconomic terms I guess this is the equivalent of a night out, where the ageing spinster (…what an ugly term) puts lots of make up on and hits the town pretending a false identity…
b) The property regulation needs to change and become landlord-friendly. I have a vested interest saying that as I am a landlord, but I am and have always been a correct-tax-paying one and I say this having also been a tenant for many years. A legal system that tolerates unpaid rent is doomed. Everything is devalued in it following the loss of value of the property that people either live in or work in. And just a final point – I have yet to come across a tenant who was late with rent but paid everything else – employees’ wages and contributions, bills, tax, VAT, etc. Not a single one. When someone is not paying, they are not paying and have a non-discrimination policy. So, everybody else effectively works for them. I don’t want to. They should be kicked out of the properties and made to do community service if you ask me. Everybody wins.
And one final note: Don’t buy the rhetoric that the small business is the backbone of society. This is true if small business is sustainable and in Greece it isn’t in such great numbers. It is the number of people who are in these businesses that are likely to hear this being said by politicians, who, in turn, know that this translates to votes. (Photo of closed shop available to let, for those among you who do not know what it looks like)
Did I say this was going to be shorter? I did, didn’t I?