Real Estate: Significant presence by foreigners in Greece.
Big investments from foreign funds in the Greek real estate market.
Foreign companies and investment funds are loudly present on the domestic real estate market at a time when prices remain low, but this situation is not likely to last long. As a result, "smart money" from abroad is being invested in Greece and in real estate categories, such as building remodeling projects or greenfield projects to secure significant returns. On the other hand, domestic interest remains anemic because, despite the relative improvement in the economy, disposable income remains limited. As a result, according to the Bank of Greece's annual report, foreign investment has increased, with foreign capital inflows in the nine-month period of 2019, increased by 55.1% compared to 2018. This increased demand from overseas results in a more overall improvement in home investment, which, at the country level, increased by 9.8% in the first nine months of 2019, compared to 12.5% in the corresponding period of 2018. However, according to the BoG, a condition for the overall recovery of the real estate market is the strengthening of domestic demand from private and business use and expansion into new areas and properties, which is expected to take place gradually.
The real estate that they choose
According to the BoG, rising demand for homes has contributed to the strong interest in targeted housing, "which, especially through short-term leases, has acquired investment characteristics and offers returns close to commercial use levels." Basically, these are homes available through Airbnb and located in major urban centers and tourist destinations. This significant demand is reflected in the strong growth rates in the number and volume of new building permits in Attica in the eight months of 2019 (74.6% and 50.1% respectively over the same period in 2018), as well as in the asking prices which have increased up to 20%, in some cases.
Increasing demand, mostly from abroad, is also found in commercial real estate, with prices in offices and shops having risen. Investors are looking for income real estate while trading in returns that often approach the highest levels of the market cycle before the begining of the crisis (2005-2007). However, according to the BoG, demand has not spread to the secondary market, it comes mainly from overseas and focuses on secured rental income and performance.
An indication of the low domestic demand is the fact that for new offices both the number of building permits and the volume of construction decreased by 37.1% and 25.7%, respectively, in the eight months of 2019 compared to the same period in 2018. For commercial shops the number of building permits and the volume declined by 15.4% and 23.3%, respectively.
In the eight-month period of 2019, construction activity in the hotel sector also declined, after a two-year period of particularly high rates. However, as the BoG states, there are no signs of market saturation and, given the ongoing positive course of tourism, it is estimated that the decline in construction activity is a temporary correction.
In any case, according to BoG analysts, boosting domestic demand for new housing and new jobs will depend on growth rates and improving the outlook for the Greek economy, implementing interventions that will facilitate and support entrepreneurship, as well as further boosting employment and disposable income.
The foreign investors
Its presence in the Greek real estate market is also strengthened by the US investment company Hines, led by Paul Gomopoulos and Andrea Kapsali. In the last 12 months, starting in winter 2018, Hines has made the most investments since 2017, the year in which it bought the Athens Ledra Hotel (now Ledra Marriott) for € 33m. Over the past year, the company has spent about 7m euros on the former Mouzaki textile site on Kifissos Avenue and Herou Street, where Aktor will build a new store in the French Leroy Merlin chain. In addition, the company bought from Pasal the Athens Heart shopping mall, which will be transformed into a premium discount center of 22,000 sq.m. under the brand name Gazi Outlet, featuring cinemas and strong clothing and footwear brands.
Another "haunted" plot, where Israeli Plaza Centers planned to build a 37,000-square-foot shopping mall, changed hands. This plot of 15 acres at the intersection of Piraeus and Kifissos Avenue at the height of Neo Faliro, where until 1997, the headquarters of the Packaging Industry SA was located. was acquired by the company Ten Brinke Hellas, which is a subsidiary of the Dutch group of the same name. The land was bought by the company, headed by Fotis Yoftsios, for 1.05m euros, with information indicating that they will develop a retail supermarket.
Israeli investment fund Zoia, with its general manager Shaggy Rubin, strengthens its position in the Greek real estate market, by acquiring more than 35 buildings in downtown Athens. The company is renovating and reusing vacant buildings, with its investment plan providing for the sale or leasing of real estate mostly to Greeks. As Rubin also said, at a recent conference, Zoia casts a vote of confidence in the downtown districts of Athens, having acquired buildings, including, in Kolonaki, Exarchia, Koukaki, Kallithea, Kastella and Piraeus.
Another Israeli interest company, Brown Hotels, has launched its presence in the Greek hotel market, with founder Leon Avigad reporting at the Prodexpo real estate conference that Athens is the new Berlin. After all, Brown Hotels has acquired the historic Acropol Hotel on Piraeus Street 1 in Omonia, which will be renamed Brown Acropol. The company has leased other properties in the historic center, and is also launching new investments in Thessaloniki. Brown Hotels, based in Tel Aviv, is active in developing hotels not only in Israel and Greece, but also in Croatia.
The European Bank for Reconstruction and Development (EBRD), which is a stable financier of major real estate development projects in Greece, is also a strong presence. The EBRD is primarily involved as a technical consultant in the construction of research buildings and the provision of specialized medical precision (personalized medicine) services to the Athens Institute of Medical Research.