FDI mainly in property, NPLs
Apart from real estate-related purchases, investments from abroad were reduced last year
The leading position of real estate in foreign direct investment (FDI) in Greece remained and even strengthened in 2023, as the figures show, maintaining the reflection as to whether and how the country’s production model will eventually be able to change.
Foreign direct investment has “resurrected” in recent years, from just 249 million euros in fateful 2010, to a record €7.9 billion in 2022. However, foreign investors prefer to invest largely in tourism and real estate and not in industry nor in the creation of new production units from the outset, so-called greenfield investments.
In 2023, Bank of Greece data show that while total FDI lagged the 2022 record, real estate investment soared. In January-September FDI reached €3.9 billion, quite some way from the €7.9 billion throughout 2022. In contrast, real estate investments reached €1.6 billion against €1.2 billion in January-September 2022, marking an increase of 30%. Overall, in 2022 FDI in real estate was around €2 billion – i.e. 25% of the total.
The tightening of the conditions for the granting of a Golden Visa certainly has contributed to this jump in 2023, which prompted many foreign buyers to rush to secure it in time, before the new measures take effect.
In addition, analysts note that investments in financial activities, as shown in the data of the central bank, amounting to €2.4 billion in 2022 (there are no figures for 2023 yet) are also, indirectly to some extent, related to real estate. This is because this category includes the funds placed for the purchase of nonperforming loans from funds.
Besides, the Hellenic Statistical Authority’s data on gross fixed capital formation (as derived from GDP), show that investments in residential construction in January-September increased to 14.7% of the total (€3.2 billion) from 10.7% of the total in the same period of 2022. This percentage, of course, is far below the 42% of investments that residential construction represented in 2007. It is also very low compared to the corresponding 27.9% in the eurozone.
