Demand for holiday homes across the Mediterranean has soared during the pandemic, with Greece, Spain and France the most popular destinations. Mykonos, Paros and Santorini have emerged as top destinations. In a broader view of the Mediterranean market, despite the pandemic, property prices have generally remained stable or even increased, and therefore yields are usually lower compared to 2019. The increased demand for luxury properties, especially in expensive destinations, resulted in higher prices and lower yields.
Global luxury home market in 2021, overall exceeded expectations, according to Sotheby's International Realty, while Greece ranks among the countries with the most significant increase in demand in the group's network. A large portion of expensive buyers returns in 2022 to the big cities with the gradual transition from teleworking to the office while maintaining the desire born in the middle of a pandemic for a better quality of life. On the other hand, the trend for a lifestyle toward a more natural and less pretentious environment that intensified during the pandemic will continue. It is precisely in this context that Greece fits ideally. Additional factors favouring Greece, are the successful course of tourism amid COVID-19 with the excellent management of the pandemic and the lower real estate prices in popular destinations throughout Greece compared to other expensive destinations in the Mediterranean, such as the South of France or the Italian South. Then the reasons that now lead to the rise of the country in the international lists are easy to understand.
The real estate market in Greece, amid the pandemic, is recording an unprecedented increase in demand for luxury homes, depicted in the sales of high-end vation homes which peaked in 2021. Americans, from whom requests for a second residence in Greece last year increased by 60% compared to 2020, and the British, French, Swiss and Germans are the nationalities from which the highest demand comes and in 2022, double compared to the record numbers recorded the previous year.
The CPS network of experts identified an additional increase in residential transactions, while at the same time, demand more than doubled and the interest remained strong for 2022. In particular, the area of Athens attracts most of this interest in the sought-after southern suburbs close to the seaside. As a result the southern suburbs of Athens is the most expensive area of the country, as seen by research done by Cerved Property Services Research & Analytics Division. Transactions carried out by major agency companies in these same areas last year, were reported to be made by foreign buyers in percentages around 35%-40%, while for the rest of Attica, around 90% of the completed transaction are made by domestic participants. Even with the current high prices of the properties of the Athenian Riviera, they remain cheap for the foreign clientele compared to the values of more than 15,000 euros per sq.m. in other seaside resorts of Southern Europe. In the Cyclades and the Dodecanese many interested buyers from abroad are interested in buying for investment purposes, on the one hand for use by themselves and on the other hand for renting when the property is not in use, due to the high yields that in Mykonos can even exceed 10%.
There is also great interest in Lamda Development's investment in Elliniko. The company has proceeded with preliminary sales agreements for all of Riviera Tower ( the tallest building in Greece and one of the tallest in the Mediterranean) 200 apartments, except the penthouses on the last three floors. They will likely sell at record prices, possibly for the entire Mediterranean. Indicative of the price levels of the new luxury residences are the pre-agreed transactions concerning the seaside villas to the north and west of the area of the former airport in Elliniko. Given that the 27 prime location villas already old will bring the company about 200 million, it follows that their average sale price was 7.4 million. Lamda also expects revenues of 250 million from the 100 apartments – maisonettes located directly behind the 27 beach villas. About 2.5 million euros each. Most buyers of these properties are Greeks living in the country or abroad. The increased demand seen, if it continues, will lead Lamda Development to start building an additional 1,000 homes ahead of schedule.
Although Greece has the longest coastline in the Mediterranean and one of the longest in the world, there are a minimal number of truly beachfront homes available for purchase, and their prices are comparatively still very competitive. While prices for luxury beachfront homes in Italy, the south of France and the Balearics range from €25,000 per square meter to over €60,000, in Greece, they are still between €12,000 and €15,000.
The Mediterranean attracts northern European investments. One of the dominant factors is the demand for apartments as an investment during the pandemic because they find it more profitable to buy an apartment in Southern Europe than in the cities where they live.
According to the ProfitLevel research examining Mediterranean cities-tourist destinations, purchasing an apartment in Athens ensures a high return. Specifically, the shortest payback period in years for a 50 m2 residence is found in Valencia. It is 17.06 years, followed by Athens at 17.66 years, Marseille at 21.78 years, Barcelona at 22.51 years, Heraklion at 23.37 years, Nice at 29.7 years and Dubrovnik at 42.38 years.
According to a relevant survey, for the sixth year running, Mykonos remains the top-performing destination among 30 Mediterranean destinations, with an average gross return of 7.4%. However, it reduced compared to 2019 (8.2%) as the increased demand has led to a further increase in sales prices while rental prices rose at a lower rate. The first 15 places with the highest yields in the Mediterranean include 12 Greek tourist areas Mykonos, Paros, Santorini, Skiathos, Porto Heli, Halkidiki, Kefalonia, Chania, Elounda, Zakynthos, Rhodes and Corfu.
The evolution of the average asking price in the country's most popular tourist destinations has shaped new dynamics compared to pre-pandemic levels. According to Cerved Property Services R&A division, the highest asking prices are in the Cyclades, followed by Halkidiki, the Ionian Islands, Crete and the Peloponnese. Mykonos is the most expensive Greek resort at €5,700/sqm in the first four months of 2022, a fact due to a large number of luxury villas available for sale (29% of all properties sold compared to 8% in Santorini), followed by Santorini €3,300 /sqm, Paros 3,200 €/sqm, Naxos 2,700 €/sqm, Halkidiki and Chania 1,800 €/sqm, Corfu, Zakynthos and Lasithi 1,700 €/sqm, Rhodes, Nafplio, Rethymno and Kalamata 1,500€/sqm and Heraklion 1,350€/sqm.
But the increase in demand and prices has also increased the future stock of luxury holiday homes, with institutional players now engaged in construction. Residences that accompany hotel facilities are a rising trend in the Greek market.
TEMES has already implemented the holiday homes model in Costa Navarino – with the villas in the new Navarino Dunes already sold out – and is also preparing to develop homes in the redeveloped Hilton Athens, which will open its doors as Conrad in 2024. The investment of 130 million will include, among other things, the creation of 50 luxury residences, which will operate under Hilton's Conrad Residences and Waldorf Astoria Residences brands.
The One & Only Aesthesis tourist resort developed by Grivalia Hospitality in Glyfada foresees the development of independent residences, energy-autonomous, with private outdoor space and parking. The homes have yet to go on the market officially – that will happen when the hotel opens in 2023.
The Saronida Olympos Golf Project is one of the most ambitious residential developments currently maturing in Attica. It is a project to develop a hotel complex, holiday homes and golf on an area of 6,000 acres in Saronida with a budget of 840 million euros.
Dolphin Capital has included residences in the Amanzoe development in Ermionida and the under-construction One & Only in Kea. Mirum's investment in Elounda and NCH Capital's resort in Kassiopi, Corfu, includes villas for sale too.
The Aldemar hotel group will start a project of around 1,000-holiday homes in Ilia Peloponnese. It is a brownfield project, i.e. land already licensed and used by the group, which will invest 270 million euros.
The economic situation resulting from the war in Ukraine and inflationary pressures do not seem to adversely affect the demand for holiday homes in Greece. Northern European retirees, the country's good performance in the tourism sector and the lower prices of other Mediterranean countries offer significant support to the Greek holiday home market. Most interested parties are looking for property opportunities to create hotel units, obtain the Golden Visa and exploit them through short-term leases.
According to the CPS network of exprets, the nationalities of those looking for holiday homes in Greece vary substantially from region to region. Slightly more than half of the transactions are carried out by local buyers and the rest by foreigners. However, on areas which traditionally attract foreign tourism like Naxos, Crete or Corfu, the great majority of buyers are foreign. In Northern Greece, most of the foreign buyers are either Germans or from the Balkans. Correspondingly, in Southern Greece, the buyer’s origins are more diverse.
The Greek holiday home market remains one of the most dynamic sectors of domestic real estate that gathers excellent growth prospects, with the increased demand predicted to continue and in several areas to strengthen due to the many infrastructure projects underway.
Research Team:
Dr. Dimitris Papastamos
Division Head
Maria Filippakopoulou
Sr. Real Estate Analyst
Ilias Liapikos
Real Estate Data Scientist
Stavros Kotsis
Real Estate Analyst