Real estate investment and tourism growth herald the return of Greece to portfolios
Opinion 4 minute read

Real estate investment and tourism growth herald the return of Greece to portfolios

31 May 2018

‘Greece’ has been a byword for economic crisis and recession in recent years, but those times could now be behind us.

It wasn't so long ago that the words 'Greek economic growth' were considered a misnomer. After years of debt, the country was on the edge of 'Grexit', the economy had collapsed, and the only saving grace was the knowledge that summer was coming and the tourist season was nigh.

That tourism industry, in fact, kept Greece afloat. Foreigners flocked to cheaper holidays in 2015 and injected the economy with their hard-earned cash. Now, three years on, Greece is back on the pathway to growth.

Bank of Greece data shows net Foreign Direct Investment inflows during 2017 reached €3,590.5m, compared to €2,774.2m during 2016 - that's an increase of 29.4%, not bad for an economy on the edge.

And as Greece turns a corner on its decade-long debt crisis, global investors can see the potential for significant returns in those areas that kept the country going, namely real estate and tourism. The fledgling energy industry, too, is proving a lure, with major energy companies looking at the hydrocarbon potential in the waters around southern Crete and the Grevena region.

Recapitalisation brings Greece back from the brink

When banks were recapitalised during that Grexit fight a few years back, asset managers saw the potential to start Greek funds. We now find 30 hedge funds focused on or based in Greece, while US investors appear to take on more Greek risk in other sectors. Case in point: the recent deal for a 75% stake in Ethniki insurance by a consortium headed by Calamos Investments. But the provenance of those funds and investment highlight one of the issues we still see in Greece - the risk appetite is coming from well-established countries, especially the EU, North America and China. Greece is yet to attract the confidence of emerging markets and players.

The focus and big hope, then, remains on tourism. The industry is undergoing significant strategic improvements, focusing - say the people behind Santorini's tourism - on "expanding the traditional tourist period and attracting of higher-value tourist segments (such as high net worth and more affluent tourists)." The goal is to increase spending and open new markets.

While the traditional Greek holiday involves plenty of sun and beach, the country's tourism industry wants to transform that into higher-value, more focused products. Expect to see more thematic holidays - such as wellness, romance or luxury - more tourism focused on nautical, medical tourism, or cultural and religious means. More attention will also surround the city break possibilities of Athens and Thessaloniki and the all-important MICE (meetings and incentives) category. A conference in Mykonos might well bring in more attendees than the usual big city hosts.

What do the real estate opportunities look like?

The government, National Tourism Organisation, regional authorities and business associations are all getting behind "upgrading" the Greek tourist product. The attraction is undeniable: from sunny islands to snowy peaks and green forests, there is a variety of destinations year-round. The key will be to make this sound premium to a global audience. If they can succeed in this, the infrastructure is ready to support - more than 700,000 hotel beds, more than 500 conference facilities, more than 6,000 yacht berths and direct air links from major European airports into more than 20 destinations.

If you're looking to capitalise on the investment opportunities in Greek tourism, there are three key areas to consider, says Enterprise Greece:

  • the privatisation of several key tourist and transport state assets (marinas, regional airports, tourist properties) by the Hellenic Republic Asset Development Fund
  • development of premium tourist resorts and properties aided by the funding and tax incentives given for such new developments
  • development of specialised tourist products and facilities focused around specific themes (gastronomy, culture, wellness), categories (medical tourism, MICE), markets (Russia, Israel, Asia) or segments (elderly, couples).

For more details or support with your business or investments in Greece, get in touch with myself and our team in Athens.

Learn more about TMF Greece.

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Written by

Yannis Goussiakis

General Manager

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