Real estate boom in Greece and Cyprus

M Opinion 03 OCTOBER 2023 - 10:49 Pavlos Loizou, CEO of Ask Wire

Real estate in Greece and Cyprus

are undergoing significant transformations and both states are showing promising growth and recovery. However, behind these general figures are problems and inequalities that need to be addressed.

The construction boom in Greece

There is a construction boom in Greece, with new skyscrapers popping up in Athens and other major cities. This revival is a testament to the country's economic recovery, with Greece becoming one of Europe's fastest growing economies. Credit rating agencies are raising their assessments of Greece's debt, which is attracting significant foreign investment. Major global companies including Microsoft and Pfizer are investing in the country, indicating strong investor confidence.

The recovery of the real estate sector in Cyprus.

Like Cyprus, after the abolition of the citizenship-for-investment program, there has been a revival in the real estate sector, driven by immigration and foreign investment, especially in luxury properties and tourism projects. Most investments are concentrated in Limassol, and to a lesser extent in Larnaca and Paphos. A marked increase in the number of residential units and office space can be seen. A significant number of technology companies have moved or opened offices on the island, many seeing it as a stable haven amid political instability in Israel and geopolitical uncertainty in Lebanon, Ukraine and Russia.

Problems and Challenges

It's not all smooth sailing, however. Greece and Cyprus are still struggling with high levels of debt, and companies and households are burdened with significant amounts of nonperforming loans. The shadow of the financial crisis still looms large and the pain of austerity measures is fresh in the minds of many. The war in Ukraine has also caused inflation, further burdening the economy, especially low-wage workers. In Cyprus, although foreign investment is supporting the luxury real estate market, there are concerns about sustained growth and the possibility of a real estate bubble, especially if it is driven mainly by external demand.

The challenges for locals

While macroeconomic and real estate growth indicators paint a positive picture, many locals feel disengaged. The rapid growth and influx of foreign investment has inadvertently caused real estate prices to rise, making home ownership unaffordable for the average Greek or Cypriot. This phenomenon is not unique to these countries; cities around the world are facing the fact that locals cannot afford housing due to soaring real estate prices. In Greece, despite economic recovery, many are still suffering the effects of austerity measures. Rising inflation, especially in basic commodities like food and gas, is making daily life difficult for many people. An improved economy does not necessarily translate into better living conditions for all, nor does it mean that the foundations for a better future for future generations have been laid because the education system and local businesses have not adapted to the rapid changes around them.

The need for sustainable growth

While there are undeniable opportunities in these emerging markets, it is important to approach them with a deep understanding. Sustainable growth will require a balance between foreign investment and local needs, as well as ensuring that the benefits of economic recovery are equitably shared. As you move forward, it's important to remember that real estate isn't just buildings and land, it's people. Ensuring inclusive and sustainable growth will be key to long-term success in these dynamic markets. As stakeholders in these markets, how can we ensure that growth benefits everyone?