According to data from the Bank of Greece, over half of all foreign direct investment (FDI) in Greece flowed into the real estate sector in the first half of this year.
It was reported that Greece received €2.1 billion in FDI in the first half of the year, with 54.2% (€1.14 billion) involved in real estate acquisitions. This is a new high, continuing the trend that began in early 2023, and this trend appears to be accelerating. In the first quarter of this year, the real estate market accounted for 43.3% of FDI, with inflows of €520 million, while total foreign investment had reached €1.2 billion.
However, the situation changed in the second quarter, with foreign capital used for real estate purchases amounting to €622 million, while total FDI in the Greek economy did not exceed €900 million.
In 2023, the real estate market accounted for 47% of all FDI, with €2.1 billion of the total €4.48 billion flowing into the Greek economy related to the real estate market. This was mainly due to the declining trend in FDI, which fell by 38.7% in 2023, from €7.5 billion in 2022 to €4.6 billion last year.
However, real estate executives point out that recent government measures will directly impact overseas home-buying interest, including banning new short-term rental accommodations in central Athens and reducing property purchases through the Golden Visa program. If this trend continues, these measures will have a greater impact on foreign direct investment than before. On the other hand, the easing of monetary policy by the European Central Bank, lower inflation, and improved macroeconomic conditions overseas may revive foreign demand for investment in the Greek economy.
Meanwhile, analysts point out that the continued influx of large amounts of foreign direct investment into the real estate market, besides causing serious social side effects in terms of housing costs, also exposes Greece's structural weakness: its inability to attract productive investment that can create jobs. To address this issue, the government must make a series of strategic changes. (Cai Ling)