Real estate bolsters foreign investments
Foreign direct investment (FDI) hit a 20-year high in 2022, reaching 7.22 billion euros, according to Bank of Greece data, but to a large extent this concerns takeovers or privatizations of already existing businesses, as well as the purchase of real estate. The creation of new productive investments, so-called greenfield investments, is increasing, but still constitutes a small percentage of total investment.
The BoG Governor’s Report 2022 showed that of the total €7.22 billion in 2022, €2.3 billion (31.8%) concerned mergers and acquisitions, while €1.975 billion (27.3%) went on the purchase of real estate. The purchase of new shares, representing the creation of new productive investments or participation in share capital increases, accounted for €1.98 billion (27.4% of the total).
Accordingly, in 2021, of the €5.35 billion in total FDI, the purchase of new shares corresponded to €1.72 billion (32%). In other words, about a third of FDI in the last two years was directed to new productive investments.
Strong investment interest is attracted by the Golden Visa program, which allows non-European Union citizens to obtain a residence permit by purchasing real estate worth over €250,000.
In 2022, privatizations took center stage with important developments, such as the acquisition of DEDDIE by Spear WTE Investments, the sale of DEPA Infrastructure to Italgas, as well as the collection of the first installment from the sale of Elliniko SA to Lamda Development.
“In the two years 2021-22 the inflows of foreign direct investment increased significantly, reaching the highest levels of the last 20 years,” BoG Governor Yannis Stournaras noted in his speech last Friday, adding, “A key role in the strengthening of investments in recent years belongs to the acceleration of the privatization program and the utilization of state assets, the participation of foreign companies in the equity capital of domestic enterprises, as well as the record number of mergers and acquisitions that took place in 2022.”
According to the report, “FDI is directed mainly to share capital increases and acquisitions, and secondarily to real estate investments,” while “investments aimed at creating new direct productive enterprises or new facilities [greenfield investment] in Greece remain at very low levels in terms of value.”
