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V2 Development: Success in Greek real estate is based on an international reputation for integrity

Mr Vaggelis Kteniadis - President of V2 Development - Greece

Before we dive into the world of V2 Developments and your journey as its president, let’s begin by taking a closer look at the real estate sector in Greece. Is it safe to say that Greece is one of the hottest real estate markets in the European Union (EU)?

It is definitely safe to say that it is the hottest real estate market in the EU. After surviving an almost ten-year financial crisis, an increase in Greek property prices and real estate in general started in July 2015, when we reached agreement with the EU regarding Greece’s debt. From October 2008 until that point in 2015, we had lost around 30 percent of properties’ initial price on average—some areas suffered more than others. I think that this is the greatest economic transformation that a country has suffered in the western world, outside of a period of war. After that July, we saw a steady increase in income that reached around 12 to 15 percent. In the future, we expect this to pick up an even faster pace to cover all the ground that we lost since the beginning of the financial crisis and surpassing it. Athens, in particular, is posed to become a worldwide destination in terms of real estate. There are many projects taking place and others have been agreed and scheduled. We are very optimistic about the country’s new government and applaud their business-oriented agenda.

V2 Development is Greece’s number one real estate development company. It is the successor of Ergon S.A., a company founded by your father that defined real estate development in Greece from the 1960s onward. What are some of the Kteniadis family values that are still ingrained in the company’s ethos and contribute to its success?

Our company stands for ethos or, to use another word, integrity. I have mentioned on multiple occasions that, back in 1960s, people were doing business with a handshake. All you had in that distant business world was your word of honor and it was extremely important that you kept your word. Before everything was put in clauses and the small print of legally signed agreements, it was all based on your word. That was my father’s strongest point, this is what I learned from him and we convey this principle through our company even today.

Today, the company has been transformed. We are a multinational company with offices worldwide—we have a corporate sense, which is completely different from the family company of the 1960s. Still, however, we have the same principles that I hope are instilled deeply and we aim to preserve integrity in this business world. We keep in mind that most of our clients, almost 87 percent, are foreign investors that do not know about our company or what we represent in Greece. It is crucial that we keep getting this message across in Greece and worldwide through our vast network of partners around the globe.

Under your and your father’s leadership, V2 Development has successfully developed and sold over 7,500 real estate assets, which include residential, retail, hospitality and warehouse facilities totaling more than 4.5 million square meters. What are some of the company’s flagship projects or ones that you are most proud of?

All those assets have been exclusive ownerships. We are not talking about synergies, agencies or mediators—we are talking about real estate assets that were owned by our company and carry the signature of either myself or my father. The biggest real estate project for Ergon Development was the development of an area in Loutraki, 85 kilometers from Athens. We developed 4,200 plots there back in 1977 and sold them all in just two years. As far as magnitude and success are concerned, that was a project that defined Ergon Development.

With the rebranding to V2 Development, we are focusing more on construction, which Ergon was not doing as it focused mainly on development of land. In the past, Greek people did not have the ability to directly go and purchase a property, due to a lack of financial means. My father was a pioneer in developing land and selling plots with in-house financing and the first to introduce this in Greece. That gave the opportunity and the ability for underprivileged people to get a piece of land. It created a paradigm, I would say, in real estate reality for the entire world, as Greece now has one of the highest property ownership rates in Europe, with more than 78 percent of Greek people owning their property.

The reason that so many Greek citizens own property is because they purchased land, granting them the ability to slowly develop their own houses. Later on, they would give their plots away to construction companies. Those companies would be getting the plot without paying any money and, in return, they would give the original owners of the plot some apartments out of the project. That was a practice that was highly criticized during the 1960s and 1970s, but now everyone can see the value of it. I have to say that this is what kept Greece together during the financial crisis—at least the vast majority of Greek citizens managed to stay in their own houses, with all the safety and security that a property gives to people and which led to a much more bearable situation. If it was not for the fact that 78 percent of Greek citizens are property owners, I am sure that the social distress would have been tremendous, leading to a literal social meltdown. It is a unique situation worldwide but this course of action, pioneered by people like my father, has truly paid off and has to be recognized.

As a company that mainly focuses on residential property, are there any new areas of real estate development that the company is currently seeking opportunities in?

We are not involved in the commercial and warehouse markets, as we are strictly dedicated to residential development. The geographical areas that are the most popular and expensive are in the southern suburbs of Athens, like Palaio Faliro, Alimos, Hellinikon, Glyfada, Voula, Vouliagmeni and Varkiza. There are some more opportunities existing downtown, in the center of Athens, because the prices dropped there more on average than in any other area of the city during the financial crisis.

I keep talking about Athens because it is a reality that half of Greece lives in Athens. Fortunately or unfortunately, Athens defines real estate in Greece. These areas are the ones that we are mostly developing. If we focus on opportunities, downtown has seen the highest rate of increase in property prices and Piraeus can be included as another opportunity. The southern suburbs of Athens are definitely areas of great value. Last but not least, properties in the area of the Hellinikon development will increase in value even more. From my perspective, that area of around 40 kilometers in length can only be compared to southern France from Nice to Saint-Tropez, Monte Carlo and Cannes. I would say that, in terms of beauty, it is even more striking, although France has better infrastructure. Hopefully, we are going to see this part of Greece being developed within the next few years.

What can you tell us about your new venture: Von Poll Real Estate?

V2 Development focuses on development, construction, trading and property management. To have a complete presence in the real estate sector, the only part missing would be an agency. I currently have the exclusive rights of Von Poll in Greece as the master franchiser. Von Poll is a German firm and one of the biggest real estate companies in Europe, with a presence in 16 countries and more than 400 offices. We have established our headquarters in Syntagma Square, right across from the Hellenic Parliament and have already sold franchises in the areas that we need to develop: Thessaloniki, Mykonos, Santorini, Rhodes, Crete, Kalamata, Patra, Corfu and Zakynthos. Over the next three to five years, we will develop the brand in the above-mentioned locations.

Von Poll’s plan is to go global, so we should expect to see moves into other continents soon. It is extremely important to have its network of 16 other countries and 400 offices, which provides us with access to those markets and people that want to invest in Greece and Europe. When it comes to the rest of the world, V2 Development itself has three offices in China, in Beijing, Shanghai and Quanzhou. We also have an office in Nairobi, Kenya, a very strong presence in Southeast Asia, in Ho Chi Minh City in Vietnam in particular, and are setting up an office in Dubai. I would say that, with the Von Poll coverage of Europe and V2 Development’s coverage in the developing areas of the world, we are going to have an adequate global presence.

When you took over the company in 2013, Greece’s economy was wading through the economic recession that ripped away over 25 percent of its gross domestic product. Your decision to look outside of Greece and adopt extraversion as an underlying strategy was a winner. As an illustration of this, you are a pioneer and one of the key players in Greece’s Golden Visa program. How has that been performing and why is it important?

I would like to make a clarification about the Golden Visa, as the term “visa” has a negative connotation—it is something that normally has a start and an expiration date. In the case of this program, we are talking about an investor’s permanent Greek residency permit that they can get after purchasing an asset in Greece of €250,000 or more. The program started in May 2013 and I am the one of the people that developed it. 2018 was the first year that we saw real results. In fact, it was the first time any country’s residency program surpassed the accepted number of applications to the U.S.’s EB-5 program. In 2019, we saw a 22 percent increase compared to 2018 and I am pretty sure that makes it the most popular residency program on the planet again.

The most important reason the Greek real estate sector kept together during the financial crisis is that the current government, as well as the two before it, spent a considerable amount of effort and energy on making this program the most favorable for the investing public. There are three particular advantages to it: first of all, it grants third-country citizens access to the 26 countries in the Schengen area. This program is obviously not related to employment. So, the second most important advantage is that investors are able to register their own companies, enjoy social security and everything that entails, while also having also the chance to contribute to the economy. The third critical advantage is the ability of investors who are eager to relocate—only 5 to 10 percent of these permit holders come to live in Greece—to obtain multiple advantages. For example, if their children under 18 years of age attend a Greek educational institution for more than six consecutive years, they have the ability to apply for Greek citizenship and obtain a Greek passport. Adults have to stay in Greece for seven consecutive years, 183 days per year, and pass a very basic language test at the end of this period. This is extremely important for third-country citizens given that, as a Greek citizen, you do not even require a visa to go to the U.S.—the Greek passport is the fourth-strongest passport in the world.

When it comes to Chinese applicants, the capital control regulations in China allow each citizen to transfer outside of the country merely €44,000 a year, this means that the assistance of the rest of their family is necessary to transfer the funds for a residency program. At the suggestion of Adonis Georgiadis, Minister of Development and Investments, this is something that was included in new legislation covering the program that was passed recently—this is a strong indication that the current government has the ability to sense and understand business needs in today’s world.

We need to think globally in Greece and question what Europe, as a developed continent, has to offer to the world. I believe that the only thing we have to offer, as the EU, is a better quality of life and luxury products. We need money from developing countries—we need fresh money to enter the EU in order to assist countries not just in the south but in the center and north of Europe, and we need to look into this deeply over the next few years. This will be, in my opinion, the secret to Europe’s survival and prosperity in future.

From time to time, I hear some criticisms from central or northern European countries regarding the permanent residency programs that exist in southern European countries. During the Southern European Summit of 2019 in Nicosia, Cyprus, I had the chance to witness multiple discussions around this subject involving participants from countries like Portugal, Spain, France, Italy, Greece, Malta and Cyprus. An insightful observation I heard revolved around the granting of European passports to third-country citizens through marriage, which reaches an astounding one million people a year. I do not want to be too skeptical about this, but I have seen the phenomenon of European passports being essentially sold through marriage. Then, we have people that make investments into European countries in order to get permanent residencies, where the number for an entire year reaches merely 12,000 people.

On the one hand, we have 12,000 investors bringing fresh funds from developing countries into the European economy and, on the other hand, we have one million people that create sentimental relationships, get married and obtain European passports. You could see the latter category as draining the economy or, as I like to see it, the benefit goes straight to the individual not the global economy. With these facts in our hands, we are able to understand how critical it is to talk about the investments coming from third countries, especially for the Chinese. People do not know that Chinese government forbids their citizens to purchase properties abroad. These people are taking a huge risk in breaking their country’s regulations. I find it extremely hypocritical to talk about the influence on the European character from foreign investments, or that the Chinese government is using its citizens as a vehicle of penetration into the European economy.

There are definitely some bad apples in every basket, meaning that there may be a few people that have acquired their financial means through illegal matters. However, we cannot judge and criticize something that has a nearly absolute positive impact on the economy, merely due to some potential negativity that might occur. It is very clear that the Greek law is incredibly transparent, stating that money needs to be transferred from the main applicant’s bank account, or those of their first- and second-degree relatives, directly into our company’s bank account in Greece. If our residency program gave investors the ability to bring cases of cash through Greece’s airports, then I would definitely support the accusations of people saying money laundering was involved. I am not knowledgeable about other countries’ residency programs so I am not in a position to be judgmental toward them, but the Greek program is clear and transparent.



New York Office
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