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Special Insert: Investments & Real Estate in Greece

Investment Opportunities In A Complex Real Estate Market

March 20, 2022
By George Kormas

The geographical position of Greece at the crossroads of three continents has historically transformed it into a bridge of cultures, with extraordinary characteristics. Its famous natural beauty and hospitable people, combined with the most favorable economic environment of recent years, make Greece one of the most attractive investment destinations, with real estate being at the forefront.

The present time is considered ideal for real estate investments in Greece. The value of real estate on average, despite the overall increase of 25% from 2018, showing resilience throughout the pandemic, continues to be about 20% below the corresponding prices of the year 2007, while the industry is expected to approach the value it deserves by the year 2027.
Specifically, the increase in house prices observed from 2018 in Athens exceeds 30%, while in Thessaloniki we observe an increase of 20% and in other major cities of 10%.

The banks’ strategic decisions to increase mortgage lending, even at a fixed interest rate for their entire duration, and the ability to use residential real estate as an investment asset, through short-term leasing, have given it unprecedented added value. The ability of citizens of countries outside the Schengen area to obtain residence permits further contributes to the rises in housing prices, with increased demand leading to new developments.

For the time being, there is no reason for lower prices, except for the new developments that will increase supply.

In the global economic environment, Europe is again becoming an investment destination with investments in emerging markets declining due to the fact that the gap in growth rates compared to the developed markets of the West has also narrowed, with capital outflows from these countries dramatically increased.

Corresponding price increases are observed in the other real estate sectors, with Greece occupying the first place in Europe in the annual survey of PwC and the Urban Land Institute that take into consideration the commercial real estate market of Athens regarding the projected course of values and rents for the year 2022.

Indicatively, in Athens, there have been increases in commercial values up to 100%, while the growth prospects have been strengthened by the expected record year of tourist arrivals in 2022, as shown by bookings from major travel agents. A contributing factor to this positive picture is the political and economic uncertainty in neighboring Turkey.

Regarding residential real estate, it is worth mentioning that a relevant study showed that the amortization through renting of an investment that entails buying a house in Athens requires a period of 17 years, which, together with Valencia, Spain is the shortest in Europe.

Equivalent increases in rental prices of about 15% are being observed in the logistics sector, the value of which with the end of the pandemic is expected to skyrocket. Due to the scarcity of modern logistics facilities, this sector is considered one of the most promising in which to invest for the immediate future, based on the argument that e-shopping will prevail in the future while physical stores will serve mainly to provide a product presentation experience to the consumer – who then will order from his home. We are already noticing, perhaps for the first time, that foreign investors are investing in this area, with greater interest in the purchase of so-called ‘last mile’ assets.

Office space is one of the elements most closely related to Environmental, Social and Governance (ESG) criteria in the real estate sector. Bioclimatic buildings with constant air renewal, with open spaces for employee interfaces, and with all the technological interventions that minimize energy consumption, will be considered more and more essential and will make those facilities that lack these characteristics obsolete. Due to the shortage of prime office space in our country, major real estate companies have started repurposing other types of assets, upgrading the existed ones or developing new office spaces that will meet all ESG criteria.

Other promising types of assets today are data centers in terms of both their income profile and development potential, new energy infrastructure, and life sciences facilities (given the enormous amount of R&D money being spent by biotech companies). These assets will provide enormous returns for investors that will be competing for participating in future developments.

Finally, hotels are a necessity for a country whose major exportable product is tourism, which has demonstrated an impressive recovery. We see a constant effort to develop new hotels, such as the small boutique hotels in the historic commercial triangle of Athens that are operating as high-end complement products to short term rentals. On the other side of the touristic spectrum, there are the renovations of the large established hotels in order to follow address the new realities of the post-pandemic touristic era.

Banks, now free of the constraint of NPLs, are responding to the growing needs of housing and real estate investments, and assisted by the Recovery Fund are expected to proceed to record loan disbursements in the coming years.

All the above reminds that experts must be consulted. The inflationary pressures, the energy crisis, and the recent geopolitical issues at the end of a pandemic have created a complex social and economic environment that is difficult for individuals and companies to interpret in order to decide on their future investing actions. Real estate investments that create long-term bonds must be analyzed and organized through established real estate experts with the ability to incorporate all relative parameters and local individualities, in a multi-dimensional exercise.

Piraeus Real Estate, through its innovative 360 approach, provides the Piraeus Bank Group and its customers with universal real estate management services. The services offered by the company include total real estate portfolio management, development, administration, as well as supervision of project construction and investment consulting services related to real estate. At the same time, it provides the opportunity to sell real estate through the five different sales channels it has, including an online auction platform and a real estate channel.
More specifically, Piraeus Real Estate has the ability to provide multi-factor analysis of data for properties based on the assessment – legal, technical, and notarial audit – in order to maximize the value of the property but also to reduce the cost and duration of the asset’s preparation for sale. Through an extensive real-time analysis of the real estate market and the calculation of the real estate marketability indices and the algorithmic calculation of its strategic asking price, the ideal solution for the utilization of each asset or asset portfolio is proposed.

If a specific plan for the utilization, development, and management of a property is approved, the real estate sales management services offer modern and comprehensive advice, in order to sell or lease the property through the simultaneous use of the five available sales channels of Piraeus Real Estate. These include the Piraeus Bank branch network, the conduct of tenders, or electronic auctions through the innovative electronic platform properties4sale.gr, the use of the network of cooperating brokers, as well as the organization and execution of targeted presentations to investors.

The 360 approach of Piraeus Real Estate also includes the development, administration, monitoring, and supervision of construction projects, ensuring compliance with the budgeted costs, the predetermined quality, and their timely completion. In addition, it provides integrated services for the management of buildings and complexes, ensuring their continuous functionality.

Piraeus Real Estate is a certified technical and financial consultant for the development, utilization, and management of real estate with experience in the private investment sector but also in public organizations. It constantly invests in its highly trained human resources and in the continuous monitoring of market trends and opportunities, in combination with the development of pioneering methodologies and tools, and with respect for the environment and sustainable progress. It is a clear choice and commitment of Piraeus Real Estate and the Piraeus Bank Group as a whole to participate only in projects with a positive environmental footprint.

George Kormas is Executive General Manager, Group Chief Real Estate of Piraeus Bank and CEO of Piraeus Real Estate S.A. He is also a member of the Real Estate & Development Committee, American-Hellenic Chamber of Commerce.

 

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