The leading position of real estate in foreign direct investment remained 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.

It is a fact that foreign direct investment has “resurrected” in recent years, from just 249 million euros in the fateful 2010, to a record 7.9 billion euros in 2022. However, foreign investors prefer to invest largely in tourism and real estate and not in industry nor in general in the creation of new production units from the outset, the so-called greenfield investments.
In 2023 in particular, data from the Bank of Greece show that while total foreign direct investment will likely be lower than the 2022 record, real estate investment will soar. In particular, in the 9 months of January – September, direct foreign investments were 3.9 billion euros, and therefore they are separated by a distance from 7.9 billion in 2022.

On the contrary, real estate investments reached 1.6 billion from 1.2 billion euros in the 9 months January – September 2022, marking an increase of around 30%. Overall, in 2022 foreign direct investment in real estate was around €2 billion, i.e. 25% of the total. This surge in 2023 has certainly contributed to the tightening of the conditions for the granting of the “golden visa”, which prompted many foreign buyers to rush to secure it in time, before the new measures come into force.
Red loans

In addition, analysts note that investments in financial activities, as shown in the data of the central bank, amounting to 2.4 billion euros 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 red loans from the funds.

Total FDI in 2023 will be lower than 2022’s record, but real estate capital inflows have soared.

Besides, the data of ELSTAT on the gross formation of fixed capital (as derived from the GDP), show that investments in house construction in the 9 months of 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 figure, of course, has nothing to do with the 42% of investments that houses represented in 2007.

It is also very low compared to the corresponding 27.9% in the Eurozone. However, this is due to the very low starting base, almost zero during the crisis years. Thus, this increase did not go unnoticed, with economists commenting that if it continues without correspondingly increasing other productive fixed investments, there is a risk of repeating the distorted model of the past.

It is clarified that the investments recorded by ELSTAT concern construction of houses that are counted in the GDP and are not the same as direct foreign investments in real estate, which often concern the purchase of existing properties and not the construction of new ones.

Investments, according to ELSTAT data, also include other non-productive elements. Thus, the mechanical and transport equipment category includes the purchase of equipment systems for defense, as well as the purchase of leasing cars.
11% increase in 9 months

It should be noted, however, that overall in the 9th month, investments, according to ELSTAT data, were up by 11% compared to the same period of the previous year. On the other hand, as a percentage of GDP, in 2022 for which complete data is available, investments represented 13.7% and therefore there is still a long way to go to reach the EU average. – 22.4% of GDP.
The increase in housing investment in Greece by almost 50% in the first half of 2023 was also highlighted by the report of the European Investment Bank last week, stating that they returned for the first time to the level of 2013.

Source kathimerini.gr