Περιοδική έκδοση

Newsletter Απρίλιος 2011

ANALYSIS

The Greek Real Estate Market

Real Estate has long been a pillar of the Greek economy. Private residential investment comprises about 33% of gross fixed capital formation.

In the Eurozone the average is 29%. More than 400,000 people work in property-related sectors in Greece, about 9% of total employment. Household wealth held in residential real estate is valued to be in the range of 5.2 times GDP, compared with 4.5 times GDP for the Eurozone as a whole. Owner occupancy is more than 80% in Greece and real estate has proved to the best investment, on average, in terms of return, compared with the stock market and bank deposits.

State owned real estate assets, estimated to be valued at €300 bn, largely unexploited up to now, are going to bring new liquidity to the market.

Real estate offers good yields even during the crisis, while it has just lost a 10% during the last two years of recession.

A mature market facing current challenges

The recent decline in construction activity as led to increased unemployment but for developers this translates into finding workers at more attractive wages. In addition, engineers and architects have more time and resources for new projects.


WHY INVEST IN GREEK REAL ESTATE?                                           

Greece has an excellent infrastructure:
• 45 airports 15 of which are international
• 520 ports, 12 of which are international
• 680 km Egnatia Motorway on the North connects Adriatic, Aegean and Black Sea
 Attiki Odos ring road in Athens, awarded by International Road Federation
• Rio Antirrio bridge connecting Peloponnese with Central Greece
• Athens International Airport a successful PPP project

In addition, there are a number of major new projects that are up or coming up for international tender.

New Public Projects

• New Heraklion Airport
• New Highways
• New logistics center in Thriasio
• Privatisation of regional airports
• Privatisation of railways’ operation
• New Attica Motorways, Cretan Motorways
• Piraeus Port’s investment plan
• Opportunities in the PPP market

Enhanced Public Property Management

To capitalise on its real estate assets, Greece is launching a new initiative for the efficient management of public real estate assets, and is offering new concessions for land plots available for tourism development, concessions for marinas, a concession for the “Pagoda” building in the Port of Piraeus, a concession for the Tae-Kwon-Do Olympic Arena, and a concession of Xenia Hotels. Another major boost is the Athens-Attica 2014 programme for revitalising urban areas.

New Opportunities In The Private Sector
The private sector is marked by a variety of diverse characteristics that are yielding specific opportunities.
  Currently, at least 7 shopping centers are in the pipeline. A lack of prime location office spaces, shopping centers and student living quarters points to opportunities in these areas and distressed assets in hospitality sector invite investors to apply the rule—buy low.

SUMMING UP…..WHY GREECE?
• Building costs are going down because of the decline in investment in construction.
• Historical data show that real estate pays better than all other investments in Greece.
• The sector proved quite resilient even during the current crisis.
• Despite strong decline in construction activity and transactions, prices corrected moderately.
• New public and private projects are under way.


INVESTMENT OPPORTUNITIES

OFFICES
• Expansion of Athens Metro along with the expansion of Attiki Motorways, and construction of Thessaloniki Metro are creating new needs for spaces and new opportunities.
• Current Athens office stock more than 5 mil m²
• Attiki Odos crosses the city centre and reaches the western suburbs of Athens, offering great accessibility. This has brought the emergence of new office submarkets.
• The investment plan of the Piraeus Port Authority creates new opportunities in one of the busiest ports of Europe.

 According to the CB Richard Ellis Global Market Review of 2010, Athens holds the 48th position in the office occupancy costs and the 3rd highest place (6,25%) concerning the Office Prime Property Yields in Europe.


ENCOURAGING SIGNS
Savill’s European Office Markets Spring 2010: “Prime rents dropped on average by 5.5% but we do not expect to see any further significant fall due to the limited supply of good quality space.” Athens still has the first highest net prime yield according to this research.

RETAIL
• Many large-scale malls, hypermarkets, leisure & entertainment centers have been developed over the last two years and many more are in the pipeline
• However, the Greek retail market is limited compared to other European cities
• Athens prime retail yields reached 7% for 2010

INDUSTRIAL/LOGISTICS
• According to a new NBG report the transformation of Greece into a peripheral transportation hub of the Southeast Mediterranean and the Caspian Sea could add approximately 0.2 % to annual GDP growth.
• New Logistics Center in Thriasio and Thessaloniki change the logistics map of the country.
• Railways privatisation and liberalisation of the road transport sector will reduce cost and improve efficiency.
• The State gives particular attention to infrastructure improvement projects, i.e. national ports scheme, logistics infrastructure new highways under PPP.

HOSPITALITY (TOURISM)
• Up to 20 million visitors per year create a wide pool of potential real estate investors in Greece. According to a Deloitte research, there is a potential market for demand of 1 million private residences.
• According to the ‘International Retirement Directory’ of Daily Telegraph, Greece and Cyprus are among the top five most favored destinations for British and other North European citizens to buy a holiday home.
• According to National Bank of Greece, a development in tourism residences similar to that of Spain will boost GDP growth by 0.5% per year.
• The number of loans for the acquisition of second homes in Greece reached 20,000 in 2007, which represents a 20% increase compared with 2006. It is anticipated that the current trend will continue with a declining rate in the future and it will reach 80,000 within the next decade.

PROJECTS IN THE PIPELINE

• New shopping centers
• Former Hellinikon airport development (part of Athens Riviera)
• Faliro Bay Complex
• Concession of hotels, land plots, Olympic Properties
• Private owned integrated resorts
• Tourism projects in the pipeline
• Votanikos Regeneration project
• Drapetsona – Urban Development project

 Latest Trends

Archimedia holdings acquired 14.29% of the Aman Porto Heli project that is being developed by Dolphin Capital Investors for the amount of    11 mn €. The project is located in Argolida and is being developed in an area of 350 hectares.

An American investor acquired 14 real estate assets from Emporiki Bank and is establishing a new REIT.