Foreign Investment in Greece: A Shift in Attraction and Infrastructure Challenges

Strategic Insights -

Greece's foreign investment landscape underwent significant transformations in 2013 and 2014, with net foreign direct investment (FDI) inflows witnessing substantial growth. The country's entry into the European Union in 2001 made it a more attractive destination for multinational companies, but since the EU's 2004 enlargement, FDI inflows have shifted towards new member states in central and eastern Europe. Convoluted legislation, obstructive bureaucrats, and local businessmen leveraging political connections to block foreign investments have posed significant challenges. Despite these hurdles, the Greek government has launched initiatives to improve the investment climate, including the establishment of a secretariat for co-ordinating government policy, an anti-corruption co-ordinator, and an investor ombudsman service.

Key Takeaways:

  • Greece recorded a net FDI inflow of EUR2.4bn in 2013, up from EUR827m in 2012, indicating a significant increase in foreign investment.
  • The National Bank of Greece sold its Pangaea real estate investment trust (REIT) to Invel Real Estate Partners (Netherlands) in November 2013 for EUR616m, marking a notable large investment.
  • Dufry International (Switzerland) purchased a 49% stake in Hellenic Duty Free for EUR328m in December 2013, highlighting the growth in foreign investment in 2013.
  • Net FDI in the first nine months of 2014 amounted to EUR1.2bn, well above the EUR400m posted in the same period of 2013, demonstrating the acceleration of investment in 2014.
  • Key transactions in 2014 included the EUR653m share capital increase in Eurobank by Capital Group Companies (US) in May and the EUR146m participation in Eurobank Properties by Fairfax Financial Holding (Canada) in February.
  • Greece's FDI inflows have slowed down since the 2004 EU enlargement, shifting towards new member states in central and eastern Europe.
  • Convoluted legislation, obstructive bureaucrats, and local businessmen leveraging political connections to block foreign investments pose significant challenges.
  • The Greek government has launched initiatives to improve the investment climate, including the establishment of a secretariat for co-ordinating government policy and an investor ombudsman service.

Statistics:

  • EUR2.4bn: Net foreign direct investment (FDI) inflows in Greece in 2013.
  • EUR827m: Net FDI inflows in Greece in 2012.
  • EUR616m: Sale of National Bank of Greece's Pangaea REIT to Invel Real Estate Partners in November 2013.
  • EUR328m: Dufry International's purchase of a 49% stake in Hellenic Duty Free in December 2013.
  • EUR1.2bn: Net FDI in the first nine months of 2014.
  • EUR653m: Share capital increase in Eurobank by Capital Group Companies in May 2014.
  • EUR146m: Participation in Eurobank Properties by Fairfax Financial Holding in February 2014.
  • 49: Number of cases received by the investor ombudsman service in 2013.
  • 44: Number of resolved cases in 2013 (32 in favour of the investor).
  • 5: Number of pending cases in 2013.

Sources:

  • A report released in May 2014
  • Law 4109/2013
  • Law 4152/2013
  • Website references for National Bank of Greece, Invel Real Estate Partners, Dufry International, Hellenic Duty Free, Eurobank, Capital Group Companies, Fairfax Financial Holding.