Greece has a lot to offer to global investors in the local hospitality real estate market, which is seeing something of a renaissance with a resurgence of international tourism and new destinations emerging, participants said at the recent 25th Prodexpo real estate conference in Athens.
Greece is currently going through an economic rejuvenation and transformation, partially driven by the government’s Greece 2.0 plan supported by the EU’s Recovery and Resilience (RRF) programme, Marinos Giannopoulos, CEO of investment and trade promotion agency Enterprise Greece, said at Prodexpo. He said the country’s GDP is forecast to rise by 2.4-2.9% this year and investor appetite is at an all-time high, with 51% of firms seeking to enter or expand in Greece, according to an EY survey.
Foreign direct investment (FDI) to Greece is steadily rising in recent years, with 19% of all FDI flowing into real estate activities in 2021-2023, Deloitte said in a recent report. The property market has even outperformed the domestic financial services and manufacturing sectors, which accounted for just 18% and 17% of FDI in this period. “Greece is poised to attract significant investments in the tourism industry mainly focused on sustainable development and upgrading of the tourist product,” Deloitte added.
Tourist arrivals, hotel investments on the rise
Enterprise Greece is already recording a rise in hospitality-related projects, Giannopoulos said. This is supported by data from the Greek Tourism Confederation (SETE), which show that investments in the domestic hotel sector climbed by 39% from a year earlier to €2.82 billion in 2023 to build and upgrade hotel rooms alone. Total investments, also including developments at other types of accommodation, increased to a whopping €5.03 billion in 2023 from €3.67 billion in 2022, SETE has estimated.
Interest from global hospitality investors is on the rise partially as Greece is attracting more and more foreign tourists. Ioannis Orfanos, Head of Capital Markets at Colliers Greece, said at the conference that the country is a unique market with an international customer base and has competitive offerings, even compared to other key destinations in the Mediterranean, such as Spain, Italy or Portugal.
Greece broke a record in international arrivals last year, with the number of foreign tourists increasing by 17.6% from a year earlier to 32.7 million in 2023, data from UN Tourism show. The country had a 10% rise in guest nights, outperforming most of the other big markets across Southern Europe.
Tourism demand strongly contributes to the development of the Greece brand, which is an attractive preposition for real estate, Roger Allen, Group CEO at RLA Global, said in the Prodexpo panel discussion. The increasing demand for second homes and the evolving role of Airbnb also have crucial effects on the Greek real estate market, he added.
New hot spots complement classic destinations
Emerging destinations, such as Thessaloniki and the Northern Cyclades are generating substantial interest among hospitality real estate investors, and can complement popular locations like Chalkidiki or Kos and classic destinations, including Crete, Rhodes and Corfu, Orfanos at Colliers said.
Athens is becoming increasingly interesting to global investors, as it is not only a city or business hotel market any more, in part thanks to the Athenian Riviera, which has attracted luxury and lifestyle hotel projects and developments.
The Greek capital has evolved into a vital destination over the past five years with projects like Ellinikon and the development of the Athenian Riviera, Luis Picas Asmarats, Senior Director of Investments at
Hotel Investment Partners, agreed. The company sees big potential in Athens, which can create synergies with other locations. Hotel Investment Partners works with international and domestic operators to run its eight hotels across Greece, and may add two new properties by the end of this year, he said.
Another company seeking to boost its presence in Greece is Spanish chain Melia Hotels International, which currently operates three properties in Crete and one each in Rhodes and Athens. “For us this is the right time to expand here, because of growth in tourism and infrastructural developments,” Nikolas Kafetzidakis, Head of Development Greece & Cyprus at Melia Hotels International, said at Prodexpo.
Teaming up with local partners could be beneficial
Global hospitality real estate investors should consider working together with domestic partners in Greece, which have market knowledge and experience in navigating procedures, Giannopoulos at Enterprise Greece said. Greek hoteliers may help foreign investors grow faster, tend to have leverage with local banks and their cost of capital may be lower, Orfanos at Colliers added. He said foreign investors can be successful if they bring “something new” or “sophistication” to the local market.
Many independent hotels in Greece are becoming more sophisticated, they understand the product and the importance of positioning and no longer depend exclusively on online travel agents (OTAs), Allen at RLA Global noted in the conference panel. This compares with less sophisticated hotel owners in some other markets, who have a hands-off approach and are not vested to develop the property – which can ultimately destroy the entire destination in question, he said.
Greenfield investors need long-term vision, patience
The panelists also discussed some of the challenges global investors may encounter in Greece, such as accessibility and the potential lack of sufficient airlift in certain locations and seasonality. Greece is further developing its infrastructure, which can improve accessibility and put new destinations on the tourism map. Kafetzidakis at Melia Hotels International said they are working to reduce seasonality by adapting their entertainment model with local partners and have also seen some general improvement in the Greek market, with some properties now operating until the middle of November.
There is something else investors should focus on, especially for greenfield developments, Allen said.“Investors and developers need a long-term vision and patience to actually build the brand and the appeal of the destination, particularly if the destination is new and emerging,” he said, adding that this can be vital for building a track record for the property.
