NEW YORK (MainStreet) — The worst of the Eurozone crisis might be over. The austerity and fiscal correctives imposed in countries like Greece, while unpopular, seem to have stabilized the shaky situation. The European dream, which was threatening to turn into a nightmare given the events of the last few years, looks to have survived. Interestingly, the crises in Europe have paved the way for high net worth non-Europeans to become part of the European dream as well. Investing in property in Portugal, Spain, Greece, and Cyprus in a program popularly referred as the "Golden Visa" can potentially turn around the distressed property sector in these countries.

The Property Glut

Spain alone has between 700,000 to 1 million unsold homes, despite property prices having crashed 50% from peak 2008 levels. With 25% unemployment in Spain, it is unlikely domestic demand will clear this inventory. Portuguese banks, which had repossessed houses in the thousands before the country's 2011 bailout are offering around 10,000 houses on sale at reduced prices. With property investment having declined to just $125 million in 2012, the lowest in the decade, the sector is desperate for a cash infusion.

In Greece, prices of even oceanfront villas have crashed 50%. Between 2002 and 2008 on average 150,000 properties were sold every year. In 2011 only 11,000 were sold, despite a dip in prices. Cyprus acquired the dubious distinction of being the weakest real estate market in the world last year. Home prices there have fallen by around 50%.

"The Euro crisis severely affected property when it was at its peak during the first half of 2012," says Neil Blake, head of EMEA and U.K. Research at CBRE, a leading global real estate firm. "Due to bad debt, banks are no longer willing to lend on residential mortgages on anything other than low LTVs (loan to value ratios)."

While CBRE reports that investment activity has picked up in Southern Europe in 2013, the percentage growth is off a much lower base in 2012.

A Visa Renewal

The response from the four governments, determined to explore every avenue to get their housing markets back on track, has been to embark on the ambitious Golden Visa program. A Golden Visa promises wealthy non-citizens residency in exchange for investments made in real estate in the country.

While plans in Spain and Portugal offer permanent residency for buying a house valued at €500,000 (about $682,100) same as Portugal, Greece has pegged its qualification value at €250,000 (about $341,050). A Golden Visa from Cyprus requires purchasing a house worth €300,000 (about $409,260).

A Golden Visa offers substantial benefits apart from residency. One can travel freely in the 26 Schengen EU countries, and the road to both permanent residency and nationality is made far easier. Countries like Portugal make it very easy for foreigners in terms of the time they are required to physically reside in the country to maintain their status — seven days in the first year and 14 in each of the next two years.

Golden Visas have seen a huge response from Chinese and Russian nationals in particular. A Chinese real estate consultant says around 1,200 Chinese nationals have availed the Cyprus government offer, though it is the only country of the four where you cannot travel freely in the Schengen EU territory. The rock bottom real estate prices seem to be incentive enough. In contrast the domestic Chinese real estate market has rapidly overheated—property prices have doubled in five years in some cases—and a host of investment restrictions have been put in to cool down the market.

Portugal has granted 102 Golden Visas to date, making its treasury richer by €50 million (about $68,210,000). While learning the Portuguese language is a major challenge for some Chinese buyers, the opportunity to have a luxury sea side villa for a bargain in Algarve both as a vacation home and for future appreciation has a strong appeal. A leading Spanish real estate firm has received up to 800 inquiries till date, many from wealthy Russians interested in prime areas like the Costa del Sol, with its hotspots like Marbella. Russians bought over 1,600 homes in Spain last year, even without the Golden Visa program, making them the fourth largest purchasers of property in the country behind Britain, France and Germany.

Greece has been even more aggressive in its pitch with Prime Minister Antonis Samaras selling the program during a state visit to China. Unsurprisingly, the first person to get a Greek Golden Visa was a Chinese national. It's not just the Chinese and Russians, though, who are flocking to such markets—the first Portuguese Golden Visa was awarded to an Indian businessman, and there is a lot of interest from the Middle East as well.

"These markets have been very open to cash equity buyers who are taking bad debts off the banks and helping to revive the housing market" says Blake.

The Fine Print

However there is the ever present risk of an investor getting burned without exercising due caution and accounting for all the tiny yet important details of owning a property in a foreign country.

For this reason, many of the reputed real estate agencies usually have a legal firm specializing in tax and immigration issues to partner with when pitching to investors. For example, CBRE has partnered with leading Iberian law firm Garrigues to put together a guide for investors interested in Portugal. Before enrolling for a Golden Visa, there are details around stamp duty, taxes on sale, inheritance and income from renting property that must be considered by investors. As an illustration, selling a property in Portugal attracts a flat 25% capital gains tax if you are not a resident in Portugal from a tax perspective.

Sometimes emergency laws enacted by governments of these troubled economies can make a property investment sour unexpectedly. In Greece a new property tax imposed on average an increased liability of €1,000 (about $1,364) on thousands of British owners who had bought property and even settled down there.

Then there is the question of the property itself. Was it built with legal sanction? What is the physical state of the property? Does it have a lien on it? A team of experts needs to investigate these points thoroughly on behalf of an investor. The investor would also do well to follow up with a personal visit so that there are no rude surprises in store.

The More the Merrier

What Southern Europe is doing — seducing foreign nationals with the lure of temporary residence and later permanent citizenship — is an old and established practice followed by many countries in the developed world.

The U.S. is probably the leading proponent of such visas with its EB-5 program. For an investment of $500,000 to $1 million that results in the creation of 10 full-time jobs, an immigrant can get EB-5 status. Multi-million dollar real estate projects in New York have been financed through this route. Current U.S. laws provide for granting up to 10,000 such visas every year and only 30 to 40% percent of that quote has been met.

Australia, Canada and Britain all offer some form of investment-driven visa and citizenship programs. At the other end of the spectrum, the island nation of St. Kitts and Nevis and the tropical tourist destination of Dominica have citizenship-by-investment programs. Therefore the Southern European countries are competing with a wide array of countries for the same target audience.

Investors also prefer markets which are seeing some appreciation of their investment rather than just residency. "In the Irish Republic, which has seen one of the biggest falls in house prices, prices have started to recover as the economy strengthens" says Blake.

For the high net worth individual it seems there is no shortage of places to call home.

—Written by Preetam Kaushik for MainStreet