Image: Flickr/Christos Loufopoulos

Investor Citizenship and Residence programs have been a major tool of attracting foreign capital. However, the criticism over lax requirements and a long list of scandals have put related schemes under increased scrutiny.

The presence of Chinese citizens buying property in Greece through the so-called Golden Visa program has grown in leaps and bounds over the past few years. While the relative share of Golden Visas granted to Chinese citizens has shrunk somewhat compared to its pre-COVID peak in late 2019, they still accounted for a stunning 72.4 percent of the total as of June 2021. The cohort of Chinese Golden Visa holders (18,905) far outpaces the next largest national contingents of Turks (1,477) and Russians (1,278). Not surprisingly then, Greek authorities have prioritized Chinese property buyers as the most significant target group.

Investor Citizenship and Residence Schemes in the EU and Greece

But before delving into the growing presence of Chinese property buyers in Greece, it would be helpful to have a quick look at how these schemes came about and evolved over time. 

Greece is one of the 19 EU member states, plus the UK, that grant residence permits in return for investment. In addition, three member states, Cyprus, Malta, and Bulgaria, have put in place Golden Passport programs, which grant full EU citizenship.

The rationale behind these policies in all the countries is more or less the same: easy money flowing into the national economy, state coffers, and some private pockets as well. In the case of Greece, the Golden Visa program was launched in 2013 for a couple of extra reasons. First of all, it was seen as a way to address the long-standing investment gap in the country, further compounded by Greece’s severe fiscal and economic crisis during the previous decade, which led to the signing of three painful bail-out agreements with international creditors. In addition, real estate has always been seen by Greek governments as low-hanging fruit – after all, it is much easier to sell a villa by the sea or a flat with a view of the Acropolis than attract foreign investment in, say, Greek manufacturing.

The threshold for the acquisition of a Golden Visa in Greece is the lowest in Europe and stands at €250,000. By comparison, residence permits in Portugal could be offered at a minimum of €280,000, depending on location, but the usual threshold is €500,000. In 2019, two additional options were added to the list of requirements in Greece: a minimum of €400,000 in securities and companies, or €800,000 in corporate bonds as a foreign direct investment (FDI).

On the basis of a back-of-the-envelope estimate, over the past eight years, this policy has brought into the cash-strapped Greek economy between €2 billion and €3 billion, a tiny fraction of the country’s exorbitant public debt of 387.3 billion in mid-2021. Yet, consecutive Greek governments have had the Golden Visa program as a feather in their cap, despite mounting evidence of controversial aspects of this policy.

Side Effects of the Golden Visa Policy

To begin with, the nominal prices of property bought by Golden Visa applicants are said to be considerably lower than real ones. Both Greek sellers and foreign buyers declare prices at exactly or slightly over the €250,000 threshold, just enough to ensure the coveted Golden Visas, while real prices may be much higher. A five-minute discussion with real estate agencies in Greece will prove this point, though none of them will shout it from the rooftops – after all, for real estate agents the property shopping spree by Golden Visa applicants has become a gravy train. As a result, both sellers and buyers pay lower taxes to Greek authorities which tend to turn a blind eye to these shady deals and loss of profit for the state coffers.

Furthermore, EU institutions have repeatedly expressed concerns about these schemes in member states. The European Commission included its objections as early as 2019 in a special report on the risks of investor citizenship and residence schemes in the EU. Commissioner Věra Jourová has stated unequivocally that “there should be no weak link in the EU, where people could shop around for the most lenient scheme.” A key point raised by EU officials is that both Golden Passports and Visas are used as a fast-track to national and thereby EU citizenship, with a significant impact on fundamental rights in the EU. A major concern voiced by Brussels is that checks on applicants for the Golden Passports and Visas are not sufficiently robust, and the Schengen Information System (SIS) is not used as systematically as it should be. As a result of this institutional debate, in October 2020 the European Commission opened infringement procedures against Cyprus and Malta for selling EU citizenship.

Cyprus clearly stands out in this saga. The controversial nature of its Golden Passport program has become truly untenable. According to media reports, between 2017 and 2019 more than 500 Chinese citizens obtained EU citizenship in the island nation. In November 2019, the Cyprus government revoked the Golden Passports bought by 26 foreign investors, including nine Russians, eight Cambodians, and five Chinese. In October 2020, Al Jazeera aired a much-talked-about documentary that revealed massive corruption in the passport-for-investment scheme in Cyprus.

Notably, the Al Jazeera journalists built their investigation around the story of an affluent, though fictitious, Chinese applicant who was supposedly in trouble with public authorities back home. After the revelations, which forced the speaker of parliament to step down, Cypriot authorities have reportedly suspended the controversial program. Athens and Nicosia are very close in political terms and coordinate on a number of issues, and the implications of the Golden Passport scandal in Cyprus have presumably been noted by authorities in Greece.

Push and Pull Factors for Chinese Golden Visa Applicants

There are many indications that Chinese citizens seek to escape pollution in their country’s big cities, food and water safety worries and, not least of all, authoritarian government controls. Despite the official narrative about China’s unstoppable rise, more and more representatives of the country’s burgeoning middle class yearn for a better quality of life as well as freedom and a global lifestyle away from the prosperity pledged by their national authorities. According to Juwai.com, a Chinese agency specializing in overseas real estate, 83 percent of Chinese buyers are interested in the educational prospects of their children, 61 percent in investing their savings, 61 percent in living in their newly acquired properties, and 56 percent in emigration.

Other surveys show that some 40 percent of Chinese buyers of property abroad come from first-tier cities, e.g. Beijing, Shanghai, Guangzhou, and Shenzhen. Meanwhile, demand among inhabitants of second-tier cities as well, such as Chengdu and Qingdao, is growing quickly. Yet another push factor is the inexorably rising prices of property in big Chinese cities, e.g. in the range of €13,000 per sq.m. in Beijing. This means that a 90 sq. m. flat in China’s capital may cost well over €1 million, which dwarfs the €250,000 threshold for real estate purchases in Greece. Demand for property has also driven prices up in second-tier cities, such as Xiamen, Hangzhou, Nanjing, Suzhou, etc.

What draws Chinese Golden Visa applicants to Greece? Obviously, the comparatively low cost of Greek Golden Visas is a major factor. In addition, Chinese applicants appreciate Greece’s natural beauty, mild climate, and, in equal measure, rich history. Presumably, the rapprochement between Greece and China, regularly touted by state-sponsored Chinese media, is also part of the story. Apparently, the majority of Chinese property buyers prefer Athens, either close to the Acropolis or along the south coast of the Greek capital. Education being a significant pull factor as well, Greek Golden Visas give holders a free pass to travel to other EU member states and study there.

Conspicuous Silence of the Official Chinese Media

Interestingly, however, the lively interest of Chinese property buyers in Greece is not endorsed by Beijing and state media. The PRC embassy in Athens has been rather cautious, carefully avoiding supporting the Golden Visa rush and official Chinese media have stayed silent on this topic. While the Hong Kong-based South China Morning Post has carried stories about Chinese citizens benefiting from Greece’s Golden Visa program, this issue is systematically ignored by mainland state media. Related stories have always been deemed newsworthy by Greek media, but they remain completely off the radar of Beijing’s mouthpieces. It is noted that there are Chinese portals facilitating the purchase of property abroad, including through Greece’s Golden Visa program, or related WeChat accounts. The omission of the Golden Visa issue from the agenda persistently promoted by Chinese official media cannot be coincidental.

A recent study carried out by the Athens-based Institute of International Economic Relations (IIER) offers a plausible explanation for this glaring discrepancy: a growing number of Chinese applicants for Golden Visas in Greece and other EU member states are effectively abandoning their country. This points to an emerging trend in Chinese society that national authorities are not comfortable discussing in public. For instance, a report aired by the Greek Alpha TV channel in January 2020 includes interviews with Chinese holders of Golden Visas who state that Greece has “a much better environment and quality of life [than China].” Obviously, these statements do not dovetail with the Chinese government’s narrative of a ‘moderately prosperous society’. There are many indications of what has aptly been called ‘China’s GDP paradox’, i.e. a stark divergence between China’s economic growth in aggregate terms and the less-than-bright personal prospects of ordinary people.

There are some additional factors that render the Golden Visa story even more controversial. Many Chinese citizens defy capital controls and find ways to move money out of the country for the purchase of property overseas. In 2018, both Greek and Chinese authorities started investigating illegal transactions through points of sale (POS) machines, which helped Chinese citizens bypass restrictions in their country. Another Greek media report in November 2019 drew attention to tax evasion and money laundering associated with the Golden Visa scheme. Small wonder then that the official Chinese media would rather stay silent on this issue.

To make matters even more embarrassing, an extensive piece of investigative journalism released in October 2020 revealed that a number of Chinese property buyers had been swindled by Greek real estate agents. Reportedly, this has generated a raft of litigation cases and it looks like the dream of a number of Chinese applicants has turned into a nightmare.

Prospects of the Chinese Golden Visa Rush in Greece

One of the many implications of the COVID-19 pandemic in Greece has been the sharp drop in the number of residence permits issued in 2020, a mere 938, in stark contrast to the 3,503 permits granted to non-European Union nationals the previous year. The signs for 2021 are even worse: up to early June, only 117 permits had been issued, representing investments worth just €29.3 million. The single biggest factor behind this slump is the fact that demand from Chinese citizens has currently come to a grinding halt. Over the past 18 months or so, Chinese applications have been in the doldrums. While travel between Greece and China is still possible, it has become much more difficult lately due to the pandemic.

In August 2020, there were media reports about the protests of some 120 Chinese Golden Visa applicants who were not allowed to travel to Greece because of COVID-induced restrictions. An association of Chinese property owners in Greece, known by the high-sounding moniker Sino-Hellenic Investors’ Confederation (SHIC), reportedly sent a letter to the Ministry of Foreign Affairs and the Ministry of Migration of Greece as well as the Greek consulates in China.

Most probably, Greek authorities will continue to promote their vaunted Golden Visa policy, but the influx of Chinese beneficiaries may well slow down over the years to come and this should not be attributed exclusively to the fall-out of the pandemic. Under EU pressure, the questionable aspects of the scheme are likely to be factored into a more robust set of eligibility criteria and verification techniques. In addition, Greek authorities will have to revisit the idea of no-questions-asked FDI attraction. In turn, Chinese authorities are likely to pay greater attention to this issue, which clearly does not serve official Beijing narratives and lends itself to controversies. Whether Beijing will manage to tighten the screw on the capital outflow from China for the purchase of overseas property remains to be seen.

In any case, the Chinese Golden Visa rush in Greece will definitely not figure on the agenda of the Greece-China Year of Culture and Tourism to be launched in September 2021. And the slowdown of Chinese property purchases in Greece seems to be in line with another prominent trend in the broader set of Sino-Greek relations: a step back from the erstwhile warm embrace between Athens and Beijing.