After a period of growth underpinned by economic recovery, Greece’s real estate market is entering a more mature phase, in which quality and sustainability are taking centre stage, according to a new study by PwC.
Its future path will depend on the sector’s ability to respond to the changing needs of households and businesses and address structural weaknesses, such as limited access to affordable housing and the fragmented nature of the logistics property sector.
Changes in lifestyles and working patterns, consumer habits and travel, combined with technological progress and rising sustainability requirements, are reshaping demand and increasing interest in modern, high-specification properties.
At the same time, limited supply, the ageing building stock and higher construction, energy and materials costs continue to put upward pressure on prices.
Real Estate Performance Index (REPI)
To capture these developments, PwC has created the Real Estate Performance Index (REPI), which tracks the market’s performance since 2012 and its response to the financial crisis, the pandemic and geopolitical turmoil.
The index covers five subsectors: offices; retail shops and shopping centres; logistics and industrial property; residential property; and hotels.
This long-term approach, combined with an assessment of the factors shaping each subsector’s performance, makes it easier to track market cycles and identify emerging trends.
Investment activity is strengthening across all sectors, with Real Estate Investment Companies (REICs) gaining momentum.
Their exposure ranges from about 5% of portfolios in residential property and 9% in hotels to 19% in logistics, 30% in retail shops and shopping centres, and 37% in offices.
However, it remains lower than in more mature European markets, partly because of a shortage of large, investment-ready projects.
Subsectors are moving at different speeds
Offices: Quality outweighs location
Demand is shifting towards modern, energy-efficient buildings, widening the gap between higher- and lower-specification properties.
Athens remains the market’s main hub, with interest spreading to areas outside the traditional business district that have dense public transport networks.
Limited supply of quality space has kept vacancy rates for high-specification offices at historic lows, while market divergence is expected to continue through 2027.
Retail shops and shopping centres: Convenience and experience
The retail market is developing along two lines: smaller, easily accessible grocery shops in urban neighbourhoods, and stores in prime locations that place the emphasis on the shopping experience.
Meanwhile, shopping centres are evolving into multi-purpose destinations for shopping, dining, entertainment and events, while e-commerce complements physical stores.
Logistics and industrial property: The growth engine
Logistics is the best-performing subsector in the property market, with demand supported by international trade, e-commerce and the growing outsourcing of warehousing and distribution services to specialist providers.
However, fragmented supply, a shortage of suitable land, higher construction costs and permitting difficulties are slowing the development of modern facilities.
Automation, more efficient use of warehouse space and the conversion of old industrial sites into modern logistics facilities are setting the sector’s new standards.
Residential property: Affordable housing in focus
The housing market is being reshaped as housing costs rise faster than incomes, home ownership gradually declines and demand shifts towards smaller homes.
With the building stock remaining ageing and renovation activity limited, the main challenge is to adapt supply to new needs while ensuring access to affordable housing.
The market outlook remains cautiously positive, with performance dependent on financing conditions and an increase in housing supply.
Hospitality and short-term rentals: A shift towards quality and experience
The hospitality sector is shifting towards smaller, higher-grade properties, boutique hotels and luxury experiences.
Capacity at five-star hotels has increased by 35% and at four-star hotels by 14%, while lower categories are declining.
Demand remains strong, but is concentrated in five main destinations and the peak season.
The increase in hotel revenues is driven mainly by higher prices, while smaller, higher-grade properties deliver better investment returns than larger, lower-grade ones.
Short-term rentals complement the hotel offering.
As Freddy Giatrakou, Partner and Real Estate Platform Leader at PwC Greece, said:
“The Greek property market is entering a new phase of maturity, in which quality, sustainability and adapting to new needs are now determining value.
In developing the index presented in our study (Real Estate Performance Index), we sought to create a tool to measure and assess the factors that shape the market’s dynamics”.