A common argument against rental housing investment in Athens is that yields are unattractive. Investors typically cite comparisons between gross residential rental yields and those of short-term rentals, offices or government bonds — and on that basis, residential yields consistently compare unfavourably, at least on a gross basis. Combined with well-documented structural market deficiencies — fragmented individual ownership, chronic undersupply and limited institutional participation — this has produced chronic underinvestment and an insufficient, overpriced and suboptimal residential stock.
This analysis sets out to establish an appropriate prime rental housing yield range for Athens and to highlight the qualitative characteristics of the sector that investors might be underweighting when assessing residential investments.
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Europe’s Living Sectors attracted €56 billion of investment in 2025 according to CBRE — yet Greece remains largely absent from this wave. This newsletter argues that institutional rental housing in Athens is a segment worth exploring, both as an investment opportunity and as a response to a growing urban housing imbalance.
The Living Sectors in Europe — encompassing rental housing, student housing, senior living, healthcare, affordable housing and co-living — have grown significantly over the past decade, evolving from an alternative real estate category into a mainstream one and displacing traditionally dominant sectors such as logistics, hotels and offices. Within this, rental housing (often referred to as Multifamily or Built-To-Rent) accounts for the largest share of Living Sector investment volume in Europe.
Why Greece lacks an institutional rental housing market
Greece does not have a distinct and institutionally investable rental housing market. More than two thirds of the residential stock is owned by individuals — with a 70% owner-occupation rate according to Hypostat — and the majority of homes are located in apartment blocks where units are either individually owner-occupied, rented on a long-term or short-term basis, or remain closed and outside the available stock. Although this high home-ownership culture may sound appealing, it creates significant market inefficiencies.
Most importantly, it results in chronic underinvestment in the sector, producing insufficient, lower-quality and overpriced stock. Individual owners often lack the capacity, expertise or incentive to invest adequately in their properties. Buildings are similarly under-maintained, as improvements depend on an inefficient and fragmented ownership and approval structure. For renters — who account for approximately 30% of the market and rising — this fragmented ownership base creates an expensive, unprofessional and difficult-to-access supply of housing: a market characterised by uncertainty around quality, limited owner track-record or reputation, and no standardisation in service levels.
This supply situation has met rising rental demand driven by a structural shift that is visible across Europe and particularly acute in Athens. The long-run trend toward city living, shrinking household sizes and delayed or foregone homeownership has durably enlarged the renter cohort — and in Athens, several converging forces have amplified this further: the erosion of homeownership affordability, which has pushed a growing segment of would-be buyers — particularly younger households — into the rental market for longer; the growth in the number of households driven by shrinking household size (approximately 200,000 new households between 2011 and 2021 according to ELSTAT); the displacement of long-term renters as short-term lets absorb part of the conventional rental stock; strong foreign direct investment into Greek real estate; and the broader inflow of foreign residents attracted by residency incentives and a favourable tax regime for new arrivals. The combination of structurally constrained supply and rising demand is the primary driver of the overpriced housing market seen today.
In institutionally-owned stock, renters benefit from a more better options through scalable and often amentized projects and a transparent and researchable choice, while landlords are held accountable through reputational consequences. Institutional ownership also brings meaningful ancillary benefits: the capacity to meet ESG requirements, apply professional housing standards and address social impact considerations — all of which are becoming increasingly important to both investors and tenants.
The investment landscape: what’s missing
Currently, institutional investment in the Greek rental housing market remains very limited. There has been an initial wave of larger housing investments in recent years, but these are concentrated in specific segments: serviced apartments for medium-term rentals, short-term lets, Golden Visa-driven sales and student housing. With the exception of student housing, which addresses a clear economic and social gap in the market, most of these segments do not directly serve long-term residents of the city. Residential rental housing remains widely neglected.
The common — and often justifiable — reason for this is that these alternative uses of real estate appear to offer better investment prospects in terms of income yields and total returns. The key question, however, is whether that conclusion still holds on a risk-adjusted and net basis, once all costs — direct and indirect — have been accounted for, particularly given the apparent rise in supply observed across many of these segments.
It is true that all the segments mentioned above offer higher headline income yields than rental housing, and for the right investor — with the appropriate operational platform, risk appetite and return targets — each can represent a compelling opportunity in its own right. Short- to medium-term lets offer higher income potential for those with the infrastructure to manage operational intensity and the tolerance for shorter income visibility. Golden Visa-driven sales have offered attractive returns to those able to navigate the regulatory environment and move quickly around qualifying thresholds. Student housing, with its clear demand fundamentals and social purpose, has proven itself as a strong institutional asset class in its own right.
The key question for each investor is not which segment looks best on a gross yield basis, but which offers the most appropriate return profile once operational costs, regulatory exposure, income volatility and recession sensitivity are properly accounted for (operational intensity and risk). Different investors will reach different conclusions depending on their platform, their capital structure and their return requirements. The argument made here is simply that rental housing — often dismissed early in that comparison — deserves a more rigorous look before being set aside.
Against this backdrop, the European experience of institutional rental housing offers a compelling model for Athens to follow. Across Northern and Western Europe, the institutionalisation of residential rental has been a self-reinforcing process: as institutional capital entered, market liquidity improved, performance benchmarks were established, and the asset class became progressively easier to underwrite — attracting further capital in turn. Athens is at the very beginning of this cycle. That early-stage positioning is precisely what creates the opportunity: those who establish a track record and a portfolio ahead of the broader market are likely to benefit disproportionately as the institutionalisation process unfolds.
Risk-adjustment is the key to the investment case
One of the major social issues of our time in Europe is housing availability and affordability in cities. Housebuilders do not deliver enough supply, and in most capital cities demand consistently exceeds available stock. This structural imbalance has driven a significant wave of rental housing investment across Europe over the past two decades, with new-build developments, large-scale refurbishments and changes of use to residential becoming an increasingly important part of the European real estate investment landscape. These projects tend to be located close to transport links or in city centres, sometimes with amenities and branding, sometimes in simpler formats. In most cases they target permanent urban residents — young professionals, singles and couples — prior to the transition into owner-occupation, a step that is becoming increasingly difficult and increasingly delayed.
From a return perspective, rental housing sits at the lower-return, lower-risk end of the spectrum, but it plays a growing role in modern real estate investment portfolios. Across European capital cities, prime rental housing yields generally range between 3.5% and 5.5% based on market intelligence from leading real estate consultants, and in most markets they are priced at a discount of 10–60 basis points to prime office yields, with certain low-yielding Nordic office markets as exceptions. The rationale for this yield discount is straightforward: rental housing is significantly more defensive than commercial real estate, and robust structural excess demand across most markets supports tighter pricing. During an economic downturn, an office asset may fall vacant and struggle to relet, depending on market conditions, location and quality. In a structurally undersupplied residential market, by contrast, rents may soften but occupancy is likely to remain comparatively resilient — a distinction that becomes particularly valuable in a risk-adjusted analysis.
What yield should investors require?
Given that prime Athens office yields are currently hovering around 5.5% to 6.0% based on discussions with market participants, a prime rental housing yield in the range of 5.0% to 5.5% appears reasonable. A second reference point is the spread to 10-year government bond yields. European rental housing markets have historically traded at an average premium of around 150 to 160 basis points over the 10-year government bond, based on publicly available government bond data. Given that the Greek 10-year government bond yield has recently been around 3.4%, this independently points to the same 5.0% to 5.5% range for prime rental housing in Athens. The convergence of two independent benchmarks on the same yield range adds meaningful weight to the conclusion.
It is worth acknowledging that the interest rate environment of the past three years has compressed the spread between residential yields and the cost of capital relative to the low-rate era of the 2010s, when the European rental housing investment boom was most pronounced. That boom was driven not only by the defensive characteristics of the asset class, but also by a prolonged period of near-zero rates that made even modest yields compelling on a leveraged basis. The current environment is less forgiving on that front. However, a 5.0% to 5.5% prime yield in Athens — against a 10-year government bond at 3.4% — still represents a spread of 160 to 210 basis points over the risk-free rate, with the added benefit of inflation-linked rental growth potential and the defensive occupancy characteristics described above. On a risk-adjusted basis, that spread compares favourably with what alternative residential uses in Athens are likely to deliver net of costs and operational complexity.
Beyond the yield argument, investors gain exposure to strong structural demand, underpinned by the long-run shift toward city living, shrinking household sizes and delayed homeownership that has structurally enlarged the renter cohort — dynamics that are clearly visible in Athens. They also benefit from limited tenant churn in quality apartments, relative recession protection, and moderate operating intensity. Perhaps equally relevant for early movers: Athens is at a very early stage of the institutionalisation cycle that has already transformed rental housing markets across Northern and Western Europe. As more institutional capital enters, liquidity improves, benchmarks become established and the asset class becomes easier to underwrite — a self-reinforcing process that tends to reward those who move ahead of the curve. Investors also have an opportunity to participate in the professionalisation of a sector that addresses a major social need — while pursuing a potentially compelling risk-adjusted return profile.
For investors willing to look beyond headline yield comparisons, rental housing in Athens presents a case that is difficult to dismiss. The fundamentals are aligned: structural and growing demand, defensive income characteristics, a clear and widening supply gap, and a market still in the early stages of institutionalisation. The yield is not the highest on offer — but on a properly risk-adjusted, net-of-cost basis, it may well be among the most attractive. And beyond the return profile, there is something less common in real estate investment: the opportunity to professionalise a sector that a major European capital genuinely needs. That combination rarely presents itself twice at the same stage of the cycle.
