Across most industries in Greece, a major attraction for FDI is the country's enviable workforce, which is well educated and inexpensive. As of mid-2018, the average monthly salary in Greece was about €1050, a figure that has decreased almost every year since the recession began, according to research and data company Trading Economics.

Tourism is Greece’s biggest industry. In 2017, the total contribution of the sector to national GDP amounted to 19.7%, or €35bn, according to the World Travel & Tourism Council. This is forecast to rise to 20.7% in 2018, with 32 million estimated to be visiting the country in the year, the highest ever recorded.

This record high is partly a reflection of Greece’s improving economy, as the number of arrivals has accelerated during the past two years of relative stability. However, it should be noted that tourism did not collapse during the crisis, despite the reputational damage inflicted on the country.

Indeed, tourist numbers remained positive as prices in Greece went down, while the political situation in Turkey and the Middle East shifted travel trends, according to Haris Siganos, executive director at hotel group Zeus International. Fundamentally, Greece’s Mediterranean location means long summers for its many islands, which are rich with history and easily accessible from Europe, Africa and the Middle East.

Rethinking tourism

Greece's challenge is now to attract tourists all year round. Costa Navarino, which lies on the southern coast of the mainland, is a role model for the country, as its season lasts from February until November, thanks to the golf and activities it offers. As well as sports, Greece has the option of emphasising its cultural and religious heritage – all of which are non-seasonal attractions.

“Greece also requires more luxurious tourism – that’s a big opportunity with much demand. We need 20 million higher paying tourists, not 30 million backpackers. In the past two years we’ve seen some new five-star hotels being built, such as the Marriott,” says Constantina Kottaridi, assistant economics professor at the University of Piraeus. Indeed, the Hilton Athens recently got a huge makeover, while Greece’s first Four Seasons hotel is also due for completion later in 2018.

“The impact of an internationally branded world-class resort on the image of Greece is priceless. Moreover, the average daily spending of clients at such resorts is, on average, 10 times that of most tourists. So a lot more income is generated with much less stress on the infrastructure and the environment,” says Miltos Kambourides, founder of Dolphin Capital, a private equity firm specialising in high-end real estate.

Panos Papazoglou, managing director of EY in Greece, believes the country needs high-end ecotourism or ‘convalescence islands’ for luxury healthcare. The country’s infrastructure is close to being too weak to absorb this year’s 32 million visitors, especially on the islands, he adds.  

In terms of government policies, it has been two steps forward and one step back, according to Mr Siganos at Zeus International. For example, he is dismayed by the introduction of an ‘overnight stay’ tax in hotels, enforceable since January 2018, alluding to it as counter-productive for the industry. “Foreign investors are aware of the fertile ground in the Greek tourist market, but they do not know what they can design, when and where they can invest and how much time they will need, due to the vast bureaucracy and the constantly changing legal framework,” he adds.

Real estate opportunities

The real estate sector was a key driver of the Greek economy in the pre-crisis era. However, the recession caused a 40% drop in property prices, according to George Kormas, CEO of Piraeus Real Estate, which is owned by one of Greece’s largest banks. “Pre-crisis, the market was dominated by locals – there wasn’t much interest from foreign investors. The past eight years were FDI darkness,” he says – unless the investor was a high-net-worth individual in the luxury resort segment.

However, since 2017 the sector has seen its first improvement with growth at -1%, after averaging about -7% in the preceding years. This can be attributed to the country’s stabilisation since 2016, which has caused a spike of foreign investment, especially from Chinese, Middle Eastern and European buyers into Athens, Thessaloniki and Greece’s major islands, according to Mr Kormas.

About 40% of Greece’s real estate stock is on the market, and assuming the country remains stable, this stock will hold for the next few years, according to Piraeus Real Estate. A good proportion of Greece’s investor-enticing non-performing loan stock consists of hotels that had been bankrupt.

Foreign investors are drawn to Greek real estate yields of 7% to 8%, which are much higher than those in central and northern Europe. “Moreover, Greece is euro-denominated, making it a very attractive country for non-European investors, and there’s an attractive golden visa programme – €250,000 for permanent residency – which has been very popular. Lastly, the Airbnb phenomenon has increased buy-to-rent [opportunities],” says Mr Kormas.  

The Airbnb and more general rental area is largely considered to be underdeveloped in Greece due to the country’s high rate of owner occupancy. Moreover, it is only recently that the country has established itself as a long-weekend destination, thanks to accelerated tourist numbers and cheaper flights over the past two years. Between 2013 and 2018, a 648% increase was recorded in city break visitors, according to Athens’ mayoral office.

Although FDI into real estate is improving, “Greece has not yet seen anything spectacular like in Spain, Portugal or Cyprus, given that the recovery here has had a slower pace. The major deterrent is high taxation and bureaucracy. The latter has improved in recent years but still has some way to go,” says Mr Kambourides.

A logistics centre?

Greece has an enviable geostrategic location in Europe, providing easy access to three continents and a lucrative shipping industry, which is key to the country's economy. “During the crisis, shipping performed well and was not too affected because Greece conducts so much international business,” says Nektarios Demenopoulos, deputy manager of Piraeus Port Authority.

Indeed, some within the country believe that Greece could easily become a global logistics centre, especially for Asian countries looking to penetrate south and central Europe, by acting as a gateway to the EU by sea, rail and air.

Greece’s privatisation process has witnessed significant FDI in the logistics space over the past two years. Indeed, in August 2016, Athens' Piraeus port was partly privatised and bought by shipping company China Cosco. Moreover, Thessaloniki’s port was acquired by German, Russian and French companies, while 14 regional airports were bought by Germany's Fraport, and a major Greek railway operator was sold to Italy’s state railway company.  

“Cosco’s management has been very successful. It is willing to invest heavily and this has improved productivity. In 2017, the port’s capacity rose to an all-time high,” says Mr Demenopoulos. Piraeus is not only Greece’s biggest port, but one of Europe’s busiest for passengers and Europe’s seventh biggest commercial port, according to the Lloyd’s Top 100 Global Ports ranking.

The Greek government has infrastructure projects valued at €21.6bn either in progress or upcoming, according to Enterprise Greece. Of these projects, 54.22% relate to either rail, transit transport or tourism infrastructure, with 10% to 15% of them funded by the private sector. This percentage would rise if public-private partnerships were added to the mix.

Future energy hub

With very few of its own reserves, Greece has been a major importer of oil for decades. Since the 1970s oil crisis, it has also come to rely on indigenous lignite, a cheap fossil fuel that is highly damaging to the environment. On the basis of population, Greece burns more lignite than any other country in the world, according to pollution monitor Airclim.  

“Greece can serve as a great energy hub in terms of electricity and gas – not least, because of its geographic location. There are a number of gas pipes and electricity interconnectors planned to go through Greece,” says Riccardo Lambiris, chief executive of state-run asset management company HRADF. 

For example, the EuroAsia Interconnector is a proposed project between Greece, Cyprus and Israel to connect their power grids via the world's longest submarine power cable. It is a leading Project of Common Interest for the EU.

In addition to this, the Trans Adriatic Pipeline project is under construction to transport natural gas from Azerbaijan’s giant Shah Deniz II field to Europe via Greece and other countries. More than two-thirds of the pipeline has been completed. In 2018, a consortium consisting of US Exxon Mobil, France’s Total and Hellenic Petroleum were awarded a tender to explore oil and gas off Crete.

Regarding renewable energy, Greece was one of the first EU countries to reach the ’20-20-20’ target: obtaining 20% of its energy from renewables before 2020. The country’s potential is immense considering its year-long sun, wind and tidal resources. To this end, it has enjoyed significant investment from the US, China, Japan and Europe.

Italy’s Enel Green Power (EGP) is by far the biggest source of greenfield FDI in Greece’s renewable sector, according to data from greenfield investment monitor fDi Markets. Valentino Rossi, EGP’s head of business development, says: “Enel paused investment in Greece [because of the crisis] but now we’re cautiously optimistic [and] may consider investing again. We’re very happy with how we’ve been treated [in Greece]. However, there’s much to do regarding the simplification of the permitting process.”

Ms Kottaridi contends that the renewable energy sector is still very young in Greece. “There are big opportunities for agriculture: farming land’s organic waste can be turned into energy [and there’s big potential for geothermal greenhouses],” she says.