By Tasos Dasopoulos
Investments in housing and other constructions for the period 2019 – 2023 reached 44 billion euros, an amount that represents 36% of the total investments, amounting to 119 billion euros, that we had in Greece in the same period.
Cumulatively, investments for the period 2019 – 2023 increased by €17.5 billion, of which approximately €7 billion came from investments in commercial and urban real estate. The recent criticism of the government is that the increase in investment is mainly due to real estate and is investment without a large multiplier effect for employment and GDP.
Coincidentally this criticism is based on investment figures for 2023. Last year overall investment due to the bad fourth quarter had a modest increase of 4%. In contrast, real estate investment had an explosive growth of 40%.
In fact, in absolute terms they reached 45% of direct foreign investments, which, however, decreased significantly to 4.48 billion euros from 7.58 billion euros that had reached 2022. Investments in housing last year reached a value of 1.6 billion euros from the 1.1 billion euros they had reached in 2022. In total, investments in urban and commercial real estate reached 3.8 billion euros last year from 2.2 billion euros in 2022.
Referring to the issue on Wednesday, the Minister of Finance, Kostis Hatzidakis, emphasized that the percentage of investments in real estate in terms of total investments, decreased during the period 2019-2023 to 35% from 42% that was under SYRIZA, while in the same period the corresponding percentage in the European Union, was significantly higher, reaching 49.7%.
The investment gap
The minister admitted that the Greek economy suffers from a significant investment gap, which is limited by the significant increase in foreign direct investment, which has reached a 20-year record in recent years.
In numbers, Greece needs to close a huge investment gap of up to 100 billion euros to be able to stabilize growth in a positive sign. Based on official calculations, to close the investment gap, investments would have to grow steadily at an average annual rate of 8% until 2031, to reach a capital stock of €780 million that we had before the financial crisis.
Also, investments as a percentage of GDP should approach the European average. Indicatively, based on the results of 2023, investments in Greece reached 14.3% of GDP, while the EU average investments reached 21.4% of GDP. Therefore, it makes no sense to target any type of investment towards our country.
The need for productive investment
The real need is to advance the implementation of reforms for the better functioning of the public sector, especially in the field of justice so that the country can again attract productive investments, which in previous years did not exceed 2-3% of the total.
In other words, to become a destination for investments from scratch which will aim at the production of products and services with high added value. Based on a study by the Bank of Greece, factors inhibiting such investments are the small size of Greek businesses and the difficulty in accessing bank loans, polynomiality and the still restrictive business environment.
