Greece’s second largest city Thessaloniki is located some 520 kilometres north of Athens, in the region of Central Macedonia in the north of the country. At the moment, the city on the Thermaic Gulf is currently often only known among country enthusiasts among those interested in real estate, even though the urban port city is now one of the most up-and-coming real estate markets in Europe. “Thessaloniki is the pulsating heart of Greece, and more and more people are recognising its potential. Around 15 percent of property buyers come from abroad – and this number is on the rise. The more tourists come to Thessaloniki, the more people want to buy real estate there. Many are surprised by the vibrant flair of the city, the wide range of properties and moderate prices,” says Georg Petras, CEO Engel & Völkers Greece.
Property prices in city centre have risen by 20 percent on average
Compared to the cosmopolitan capital Athens, Thessaloniki is better known for its casual flair. The city’s blend of hip, young cultural scene and centuries-old heritage, along with its location directly by the sea, makes Thessaloniki unique and is attracting ever-greater international attention. Approximately 15 percent of property buyers now come from abroad, compared to 4 percent in 2018. The majority of these clients come from the DACH region (37.9 percent), Israel (7.3 percent) and the USA (6.4 percent), which has been investing particularly heavily in Greece since last year – due to the low euro exchange rate and the strength of the US dollar. A quarter of foreign transactions in Greece can be attributed to US citizens alone in 2022. The steadily growing influx of national and international capital, meanwhile, is being fuelled by Thessaloniki’s significance as the most important port and transport hub in the Balkan region. According to Statista, Greece’s gross domestic product is expected to grow steadily by a total of 37.4 billion US dollars (+15.63 percent) over the next five years. Moreover, the government’s recent reforms, such as speedier processing of foreign permit procedures, tax incentives and good golden visa conditions, have significantly increased Greece’s appeal. A trend that is having a positive impact on Thessaloniki’s real estate market: “Thessaloniki is more desirable as an investment location than ever before: the city has been on a noticeably upward trajectory for several years now, and more and more capital is being generated and moved here,” Georg Petras reveals. The average price per square metre in Thessaloniki is currently approx. 2,350 euros, a year-on-year increase of approx. 20 percent (first half of 2022: 1,960 euros).
Neighbourhoods in the centre, surrounding the historic heart of the city, rank among Thessaloniki’s most desirable and expensive residential areas. These areas are especially popular with young buyers, due to the immediate vicinity to the city’s main sights, the vibrant bar and restaurant scene, and eclectic mix of architectural styles. Refurbished apartments spanning 50 to 80 square metres of living space are especially popular here. The increased demand from expats and young buyers for properties in the centre for short-term rental has seen interest grow in properties for sale as an investment with high ROI potential. As a result, the average price per square metre directly in the centre has risen by approx. 21 percent year-on-year (first half of 2023: 2,710 euros per square metre / first half of 2022: 2,230 euros per square metre). Premium properties can command top prices of up to 10,000 euros per square metre. Further away from the centre, the Thermi-Panorama, Kalamaria and Thermaikos districts in the southeast of the city are also sought-after residential locations, popular with families and travellers alike due to their new shopping malls, good schools and proximity to the airport. Average prices per square metre here range between 1,574 and 2,659 euros. Top asking prices for contemporary villas with sea views reach 3.5 million euros.
Chalkidiki – Island flair not far from bustle of the big city
Around 60 minutes by car to the east of Thessaloniki’s centre lies the peninsula of Chalkidiki, which is famous for its three headlands with over 550 kilometres of coastline, Mediterranean forests and golden sandy beaches. Although the region is one of the country’s classic holiday regions, it is still comparatively less frequented as a real estate location. “Chalkidiki boasts picture-postcard idylls and is the absolute Greek hotspot of the moment in 2023. This is because, compared to other popular locations such as Mykonos, the availability of properties is still keeping up with the level of demand,” says Georg Petras, adding, “With easier lending by Greek banks to foreign buyers, we are registering strong international demand, especially for properties worth in excess of 1 million euros.”
The top 3 locations on the peninsula are the picturesque villages of Pefkochori, Hanioti and Nikiti. Top prices per square metre of over 4,000 euros are paid for contemporary apartments. Villas directly by the sea can reach asking prices of up to 5.5 million euros.
Around 30 percent of international clients here come from Northern Europe, Israel and the USA. They are especially interested in villas along the coast or popular spots like Nikiti.
Outlook: Exciting future prospects and lively market dynamics
Engel & Völkers forecasts that the Thessaloniki market will continue to see dynamic growth over the next six months. In particular, the growing purchasing power from abroad will form a vital pillar in the development of the port city on the Aegean Sea. “Thessaloniki is a thriving location for sound capital investment. The potential for value appreciation is still very good compared to many other cities, as is the availability of real estate. The prospering economy promises growth and vitality, with an authentic quality of life that is attracting expats from all over the world. Thessaloniki will play an increasingly prominent role on the international real estate stage in the medium to long term,” Georg Petras concludes.