Property: In Greece, Serbia and Cyprus, the trend remains positive despite the change of trend in Europe

Real estate markets in Greece, Cyprus and Serbia are showing remarkable resilience, despite the economic pressures in Europe. With increased residential prices and strong demand for commercial real estate, these countries offer attractive investment opportunities.

The upward trend in property prices that has dominated Europe in recent years appears to be coming to an end, influenced by factors such as inflation and high interest rates. However, there are some countries that are bucking the trend, not only keeping their prices stable, but recording further increases.

Greece, Cyprus and Serbia are three such cases – two countries that have been through bailouts and one non-EU country with unique characteristics. These markets are showing remarkable resilience, attracting both international and domestic investors with attractive opportunities.

This finding comes from Danish International Real Estate Consultants and Valuers, in collaboration with BNP Paribas Real Estate, through extensive research highlighting the positive outlook for the residential and commercial sectors in these markets.

Resilient residential markets
The residential market in Cyprus remains strong, with the main impetus coming from foreign investment. According to the Central Bank of Cyprus, house prices rose by 7.8% in the first quarter of 2024, while apartment prices recorded a 13.9% increase. This growth is closely linked to the country’s Permanent Residence Programme, also known as the “Golden Visa”, which continues to attract foreign buyers. The total value of residential sales in Cyprus reached €2 billion in 2023, and the upward trend is expected to continue in 2024.

In Greece, the residential market is booming, especially in urban areas. House prices in the southern suburbs of Athens reached EUR 3,750 per square metre in the first quarter of 2024, recording the highest price in the country. Similarly, Piraeus recorded a significant annual increase of 28.9%, while overall apartment prices in Greece rose by 10.4% per year, with Athens, Thessaloniki and other regions on the rise.

Serbia also saw a recovery in the housing market, with apartment prices increasing by 5% year-on-year in the first half of 2024, a development attributed to lower inflationary pressures and lower interest rates.

Growing demand for offices
Commercial property markets in Cyprus, Greece and Serbia are recording increased demand, especially for Grade A offices. In Cyprus, demand for modern and energy efficient offices has reached its highest level in the last five years, with rental prices increasing by 8.5% per annum. Cities such as Limassol and Larnaca are leading the market, while Nicosia is showing a steady recovery.

The Greek office market is maintaining its momentum, with increased demand for Grade A properties, boosted by the country’s improved economic situation and new investors seeking properties with ESG (Environment, Society, Governance) criteria. Athens and Thessaloniki are at the centre of developments, attracting large multinationals such as Pfizer, Deloitte and Chubb. Crete, although a smaller market, presents significant investment opportunities, particularly in Chania and Heraklion, with returns ranging between 6% and 6.5%.

In Serbia, demand for commercial real estate is growing, with office yields reaching 8.5% and vacancy rates remaining low in Class A buildings. The country continues to attract foreign investors and businesses, making its real estate market attractive for investment.

Incentives and strategies supporting the market
Cyprus continues to attract foreign investment through the Permanent Residency Programme, also known as the ‘Golden Visa’, which offers property buyers the right of permanent residence in the country. This programme has contributed significantly to the demand for high-value properties and has boosted the housing market, particularly in tourist areas. In addition, tax breaks for investment in energy-efficient buildings and infrastructure improvements play a key role in sustaining investment interest.

Greece, for its part, has managed to recover from the long economic crisis by attracting investors through programmes such as the “Golden Visa” and development laws that encourage investment in property renovation and new construction. The strengthening of sustainability measures and incentives for “green” investments are key factors that differentiate the Greek market, making it particularly attractive for multinational companies seeking ESG properties.

In Serbia, improving macroeconomic conditions, combined with increasing foreign direct investment, are supporting the growth of the real estate sector. The government has prioritised improving infrastructure and providing incentives for commercial real estate development, making the country an attractive destination for international investors. Low interest rates and an improving investment climate are helping to boost demand, while steady political support for investment projects in the real estate sector creates a fertile ground for further growth.

Future prospects and challenges
Despite the positive outlook, the real estate markets in Greece, Cyprus and Serbia face a number of challenges that may affect their future development. The continued rise in interest rates and rising construction costs are potential risks that could limit demand, while inflationary pressures may affect consumers’ purchasing power. Changes in tax policy or regulatory frameworks may also affect the attractiveness of investment.

However, these countries appear to be preparing themselves to face such challenges. Continued investment in infrastructure, market support through tax relief and the offer of incentive programmes are expected to maintain the upward momentum in property markets. In addition, the emphasis on energy efficiency and ESG criteria create prospects for long-term growth, enhancing the resilience of these markets to external economic pressures.

Finally, the real estate markets in Greece, Cyprus and Serbia appear to be maintaining their upward trajectory, offering opportunities to both international and domestic investors. With their adaptability and innovation, these countries continue to stand out on the European real estate investment map, despite any challenges that may arise in the future.