Foreign Investments in Greece Focus on Services and Real Estate, Productivity Shift Stalls

A significant portion of Foreign Direct Investments (FDI) in Greece is directed towards services and real estate, while the shift to a more productive economic model lags in other sectors that could boost competitiveness. According to the Economic Developments Report by KEPE, despite improvements in Greece’s competitiveness rankings, gaps remain in digital transformation and related workforce skills. Historically, financial, insurance, and similar services dominate FDI inflows, with an increasing share going to real estate. In the last five years (2019-2023), net FDI in services has exceeded €3 billion annually, except for 2020 due to the pandemic. Record highs were set in 2019 at €3.4 billion and again in 2022 at €4.8 billion. Overall, Greece has seen a rising trend in FDI, reaching €5.35 billion in 2021 and surging over €8 billion in 2022. However, investments in digital transformation remain weak. Real estate investments have consistently grown as a percentage of total foreign investments, rising from 7.4% in 2013 to 44.7% in 2023 (based on preliminary data). While progress has been made in digitizing public services, the private sector and infrastructure lag behind European averages. KEPE emphasizes the need for faster internet speeds and enhanced IT training to accelerate Greece’s digital transition. To ensure sustained growth, KEPE recommends reforms in education, improved access to funding for digital transformation, and better legal system efficiency. Attracting high-tech foreign companies remains crucial, not only for direct investment but also for fostering innovation within the Greek economy.