PwC highlights structural shifts in Greece’s real estate market

Property quality, sustainability and the ability to adapt to the changing needs of households and businesses are emerging as decisive factors shaping the sector’s outlook, according to a new study by PwC Greece.

The evolution of the market is captured by the Real Estate Performance Index (REPI), developed by PwC Greece to systematically monitor trends across five key real estate subsectors: offices, retail and shopping centres, logistics and industrial properties, residential real estate, and hotels.

The index tracks market performance from 2012 onwards, assessing four key factors: demand, supply, prices and investment. It also records how individual subsectors respond to major economic and international developments, including the financial crisis, the pandemic and geopolitical disruptions.

Limited Supply and Rising Expectations

Changes in lifestyles and working patterns, evolving consumer habits, technological advances and increasingly stringent sustainability requirements are reshaping demand for real estate. The focus is shifting towards modern, high-specification buildings with improved energy performance and the capacity to meet the needs of businesses and users.

At the same time, the ageing building stock, limited availability of suitable properties and rising construction, energy and materials costs continue to put upward pressure on prices.

Challenges vary across subsectors. In the residential market, rising housing costs and a limited supply of affordable properties are placing increasing pressure on households and homebuyers. In logistics, fragmented supply, a shortage of suitable land and complex permitting procedures are constraining the development of modern facilities.

Meanwhile, investment activity is strengthening across all subsectors, with Greek real estate investment companies (REICs) playing an increasingly important role. Their market exposure ranges from approximately 5% in residential portfolios and 9% in hotels to 19% in logistics, 30% in retail and shopping centres, and 37% in offices.

However, these shares remain below the levels recorded in more mature European markets, partly because of the shortage of large-scale projects that are sufficiently developed and investment-ready to attract institutional capital.

Trends Across the Five Real Estate Subsectors

Offices: Quality and Energy Efficiency Take Priority
Demand is shifting towards modern, energy-efficient office buildings, widening the gap between high-specification properties and older premises. Athens remains the market’s principal hub, while interest is also expanding to areas outside the traditional central business district, provided they offer good public transport connections.

Limited supply of high-quality office space is keeping vacancy rates at historically low levels in the prime segment. The divergence between modern and older buildings is expected to persist through 2027.

Retail and Shopping Centres: Accessibility and Consumer Experience in Focus

The retail property market is developing along two main directions: smaller, easily accessible grocery stores in urban neighbourhoods and prime-location retail outlets that invest in enhancing the shopping experience.

Shopping centres are evolving into multifunctional destinations, combining retail, dining, entertainment and events. At the same time, e-commerce is complementing physical retail, reinforcing the need for commercial spaces to adapt to changing consumer habits.

Logistics and Industrial Properties: The Strongest-Performing Real Estate Segment

Logistics is delivering the strongest performance across the real estate market, supported by international trade, the expansion of e-commerce and the growing outsourcing of warehousing and distribution services to specialised providers.

However, the development of new facilities faces several obstacles, including fragmented supply, a shortage of suitable land, high construction costs and lengthy permitting procedures.

Automation, more efficient use of warehouse space and the conversion of former industrial facilities into modern logistics centres are shaping the sector’s evolving requirements.

Residential Real Estate: Affordable Housing Takes Centre Stage

The residential market is facing a widening gap between housing costs and household incomes. Homeownership is gradually declining, while demand is increasingly shifting towards smaller homes.

The ageing housing stock and the limited pace of renovations are making it more difficult for supply to adapt to current needs. Ensuring access to affordable housing has therefore become one of the sector’s most significant challenges.

The outlook remains cautiously positive, with the market’s trajectory depending on financing conditions and the extent to which housing supply can be expanded.

Hotels and Short-Term Rentals: A Shift Towards Higher Quality

The hospitality sector is seeing a growing preference for smaller, higher-category establishments, boutique hotels and services focused on experience and luxury.

According to the study, the capacity of five-star hotels has increased by 35%, while four-star hotel capacity has risen by 14%. Lower-category hotels, by contrast, have recorded a decline.

Demand remains strong but is concentrated in five key destinations and during the peak tourist season. Growth in hotel revenues is attributed primarily to higher prices, while smaller, higher-category establishments are delivering better investment returns than larger properties in lower categories.

Short-term rentals continue to complement the traditional hotel offering.