Business opportunities in Athens
Greece is regaining the business community’s trust. In February 2018, credit rating agency Moody's upgraded its investment outlook for Greece from Caa2 to B3. According to the country's official investment agency Enterprise Greece, in 2017, the volume of foreign direct investment in Greece grew by 30% from the year before, reaching €3.6 billion. Greece's GDP has been growing for four consecutive quarters, and according to the European Commission, will continue to grow in 2018 and 2019 at a rate of 2.5% per annum. According to the European Central Bank (ECB), disposable income per capita rose for the first time in five years in 2017.
The effects this has on small businesses is hard to quantify at the moment, as the latest data from Endeavor Greece, an organisation providing support to entrepreneurs, only reflects the situation as of 2016. That year, 28,600 new companies were registered in the country (half the figure compared to before the crisis in 2008), and 35,200 businesses closed. However, an clear trend can be observed – tourism was the only segment in 2016 in which more companies were opened than in 2012 (a 31% increase) and the number of the startups launched exceeded the number of startups that closed. Generally, the majority of recently opened Greek enterprises are either directly or indirectly related to tourism: restaurants, bars and catering account for 20% of them, while retail accounts for 11% and the actual tourist segment accounts for another 5%.
This comes as no surprise. In addition to the tourist segment being less dependent than other sectors on the state of the still-weak Greek economy, the country is experiencing a tourist boom. According to the Bank of Greece, between 2012 and 2017, the number of international visitors to the country grew from 17 million to 30 million, while the number of international arrivals in Athens, according to the Association of Greek Tourism Enterprises (SETE), rose from 2.5 million to 4.8 million over the same period.
According to the World Bank’s Doing Business 2018 survey, opening a company in Greece takes 12.5 days, which exceeds the time required in many European countries like Italy (6.5 days), Cyprus (6 days), and Portugal (5 days). Charter capital requirements are nominal – as little as €1. The procedure itself has four stages during which the entrepreneur must:
- Get a tax clearance certificate from any tax department (this can be done remotely at no charge).
- Apply for company registration with the General Electronic Commercial Registry (GEMI) (about €200).
- Make a seal (€40).
- Register at the Unified Social Security Institution (EFKA) (€111).
Taking out a loan in Greece is not easy. The country ranks first in Europe in terms of the number of bad loans. However, in May 2018, the four largest Greek banks passed ECB stress tests, which demonstrate the success of the country’s economic restructuring and the gradual recovery of the Greek economy.
One of the difficulties entrepreneurs face in Greece is the amount of red tape. For instance, a commercial dispute in most OECD member countries, according to Boston Consulting Group (BCG), is settled in an average of 19 months, while it takes an average of 53 months in Greece. However, the main problem is high taxes. For instance, the corporate income rate in Greece is 29%. In contrast, the company tax rate in Cyprus is only 12.5%, while dividends and interests are tax exempt. Tax rates in Portugal, Italy and Spain are also lower than in Greece at 21%, 24% and 25% respectively.
In April 2018, Greek SME assistance fund Equifund was launched with the support of the national government and the European Investment Fund. According to BCG, the total volume of investment in small enterprises by 2022 will reach €1 billion, €260 million of which has already been raised from various sources including the European Investment Fund, European Investment Bank, institutions in Greece and the EU and private investors.
Greek business incubators, such as Corallia, EGG, iQbility and Orange Grove support startups at every stage of development, while venture capital funds such as Marathon Venture Capital, NBG Business Seeds and Venture Friends help companies with seed funding.
Start-up costs in Greece are low, with cheap commercial rent
One of the most important advantages Greece has over other touristy countries is its cheap residential and commercial property. This is one of the last European countries where property prices have not recovered since the crisis. According to the Bank of Greece, rental rates for retail property in Athens in 2017 was half the level of 2008, while commercial rental rates were 35% cheaper.
Shops located in the city centre are popular with tourists and compete heavily with shopping malls. According to consulting company Cushman & Wakefield, rental rates for prime street retail property in the central Athens neighbourhood of Kolonaki averages €90/m² per month, which is thrice cheaper than in Barcelona and 10 times cheaper than in Rome. On the most expensive Greek shopping street, Ermou, the rental rate for street-level shops is €245/m² per month (slightly cheaper than Madrid's average), while it averages €115–120/m² in the suburbs of Athens. Shops, restaurants and bars are concentrated in the city’s central neighbourhoods: Gazi, Kerameikos, Koukaki, Metaxourgio, Monastiraki, Psirri and Exarcheia.
Rental rates for high-quality commercial space in central Athens, at an average of €18/m² per month, are comparable to prices in the outskirts of Madrid. There are also offices for rent in the suburbs. According to Cushman & Wakefield, they are leased at a monthly average of €13/m² in Piraeus, and €16/m² in Kifissia.
For far-sighted entrepreneurs, the Greek crisis is an opportunity for greater profits, as business resources are currently cheap. While the country’s recovery might be long and difficult, the fast-growing tourism and real estate sectors indicate returning investor confidence and a growing economy.