Greece’s Real Estate Market: A Promising Outlook for 2023

Greece’s real estate market is displaying a positive trajectory, instilling a sense of optimism for the coming years. Since 2018, the market has experienced a noticeable resurgence, with prices witnessing strong growth. Over the past four years, properties have successfully recovered approximately half of the 40% value lost during the prolonged financial crisis. Premium locations have witnessed even more substantial price increases. The scarcity of new and prime properties, combined with surging demand, has resulted from the low level of construction activity during the 2010-2018 financial crisis.

Both domestic and international investors are once again drawn to Greece, as the market’s appeal continues to grow. The cautious approach observed in the primary residence market is gradually transforming into a keen interest in attractive investment opportunities. Greece’s real estate prices remain comparatively moderate when compared to other European countries, particularly in metropolitan areas like Athens and Thessaloniki, as well as the islands. The stability of the market, despite ongoing turbulence, can be attributed to the Greek government’s proactive measures and the availability of real estate. In the coming months, market participants are expected to shed their reservations and embrace the prevailing opportunities, driven by Greece’s dynamic economy and the strong demand for real estate.

Challenges posed by the pandemic crisis and the war in Ukraine have temporarily impacted the market. Construction costs have risen, along with increased interest charges and inflationary pressure. However, the rise in interest rates has had mixed effects. While mortgage interest rates have increased, resulting in higher costs for borrowers, the desire to hedge against inflation through property ownership has intensified. Currently, around 25% of sales are transacted through mortgage loans. Although the demand for new mortgage loans has declined in recent months due to rising interest rates, it is estimated that by 2023, the percentage of new mortgage loans will rise to approximately 30%.

Greece’s resilience in successfully navigating recent challenges has solidified its status as an attractive destination. The country offers a wealth of opportunities and continues to pique supraregional interest through extraordinary projects. Notably, the revival of the Tower of Piraeus, the second tallest building in Greece, has received positive responses. After lying vacant for several decades, it is undergoing a remarkable transformation and renovation to emerge as a modern business building by year-end.

Additionally, the ongoing Hellinikon project, situated on the former Athens airport site, stands as Europe’s largest urban construction endeavor. Spanning an impressive 6.2 million square meters, it encompasses infrastructure for trade, housing, and tourism. This project is anticipated to have substantial positive effects on the Greek economy, attracting international investors and generating around 70,000 new jobs.

The primary residence market in Greece has experienced some reluctance among locals due to rising prices, construction costs, interest rates, and energy-related concerns stemming from the war in Ukraine. While the Greek government has implemented extensive support programs to mitigate additional energy costs for the domestic population, inflationary pressures make it challenging to counterbalance all expected negative factors. As part of the national growth program, the government is subsidizing loans for 10,000 young homebuyers for the first time, bolstering support for the real estate market.

The shortage of real estate has been further exacerbated by the tourist use of many units, such as those listed on Airbnb, resulting in significant increases in rental prices in certain regions. Moreover, the scarcity of residential construction between 2010 and 2017 in major cities has negatively impacted rental prices. Consequently, rental prices are not expected to undergo significant changes in 2023 given the prevailing conditions.

Greece continues to attract private investors seeking holiday homes, with German, Austrian, and Swiss buyers leading the pack, followed by buyers from the US, UK, Spain, and France. The combination of relatively moderate prices and available properties solidify Greece as their preferred choice. The limited supply of holiday homes on popular islands like Mykonos and Santorini has redirected buyers’ interest toward emerging areas such as Paros and smaller islands. This trend is expected to persist throughout 2023.

In summary, Greece’s real estate market exhibits promising prospects for the coming years. Although the upcoming elections may influence the market’s course this year, significant growth is anticipated once the election period concludes. The Greek real estate market presents appealing opportunities and holds great potential for growth.