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Greece: Boom on the South Aegean Islands

Greece is one of the most popular holiday destinations in the world, and the multitude of islands in the South Aegean Sea find themselves in especially high demand. The picturesque region is one of the 13 administrative regions of Greece. It encompasses two groups of islands – the Cyclades and the Dodecanese. Azure blue waters, up to 3,000 hours of sunshine a year, stunning towns and coastal scenery, and a wide range of different real estate options make this region, with more than 170 islands in total, a highly appealing location for first and second homes. A number of different initiatives to improve the regional infrastructure, including new direct flight links and modernised marinas, boosted buyer interest in 2021, particularly among international clients – who now account for more than 80 percent of the Engel & Völkers client base. This strong investment interest is reflected in the rise in prices across the region, as Georg Petras, CEO Engel & Völkers Greece, confirms: “We’ve never seen such keen enthusiasm for the South Aegean before. In 2021, prices rose by around 10 percent throughout the region. Islands that weren’t on the tourist radar in the past have been swept up with this trend – which is set to gain momentum even further.”

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- Greece: Boom on the South Aegean Islands

High demand for newcomer destinations 

The Cyclades consist of 39 islands in a circular formation, 24 of which are inhabited. Besides boasting a unique natural environment, each of these islands also impresses with a rich cultural heritage and a very diverse range of real estate. For top properties in very good locations, the well-known Cycladic islands of Mykonos and Santorini recorded the highest prices in the South Aegean in 2021. Whitewashed villas in a traditional style with ultra-modern fittings, private pools and panoramic terraces were particularly sought after by buyer groups based in Europe. Properties fitting this description on Mykonos sold for 5.5 million euros last year. Luxury properties in very good locations reached sales prices of up to 10 million euros. For apartments in central locations such as Mykonos Town, up to 17,500 euros per square metre were paid. “Mykonos has been a mecca for the international jetset since the 1960s and is a magnet for tourists all year around. The ROI potential on the island is therefore particularly good; prime residences can bring in returns of up to 10 percent with good occupancy rates,” Georg Petras reveals. On the volcanic island of Santorini, world-famous for its black lava beaches and blue and white cottages, prices for such luxury properties with far-reaching sea views were as much as 3 million euros. Premium houses with their own terrace overlooking the blue domed roofs typical for the island commanded top prices of 9,000 euros per square metre. 

In addition to these highly frequented destinations, less touristy islands enjoyed increasing popularity with property seekers in 2021. A trend that Georg Petras observed particularly starkly on the small Cycladic island of Paros: “The pandemic has seen properties in secluded locations become particularly desirable. Tucked away islands located at a distance from the cosmopolitan hotspots offer this seclusion and tranquility. This has seen Paros become the new shooting star in the region. Buyers here can still come across standalone estates with ample potential for development, in addition to the convenient option of island-hopping and Mykonos with its shopping amenities just a 45-minute ferry ride away.” Located in the heart of the Cyclades, Paros is one of the most authentic islands in the entire region: quaint and untouched fishing villages, quiet streets, fine sandy beaches and a genuine Greek way of life set the atmosphere on the island apart. Contemporary villas here with private pools fetched top prices last year of approx. 2.5 million euros. The market segment for holiday villas commanded prices of up to 8,000 euros per square metre. 

To the southeast of the Aegean Sea, the Dodecanese Islands are strung together like a pearl necklace. This southernmost region of Greece, consisting of more than 160 islands, is a popular second home market, especially during the European winter. Rhodes is the most well-known Dodecanese island in terms of tourism and the largest in the South Aegean when it comes to surface area. In 2021, prices for villas in premium locations on the island reached up to 7,000 euros per square metre, while beachfront villas sold for up to 2 million euros. One up-and-coming holiday spot in the Dodecanese and an insider tip for property buyers is Symi, located 24 kilometres north of Rhodes. It is attracting interest thanks to its colourful Neo-Classical houses, its largely untouched nature and low-key tourism. Prices for holiday homes here reached up to 800,000 euros, while holiday apartments fetched up to 4,500 euros per square metre.

Moderately priced luxury real estate market attracts international clientele 

The boom in tourism and the high demand for holiday homes in 2021 has meant that prices in the region have soared by up to 15 percent in the luxury segment for properties worth in excess of 1 million euros, and by up to 8 percent in the segment above 2.5 million euros. Despite this, the premium segment in the South Aegean remains in a very moderate price bracket compared to other European holiday destinations. The low land transfer tax rate of around 3 percent and the ancillary costs involved in a property purchase make it even more attractive for international investors. Buyers from Central Europe in particular are acquiring real estate on the islands, be it as an investment property or for their own private use. The majority of these buyers come from the DACH region, followed by Belgium, France and the UK. Besides older generations of buyers, young Europeans including millennials are also being drawn by the great diversity of the South Aegean. Thanks to new remote working models, they are spending longer and longer periods of time on the islands, in turn transforming the market into a vibrant year-round place of residency. The pandemic and the increased desire to live close to nature has led to a shift in the kind of holiday property being chosen. “Many prospective buyers are looking for a modern picture-postcard idyll: refurbished villas in a traditional style and with bright, minimalist architecture, ideally in a secluded setting just by the sea or perched up on the cliffs. Close proximity to nature is currently the essence of what luxury is all about,” says Mr. Petras.

Outlook: Booming tourism sector gives added boost to real estate market

Engel & Völkers Greece anticipates that demand will increase and that property prices in the South Aegean will rise steadily over the course of the 2022 summer season and the rest of the year. “Greece is a haven of peace and security for many, more so than ever in the current global political climate. The huge significance of the South Aegean for the Greek tourism industry goes hand in hand with the real estate market. Investors currently have access to smart investment opportunities, especially on the smaller Greek islands,” Georg Petras concludes.

The Engel & Völkers Market Report for the South Aegean 2021/22 can be found in full here.




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