Greece: record foreign investment in real estate in 2022

A new all-time high of foreign investment in the Greek real estate market, especially in the residential sector, was recorded in 2022.

According to the data Bank of Greece (BoG)last year the Greek real estate market received from abroad €1.975 billion. This is 68% more than in 2021, when the corresponding figure did not exceed 1.17 billion euros. At the same time, the figures for 2022 were also 37% higher than the previous record set in 2019, when foreign investment amounted to 1.45 billion euros.

The historical performance of 2022 is due to a very dynamic fourth quarter, which also set a record on a quarterly basis. In total, almost 700 million euros (698.5) were invested, which is 84.3% more than in the corresponding quarter last year, when 379 million euros entered the domestic real estate market. The next highest quarterly figure was in the immediately preceding quarter (Q3 2022) at €488.5m.

An increase of 375% from 308.5 million in 2016

To understand the extent of the diversification of the buying audience in the real estate market and the sharp increase in the influence of foreign buyers, just look at what happened before 2016. So far, the largest annual figure was 308.5 million euros of foreign investment, recorded in 2007, when the housing market was at its peak, as was global liquidity. For example, in 2004, the year of the Olympic Games, when Greece was at the peak of its popularity, foreign investment in real estate did not exceed 80.6 million euros.

This development is due to a number of reasons. Firstly, the restart of the international and Greek economy after the pandemic marked the full return of foreigners, which was especially noticeable in the second half of 2022. Characteristically, in the second half of the year, the inflow of foreign capital for the purchase of real estate amounted to 1.18 billion euros, the same as for the whole of 2021.

Data according to the report of the Bank of Greece BoG

A decisive role in this development was played by the changes announced in the “golden visa” program for obtaining a residence permit in September last year. And most recently, the easing of measures to contain the pandemic in China, which allowed Chinese investors to return to Greece for the first time since 2020. Thus, according to data from the Department of Immigration Policy, 1,216 applications for initial permits were submitted in December 2022, compared to 337 applications submitted in September of the previous year. In total, 4,363 permit applications (investors plus family members) were submitted in 2022 compared to 2005 in 2021, an increase of 117%. At the same time, a total of 2,258 new permits were issued, representing a minimum investment of 564 million euros. However, the biggest investors in real estate in Greece are not the Chinese, but the citizens. EUBritain, USA and Israel.

The center of Athens, the southern suburbs, Piraeus and popular tourist destinations remain the center of attraction for investors.

Short term rental

Another important reason that has attracted foreign investors is the popularity of short-term rentals and the relatively low sale prices compared to other major European cities. The fact that it is now possible to exploit the purchased property is a very serious attraction that did not exist in the past, when long-term rentals were a one-way street for the Greeks. The recovery of short-term rentals after the pandemic has also restored confidence among investors.

It is this trend that ultimately determines the areas in which foreign investors prefer to locate. The center of Athens, the southern suburbs, Piraeus and popular tourist destinations are the main areas where foreigners are looking for property. By contrast, few purchases were made in the northern suburbs of Attica, which remain a “stronghold” for domestic buyers.

In its latest annual report, the Bank of Greece speaks of a continuation of this trend and even suggests that the dependence of the Greek real estate market on foreign demand will increase in the coming months. This will happen not only because of the continued high buying interest from abroad, but also because of the decrease in demand from the Greeks, whose purchasing power is again declining. High interest rates, inflation and the high cost of living have hit household incomes as housing prices continue to move higher, making home buying increasingly difficult.

expectations

Overall, as noted by the Bank of Greece, “Expectations for the Greek real estate market, while remaining positive for the high end of the market, now seem more subdued. Compression in net income from investments and expected capital gains from real estate, coupled with rising interest rates and uncertainty is expected to gradually put some investors back on the fence.”

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