Israeli Investors Eye Portugal, Greece, Cyprus Real Estate Amid Shifting European Markets
Many Israelis have purchased apartments in Greece, Cyprus, and Portugal in recent years, with Israeli-run agencies catering to this demand. While some purchases are for personal use as 'shelter apartments,' they are primarily viewed as real estate transactions. However, these destinations are considered risky or of questionable value.
Portugal leads European housing price increases, with a 17.8% rise in the first quarter of 2026 and an 85% increase since 2020. This surge is driven by high immigration, complex building regulations, and elevated construction costs, leading developers to focus on luxury properties. Despite government initiatives to streamline construction and a slight decrease in immigration, a significant housing deficit persists. In Lisbon, renting a two-bedroom apartment can exceed 110% of the average income, though other areas offer lower rents. The average annual yield on rental properties in Portugal is around 5%, with Lisbon and Porto showing yields of approximately 4% and 5% respectively. While not immediately indicative of a bubble, investors are cautioned to monitor market changes and government policies.
Greece's housing market is experiencing a slowdown in price increases, with annual growth dropping from nearly 16% three years ago to about 6% in early 2026. After a severe economic crisis, national housing prices have recovered, surpassing 2008 peaks. Foreign investors, including Israelis, are shifting towards smaller, more affordable properties closer to urban centers, prioritizing strategic purchases over emotional ones. Athens and Thessaloniki saw modest price increases of around 5% and 6% respectively, with gross rental yields in Athens and Thessaloniki hovering around 4-5%, suggesting the market is not in a bubble. However, potential investors must consider social trends and local sentiment.
Cyprus, a smaller market with about 5,000 quarterly transactions, has seen an 11% price increase in early 2026. Apartments have risen 27% since 2010, while land prices have fallen. The market experienced a boom from 2002-2008, followed by a significant crash and a recovery starting in 2016. Since 2020, apartment prices have increased by 53%. Larnaca and Limassol lead price increases, with foreign buyers dominating nearly 44% of transactions, particularly in Paphos. While the market is not widely considered to be in a bubble, its heavy reliance on foreign buyers makes it vulnerable to external economic shifts and crises.
