State asset tenders and bank portfolios currently offering investors great opportunities in local real estate
Some 100 million euros is expected to come into the local property market from foreign investors within 2013, according to a report by international real estate agency Savills, which would constitute a record amount for the last few years at least.
This high level of foreign investment in Greek property is expected to come from the state tenders conducted by privatization fund TAIPED, including the sale and leaseback of 28 properties for which offers are expected to be submitted by the end of the month or in early October. These tenders have reportedly attracted the interest of a number of investors who are able to pay significant amounts of money.
Another reason for the anticipated rise in property investment from abroad is the entry into the market of quality properties from the portfolios of the country’s banking groups, which due to the ongoing concentration of activities is leading them to selling their real estate holdings in order to strengthen their financial reports and cash reserves.
Nevertheless the Greek market still faces a number of problems. Savills says in its Europe-wide report that the general investment climate remains unchanged as investors do not have access to bank funding. The writers of the report state that “the eagerly anticipated recapitalization of the banking system has not translated into improved liquidity in the market.”
However, investors who do have access to the necessary cash flow are currently focusing on the Greek market due to the considerable drop in prices over the last few years, even for quality assets. It follows the pattern set for other peripheral markets in the European Union, such as Ireland, Spain and Italy, to which more and more foreign investors have been turning.
Savills also foresees a further 15 percent decline in commercial property prices this year in Greece, but this will probably signal the end of the downward cycle. The interest from foreign investors is set to halt the drop in prices, with Savills expecting the yields of quality properties in Greece to stay at the current levels of 8.5-9 percent for next year as well. This means the commercial property market will likely stabilize in 2014.