At the top of the preferences of the international investment community is Greece, with 43% of investors considering our country as the most attractive European destination.
The data from two new international surveys by Questex reflect a significant change regarding Greece’s profile as an investment destination, given that our country managed to climb from fifth place, where it was in the previous corresponding survey, to first.
According to the findings, Greece gathers 43% of investors’ preferences, followed by Italy with a 29% share, and then Spain and France, which each gather 14%.
The survey reflects the broader shift of international investment capital toward Europe. 82% of investors state that the European market is a priority regarding the implementation of their investment plans, while 63% assess Europe as a significant investment opportunity.
Indeed, geopolitical uncertainty acts as a catalyst for the redirection of capital toward markets considered more stable and predictable. Within this framework, Greece strengthens its position, as it combines a strong tourism product, international demand, and the potential to create added value.
Besides, the country’s geographical position at the crossroads of Europe, the Middle East, and Asia is a significant advantage, as it makes it an important gateway to the European market.
None of the survey participants stated that they are reducing or freezing their investment activity due to the uncertain geopolitical environment. On the contrary, 57% state that they are shifting their investments toward alternative European or more resilient markets, with Mediterranean destinations—and especially Greece—being the main recipients of this redirection of capital.
The major change observed in investment strategy concerns the type of properties sought by capital. According to Alexi Khajavi, President Hospitality & Operational Real Estate, Questex, investors are no longer turning so much to projects that require development from a zero base (greenfield projects), but to mature and operating assets, which can be upgraded and create additional value.
“The development of new hotel units continues to be considered a higher-risk investment. There are many factors that can affect the completion of a project,” he said characteristically.
The previous model concerned the purchase of a lower-category hotel, the investment of capital for renovation, and its conversion into a higher-category unit. Today, interest is shifting more toward existing quality units, even five-star hotels that carry some international brand.
More specifically, according to Hospitality Investor’s survey, 57% of participants are seeking five-star hotel assets under professional management, while 29% are considering three-star resorts with the potential to create added value through upgrading. On the other hand, urban hotel assets are no longer a priority for investors.
The issue for the Greek market is that it has a limited number of such opportunities. Demand from international capital is increasing, but the supply of mature investment products remains small.
“Investors see the significant growth of tourism, the increase in arrivals, the strengthening of tourism spending and the potential to create new added values”, stressed the head of Questex.
As he said, Greece has evolved into one of the most interesting tourist destinations, attracting travel flows from Europe, the US, and Asia.
In contrast, moreover, to mature markets such as the US, where a large part of the hotel stock is already developed, in Greece there is still room to upgrade existing units and create additional value.
The broader picture of the market, however, confirms this shift of investors toward upper-upscale and luxury units, with strong brands, professional operation, and the ability to maintain high prices.
At the destination level, investment interest remains concentrated in Athens and in the island country, spearheaded by popular tourist destinations. The Greek capital remains the No1 choice for investors, with Mykonos, Santorini, Paros, and Naxos attracting strong demand.
Positive indications are also being recorded for Kalamata, due to infrastructure development and the upgrading of the city’s airport, but also for Crete, where increased connectivity is creating new possibilities in combination with the construction of the new airport in Heraklion.
By contrast, investment interest remains limited for northern Greece, Thessaloniki, and mountain destinations.
The challenges
Despite the positive investment climate, the Greek market continues to face significant challenges.
According to Alexi Khajavi, one of the most important issues for the Greek market is the limited presence of international operators. “There is not yet in Greece the same development of the so-called ‘white label operators,’ that is, companies that undertake the operation of hotel units without owning them and without necessarily carrying their own brand. There are certain cases, but not to the extent we encounter in other European markets or in the United States,” he said characteristically.
He also stressed that some investors are now accelerating their exit from their projects before the scheduled timetable due to the “environment of increased challenges taking shape in the market.”
As Alexi Khajavi said, seasonality remains one of the main issues, as a hotel that operates only for six months a year presents a different investment picture compared with an asset operating year-round. The extension of the tourist season is considered critical for increasing returns and the value of investments.
“An investor cannot place large capital in an asset that will operate only 6 months a year,” he stressed characteristically, adding that the lack of workforce, increased wage costs, and the energy burden are key factors that international investment capital takes into account.
It is worth noting that the findings of the surveys reflect the trends expected to be at the center of discussions at the R&R Forum next November, as investment capital continues to focus on the European resort and leisure hotel sector. The R&R Forum is organized by Questex, with Enterprise Greece participating as Country Patron.