Greece’s housing shortage is pushing investors into hotels, short‑term rentals and second homes

Greece property market: why a shortage is reshaping investor demand

The property market in Greece is being reshaped by an acute shortage of residential homes and rapidly rising prices, according to the American-Hellenic Chamber of Commerce’s report, “Property Market Outlook for Greece.” The report reviews the second half of 2025 and offers forecasts for the first half of 2026, and its conclusions matter to anyone tracking Greek real estate investment, housing affordability or tourism-linked property.

From our reading, the headline is blunt: tourism and holiday-home segments are strong, offices are cooling, and everyday Greeks are finding ownership ever harder. That combination is changing where capital flows and what projects professional investors favour.

Market snapshot: what the AmCham report found

The AmCham Real Estate & Development Committee, which produced the study, flagged a set of clear trends for the recent six months and the near term.

• The market “performed well” across hotel, residential and second/vacation home sectors in the latter half of 2025.
• Despite strong performance, residential properties are judged overvalued by the committee.
• Office markets are experiencing a slowdown as occupier demand weakens.
• Key drivers: strong international investor interest, solid domestic housing demand, and robust tourism performance.
• Structural challenges include regulatory and legal uncertainty, high construction costs, and housing affordability constraints.

The committee’s chair, Lefteris Sikalidis, summarised the analysis, saying the Greek market is moving “to a more mature and selective development, with clear differentiations, in addition to geographical criteria, by sector and property category.” He added that while tourism and modern housing keep momentum, the issue of affordable housing emerges as the central challenge.

Why prices are rising and supply is tight

There is no single cause. The AmCham report identifies a cluster of factors that together make housing more expensive and less available.

• Demand drivers

  • Continued international investor interest has put upward pressure on prices, especially in coastal and island locations and in Athens’ stronger neighbourhoods.
  • Domestic housing demand remains solid. Households still look to buy as a store of value and for rental income.
  • Tourism is feeding demand for short-term rentals and second homes, which reduces the stock available for long-term residents.

• Supply constraints

  • The report points to an acute shortage of residential real estate. That shortage is structural and tied to long-term demographic shifts and under-supply of new housing compared with recent demand.
  • High construction costs and labour shortages raise the price of bringing new units to market, deterring smaller developers and pushing the necessary scale of projects higher.

• Policy and regulatory friction

  • The committee highlights regulatory and legal uncertainty as an impediment to large-scale projects and institutional capital seeking stable returns.

Put together, these dynamics mean the market has become more selective. Location, asset type and management model now determine performance more than before.

Where investors are placing bets now

The near-term winners are clear in the AmCham report. For the next six months, the committee expects:

• Hotel sector: continued strong performance, driven by tourist flows and demand for professionally managed accommodations.
• Short-term rental spaces: demand is set to remain solid as tourism recovers and international visitors look for rental alternatives to hotels.
• Second and vacation homes: investors and buyers remain active in holiday destinations.

Conversely, retail and logistics (warehouse) spaces are forecast to slow down.

Why this allocation? The logic is straightforward. Tourism profits have stayed resilient, creating predictable cash flows in hotels and short-term rentals. Second homes remain attractive to foreign buyers seeking a blend of lifestyle and investment. Offices and retail are more exposed to domestic economic cycles, changing consumer habits and flexible working patterns.

For institutional investors, Greece currently offers two practical plays:

• Acquire and convert assets into tourism-oriented products or professionally managed holiday accommodations.
• Back large-scale residential developments that can be run as long-term rental platforms, particularly build-to-rent models that require institutional capital and professional management.

The case for institutional capital — and why Greece needs it

The AmCham committee makes a focused policy point: Greece needs to attract institutional international investors capable of delivering large-scale, professionally managed residential developments. We agree, with some caveats.

Why institutional capital matters:

• Scale: institutional investors can finance multi-hundred-unit projects that make construction and operating efficiencies possible.
• Professional management: they can deliver long-term rental supply with consistent quality standards and tenant services.
• Access to capital: institutional entrants broaden the range of financing available beyond smaller local developers.

But the challenges to attracting these investors are real:

• Regulatory and legal uncertainty increases perceived risk and the cost of due diligence.
• High construction costs reduce projected margins and lengthen payback periods.
• Labour shortages make delivery timelines unpredictable.

Institutional investors will demand policy clarity, streamlined permitting, predictable taxation and a ready pipeline of investible projects. The AmCham report highlights EU-funded regeneration schemes as a potential catalyst: they can de-risk urban redevelopment and create investible pools of assets.

Risks that buyers and investors must weigh

The favorable headlines mask several risks that matter in everyday decision-making.

• Overvaluation risk in housing: the committee labels residential properties as overvalued. For owner-occupiers, paying a premium today can be risky if wage growth and mortgage access do not keep pace. For investors, buying at peak pricing compresses returns.

• Construction and delivery risks: high construction costs and labour shortages mean longer build times and higher budgets. That can inflate projected yields and stall projects.

• Regulatory changes: politicians or regulators can alter rules around short-term rentals, taxes and planning. Markets hate uncertainty; sudden policy changes can materially change asset economics.

• Macro and geopolitical shocks: the AmCham report underlines international and geopolitical instability as an ongoing threat to tourism flows, capital movements and currency markets.

• Societal and political pressure on short-term rentals: rising rents and housing scarcity can prompt stricter local measures against tourist rentals, reducing future income for owners who depend on that market.

We advise investors to build stress-testing into acquisition models: assume slower occupancy, higher operating costs and a multi-year horizon to realise value where possible.

Practical advice for different buyers and investors

We break this into categories so readers can quickly see what applies to them.

• Private buyers (homeowners)

  • If you are seeking a primary residence, focus on affordability and long-term living needs rather than short-term price appreciation.
  • Consider locations with employment growth and services rather than purely tourist hotspots; such neighbourhoods tend to be less volatile.

• Buy-to-let investors

  • Short-term rental demand is strong, but regulatory changes can happen. Build portfolios that can pivot between short- and long-term leases.
  • Prioritise professional property managers if you own multiple units or remote assets.

• Institutional investors and funds

  • Look at build-to-rent and large-scale urban regeneration projects, particularly those with access to EU funding or public-private partnership structures.
  • Demand legal and permitting clarity before large commitments. Consider staged investment to manage execution risk.

• Overseas buyers and holiday-home buyers

  • Holiday homes are performing well but are price-sensitive and seasonal.