Real estate investments look like a reliable haven against unstable currencies, falling stocks, and inflationary pressure. However, this market, like no other, is surrounded by stereotypes and misconceptions. Myths about real estate investments not only mislead but also distort the understanding of key profit formation mechanisms, payback periods, and risks.
Real Estate Cannot Fall in Price: Popular Myth About Investments
One of the most entrenched beliefs is the idea that real estate is immune to price decreases. This belief often stems from the experience of the 2000s when Russia and Southern Europe saw stable price growth. However, this growth was driven by a range of unique macroeconomic factors, including accessible mortgages, rising incomes, and limited supply. After 2008, the market demonstrated the opposite dynamics.
For example, in Cyprus in 2012–2014, due to a banking crisis, the residential real estate market in Nicosia and Limassol plummeted by 35–45%, especially affecting properties purchased under the “golden visa” scheme. Many foreign investors were forced to sell apartments below cost due to a sharp drop in demand. To this day, some of these properties have not regained their positions.
In Greece, the situation was even more prolonged: after the 2008 crisis, the real estate market collapsed by 43.8% and did not show signs of recovery for almost 9 years. Even in Athens, in areas like Kypseli and Patissia, prices have not yet reached pre-crisis levels, despite a general increase in interest from foreign buyers.
Thus, price growth is not a guarantee. It depends on the phase of the market cycle, macroeconomic indicators, credit policies, and geopolitical factors. Investors who ignore these variables and enter the market at its peak risk incurring losses and becoming hostages to frozen capital.
No Passive Income: Even a Convenient Apartment Requires Expenses
Another persistent misconception is the belief that owning real estate automatically provides stable income without the owner’s involvement. This illusion is particularly characteristic of investors focusing on short-term rentals in tourist regions such as resort areas in Cyprus or downtown Athens.
In reality, the rental business involves numerous expenses and requires regular attention. In Greece, for example, renting out an apartment entails mandatory registration with the tax authority, annual reporting, and payment of rental income tax on a progressive scale ranging from 15% to 45%, depending on the amount. Additionally, property owners must pay ENFIA tax—an annual property tax whose amount depends on the area, year of construction, and location. It can range from €300 to €1200 per year for a standard apartment in Athens. The myths about real estate investments create an illusion of simplicity, although in reality, a property requires planning, legal support, and oversight.
One Apartment Is Not Sufficient Diversification
One of the most dangerous simplifications is the idea that buying one apartment ensures reliable and stable profitability. In practice, such an approach creates a single point of risk devoid of flexibility.
An investor who invests in a single apartment in Cyprus may face seasonal volatility: for example, in Ayia Napa or Protaras, demand sharply drops in winter months, and the property remains unoccupied for up to 5 months a year. Meanwhile, utility payments, tax obligations, and maintenance costs continue to accumulate.
In Greece, the situation may be related to market saturation. Many areas in Athens popular with investors—such as Neos Kosmos or Metaxourgeio—experienced rapid price growth in 2017–2022, but since 2023, there has been stabilization and even a slight decline in demand due to Airbnb regulation and increased tax burden. If an investor has invested all capital in such a property, they are in a vulnerable position in terms of profitability and liquidity. The myths about real estate investments hinder the logical necessity of capital distribution: among regions, types (residential, apartments, commercial), and even investment currencies.
Investments = Buying in New Developments
In Cyprus, a significant portion of new developments in Limassol built after 2015 targeted foreigners. Prices for such properties exceed €4,000 per square meter, but demand dropped after the cessation of the citizenship-by-investment program. Today, many of these apartments remain vacant, and owners are forced to reduce rental rates or sell at a loss.
A similar trend is observed in Greece. New construction is concentrated in areas with already high prices, where the ceiling on rental rates limits profitability. For example, in the Glyfada area of Athens, a square meter in a new building costs around €5,000, while the monthly rental rate does not exceed €20 per m². This means that the investment yield fluctuates around 3–4%, making new developments less attractive compared to secondary properties in areas with growth potential. The myths about real estate investments in this case prevent exploring alternative assets: secondary market properties, income-generating houses, commercial spaces, coworking spaces, warehouses.
Income Is Easy to Calculate in Advance
It is often heard that the profitability of real estate can be accurately calculated in advance using a simple formula: rental income minus current expenses. At first glance, everything seems logical, especially when it comes to stable long-term rentals. However, reality turns out to be significantly more complex, especially in international jurisdictions.
For example, in Cyprus, buying an apartment in Paphos for €180,000 and renting it out for €1,000 per month may seem like a profitable scheme. But even if the occupancy is stable, the actual yield turns out to be lower than expected. Firstly, the rental income tax can reach up to 20% if the owner does not have tax residency on the island. Secondly, there are annual expenses for complex maintenance, which can range from €1,200 to €2,000 per year, especially if the building has a pool, reception, security, or elevator. In addition, there are costs for repairs, depreciation, equipment replacement, management company fees, and waste disposal fees. The myths about real estate investments distort the realities of calculation: without considering all parameters, the investment turns into a trap.
Another Investment Myth: Real Estate as a Retirement Cushion
Among investors, especially older ones, the thesis is popular: “I will buy an apartment, rent it out—and it will become my pension.” However, in practice, this approach does not always meet expectations, especially in the long term. In Cyprus, there are a significant number of properties built in the 1990s and early 2000s that are losing liquidity today. The reasons include outdated layouts, lack of energy efficiency, parking problems, and infrastructure issues. For example, apartments in Paralimni purchased in the early 2000s for €110,000 now are worth at best €90,000, and that’s under good conditions. Tourist interest has shifted towards more modern areas with developed logistics, such as Larnaca or Limassol. Renting out such an old apartment can only be done at a significant discount. The myths about real estate investments hinder the understanding: even a perpetual asset requires regular evaluation, repackaging, and sometimes selling.
Reality Requires Flexibility
An investor who relies on rumors risks losing capital, time, and motivation. The right strategy is formed only based on facts, verified calculations, and consideration of the full picture—from taxes and depreciation to market volatility. Myths about real estate investments crumble as soon as a systematic approach is applied. Comparing properties, locations, rental models, legal nuances—this is the real foundation of successful investments.
Buying a home in Greece always raises a lot of questions: which cities are the most attractive, what you should pay attention to, and what are the peculiarities of the property market in each region. Each location offers its own unique lifestyle, investment opportunities and level of affordability.
Buying a property in Greece in 2024 is a good idea. Athens and Thessaloniki are suitable for those who want to invest in an urban lifestyle with active rentals, while Corfu and other islands are suitable for those looking for privacy and high income from tourism.