Foreign companies and investment funds are making a resounding "presence" in the domestic real estate market, at a time when prices remain low, but this situation is not expected to last long. Therefore, "smart money" from abroad is placed in Greece and in real estate categories, such as building reconstruction projects or greenfield projects in order to ensure significant returns. In contrast, domestic interest remains anemic because, despite the relative improvement in economic conditions, disposable income remains limited. As a result, according to the annual report of the Bank of Greece, foreign investment has increased, with foreign capital inflows during the first nine months of 2019, increased by 55.1%, compared to the corresponding period of 2018. This increased demand from abroad has resulted in the overall improvement in investment in homes, which, at the national 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 with the BoG, a condition for the overall recovery of the real estate market e so the strengthening of domestic demand from private and business use and expansion into new areas and properties, which is expected to take place gradually.
Which properties do you choose?
According to the BoG, the increase in demand for housing has been driven by a strong interest in targeted housing, "which, especially through short-term leases, has acquired investment features and offers returns close to professional levels". In other words, these are basically homes that are available through Airbnb and are located in large urban centers and tourist destinations. This significant demand is reflected in the significantly high growth rates of the number and volume of new building permits in Attica during the eight months of 2019 (74.6% and 50.1% respectively compared to the same period of 2018), as well as in the required prices. which have been strengthened by up to 20%, in some cases.
Demand growth, mostly from abroad, is also seen in commercial real estate, with prices in offices and shops rising. Investors are looking for income real estate, while performing transactions with returns that often approach the levels of the highest point of the market cycle before the onset of the crisis (period 2005-2007). Nevertheless, according to the BoG, demand has not spread to the secondary market, it comes mainly from abroad and focuses on income real estate with guaranteed lease and return.
Indicative of the reduced domestic demand is the fact that for new offices both the number of licenses and the volume of construction activity decreased by 37.1% and 25.7%, respectively, during the eight months of 2019 compared to the corresponding period of 2018. For commercial stores, the number of licenses and the volume decreased by 15.4% and 23.3%, respectively.
The construction activity in the hotel sector also declined during the first eight months of 2019, after a two-year period of very high positive rates. However, according to the BoG, there are no indications of market saturation and given the ongoing positive trend in tourism, it is estimated that the decline in construction activity is a temporary correction.
In any case, according to BoG analysts, the strengthening of domestic demand for housing and new business will depend on growth rates and improving the prospects of the Greek economy, the implementation of interventions that will facilitate and support entrepreneurship. as well as by further boosting employment and disposable income.
Foreign investors
The US investment company Hines, led by Paul Gomopoulos and Andreas Kapsalis, is also strengthening its presence in the Greek real estate market. In the last 12 months, starting in the winter of 2018, Hines has made the most investments since 2017, the year in which it bought the Athens Ledra Hotel (now Ledra Marriott) for 33 million euros. In the last year, the company has transferred, for about 7 million euros, the area of the former Mouzaki textile factory on Kifissos Avenue and Irous Street, where Aktor will build a new store of the French self-made chain Leroy Merlin. The company also bought the Athens Heart shopping center from Pasal, which, in the spring of 2021, will be converted into a premium discount center of 22,000 sq.m. under the name Gazi Outlet, with cinemas and strong clothing and footwear brands.
Another "haunted" plot, where the Israeli Plaza Centers was planning the construction of a shopping center, with a total area of 37.
