Greece’s high-end property market is boosting the economy with foreign direct investments (FDI) in the first three months (Q1) of 2023 up by 32.9 percent year-on-year, according to the Bank of Greece (BoG).
According to BoG’s “Monetary Policy 2022-2023” report, FDI came to 0.5 billion euros in Q1, on the back of a dynamic 2022, when it recorded an average annual increase of 68 percent (2 billion euros).
“The Greek real estate market, presenting important peculiarities in relation to the rest of the real estate markets in Europe, is estimated to continue to maintain its attractiveness, especially for its high-end stock,” said the report.
BoG analysts note that despite inflationary pressures, increasing energy and materials costs, interest rate hikes, prices continue to remain high as a result of strong demand and limited supply.
Additionally, they say, a renewed slowdown in construction activity, which for more than a decade has been impacted by successive crises, has contributed to the further price hikes as investors continue to bid on limited inventory.
The BoG report goes on to add that the low supply of modern properties has gradually led to price increases of properties with lower technical specifications.
At the same time, yields remain at low levels for the market but attractive for investors as a result of which investment activity remains active both from abroad and from within the country
The growing demand for properties with modern specifications is expected to lead to the upgrade of existing stock, which, if not adapted to the new requirements, will further depreciate, said the report.
Looking ahead, BoG analysts note that the real estate market will continue to be under pressure from increased inflation and interest rates, limited financing options, high energy and material costs, and broader geopolitical uncertainty.