A new record for foreign investment in Greek real estate market and residential real estate was recorded in 2022. According to the Bank of Greece, 1.975 billion euros flowed into the Greek real estate market from abroad last year. This is an amount that is 68% higher than in 2021, when the corresponding amount did not exceed 1.17 billion euros. At the same time, the figures for 2022 were 37% higher than the previous record set in 2019, when foreign investment reached 1.45 billion euros.

The “historic” results in 2022 are driven by a very dynamic fourth quarter, which also saw record quarterly performance. In total, almost 700 million euros (698.5 million euros) were invested, an increase of 84.3% compared to the corresponding quarter last year, when 379 million euros poured into the domestic real estate market. The next highest quarterly result was recorded directly in the previous quarter (Q3 2022) at €488.5 million.

308.5 million in 2016

To understand the extent of the diversification of the buying public in the real estate market and the sharp increase in the influence of foreign buyers, it is enough to study what happened before 2016. Prior to that, the highest annual income was 308.5 million euros. investments by foreigners registered in 2007, when the housing market was at its peak, as was global liquidity. In 2004, for example, the year of the Olympic Games, when Greece played a leading role in the international arena, foreign investment in the real estate market did not exceed 80.6 million euros.

This development is due to a number of reasons. Firstly, the restart of the global and Greek economies after the pandemic marked the full return of foreigners, which was especially evident 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, that is, the same amount as for the whole of 2021.

The change in the golden visa program for residence permits announced last September, and most recently China’s loosening of containment measures in China, have played a decisive role in this development, allowing Chinese investors to return to Greece for the first time since 2020. Thus, according to the Ministry of Immigration Policy, in December 2022, 1216 requests for initial authorization were submitted against 337 requests submitted in September last year. In 2022, a total of 4,363 permit requests (investors plus family members) were submitted compared to 2005 in 2021, an increase of 117%. At the same time, a total of 2,258 new licenses were issued, which corresponds to a minimum investment of 564 million euros.

The areas of “Magnet” remain the center of Athens, the southern suburbs, Piraeus and popular tourist destinations.

Short term rental

Another important reason why it attracts foreign investors is the popularity of short-term rentals and low sale prices compared to other major cities in Europe. In other words, the fact that there is now a way to use the property you buy is a very strong attraction that did not exist in the past, when long-term rentals were a one-way street for Greeks. The recovery of short-term leases after the pandemic has also restored investor confidence.

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. On the contrary, in the northern suburbs of Attica, which remain the “stronghold” of domestic buyers, very few purchases are made.

In its recent annual report, the Bank of Greece says that this trend is continuing and even predicts that in the coming months the dependence of the Greek real estate market on demand from abroad will increase. This will happen not only due to the continued high purchasing interest from abroad, but also due to a decrease in demand from the Greeks, whose purchasing power is again limited. High interest rates, inflation and the high cost of living have taken a toll on household income as home prices continue to rise, making it difficult to buy a home.

expectations

In general, as noted by the Bank of Greece, “expectations for the Greek real estate market, although they remain positive for its elite segment, now seem to be more restrained. Declining net investment returns and expected real estate capital appreciation, coupled with rising interest rates and uncertainty, are estimated to gradually lead some investors back to a wait-and-see approach.”