Israeli Real Estate Investments in Greece, Cyprus, and Portugal Face Risks
An analysis of Israeli real estate investments in Greece, Cyprus, and Portugal reveals surging prices driven by foreign buyers, housing deficits, and shifting market trends.
Many Israelis have purchased apartments in Greece, Cyprus, and Portugal in recent years, prompting real estate agencies catering to this demographic to sprout up. While some purchases were framed as "shelter apartments" for a temporary getaway during difficult times, they must be rigorously evaluated as standard real estate investments. As such, all three destinations carry notable risks or questionable long-term viability.
Tracking European price surges between the first quarter of 2025 and the first quarter of 2026 reveals that top performers do not belong to Europe's economic elite. According to EUROSTAT, Portugal leads with a 17.8% annual price increase, followed by Bulgaria at 14.8%, Slovakia at 14.4%, Croatia at 14.3%, Spain at 12.8%, Lithuania at 11.9%, and Latvia at 10.9%. Finland was the sole European nation where housing prices declined, dropping by 2%.
The Iberian Housing Crisis
A recent Financial Times report on the Iberian Peninsula highlights an acute housing crisis driven by intensive immigration, which rapidly expanded household numbers alongside bureaucratic delays and high construction costs that incentivize luxury development. Between 2021 and 2025, Portugal fell short of its population's housing needs by some 300,000 units, while Spain faced a deficit of 750,000 units.
Investors in overheated markets must remain vigilant, a challenging task for foreign property owners. While Portugal's parliament approved VAT cuts on construction and streamlined licensing procedures, a worker in Lisbon earning an average salary would need to allocate over 110% of their income to rent a two-bedroom apartment in the city center.
Greece: Moderating Price Growth
Is the Greek market in a bubble? While the International Monetary Fund flagged Greek real estate as entering "bubble territory" in 2024, price growth has steadily moderated. After annual surges of nearly 16% three years ago and 11% two years ago, the first quarter of 2026 recorded an annual increase of approximately 6%.
Foreign buyers in Greece are shifting their preferences, moving away from large seaside villas toward smaller, more strategically located apartments close to urban centers, shopping hubs, and everyday amenities. Gross rental yields in Athens and Thessaloniki hover around 4% to 5%, suggesting the market is not currently in a bubble.
Cyprus: Foreign Demand Drives Prices
Cyprus features a much smaller real estate market, with quarterly transactions hovering around 5,000—less than a fifth of Israel's volume. Property prices across the island rose by roughly 11% between the first quarter of 2025 and the first quarter of 2026.
Foreign buyers heavily influence the Cypriot market, accounting for nearly 44% of all real estate transactions. In Paphos, foreign nationals drove three-quarters of all purchases in the first quarter, whereas Nicosia remains the most authentic market, with over 80% of transactions controlled by locals. While widespread bubbles are not currently projected, markets heavily reliant on foreign capital remain vulnerable to external shocks.
