Real estate and NPLs lead FDI in 2023

The leading position of real estate in foreign direct investment (FDI) in Greece is maintained and even strengthened in 2023, as the figures show, maintaining the reflection on whether and how the country’s production model will eventually be able to change.

FDI has “resurged” in recent years, rising from just €249 million in the fateful year of 2010 to a record €7.9 billion in 2022. However, foreign investors prefer to invest mainly in tourism and real estate, rather than in industry or the creation of new production units from scratch, so-called greenfield investments.

In 2023, Bank of Greece data show that while total FDI fell short of the 2022 record, real estate investment surged. In January-September, FDI reached €3.9 billion, a far cry from the €7.9 billion for the whole of 2022. In contrast, real estate investment reached €1.6 billion compared to €1.2 billion in January-September 2022, an increase of 30%. Overall, FDI in real estate in 2022 will amount to around €2 bn, i.e. 25% of the total.

The tightening of Golden Visa requirements certainly contributed to this jump in 2023, with many foreign buyers rushing to secure a Golden Visa before the new measures took effect.

In addition, analysts note that investments in financial activities, as shown by the Central Bank’s data, amounting to €2.4 billion in 2022 (there are no figures yet for 2023), are also to some extent indirectly related to real estate. This is because this category includes the funds placed for the purchase of non-performing loans from funds.

Moreover, data on gross fixed capital formation (as derived from GDP) from the Hellenic Statistical Authority show that investment in residential construction in January-September rose to 14.7% of the total (€3.2 billion), up from 10.7% of the total in the same period of 2022. This percentage is, of course, far below the 42% of investment that residential construction represented in 2007. It is also very low compared to the corresponding 27.9% in the euro area.

Original Story: Ekathimerini | Author: Eirini Chrysolora

Edition: Prime Yield