Foreign direct investment in the Greek real estate market has returned to the record pace of 2019, according to data from the Bank of Greece.
During the first quarter of this year, inflows of foreign capital amounting to 374 million euros were used for the acquisition of real estate in the local market. This is a huge 74.8% increase compared to the same period last year, when inflows of €214 million euros were recorded. The whole of 2021 saw investments of €1.17 billion, which was 34.5% higher than the €875 million of foreign investment in 2020.
However, in 2019 it had recorded its highest ever performance, at €1.45 billion. In January-March 2019 €392.7 million had flowed in, which was just €18.7 million more than this year, or 4.7%. This illustrates the return of foreign buyers to the domestic real estate market, a development that goes hand-in-hand with the significant recovery of tourism and the arrival of visitors from abroad.
The increase in inflows in Q1 this year is perhaps more important, due to the absence of investors from China, who made a significant contribution to the figures of previous years, due to the incentive of the Golden Visa. Chinese real estate buyers have fallen sharply since the outbreak of the pandemic, and this year in particular, buyers from Russia, which was among the three most dynamic investor markets, along with Turks and Chinese, have been excluded from the program.
In its interim report on monetary policy, published on Thursday, the BoG noted that in addition to the increase in house prices in Q1 of 2022 (8.6%), the volume of construction activity (in January-February) rose by 35.7%, while in January-May the index of business expectations for housing construction jumped by 64% on an annual basis. Investment in housing in Q1 increased by 18.6%, but remains only 1.4% of GDP.
On the other hand, the total construction costs of new residential buildings increased by 7% in the first quarter, while in 2021 the average annual increase was 3.2%.