Never Mind the Crisis – Greece Still Is Big Spenders' Favourite Playground

Saying that Greece’s economy is in (big) trouble is an understatement. But in every crisis there is opportunity, and Greece is no exception.
Rising property values earlier this decade lured many middle-class Greeks into the market. Property then became massively overvalued. For a long time property prices were similar to what you’d see in New York or London. Now that the bubble has burst, the domestic real estate industry has collapsed. For two bedroom apartments in noisy central Athens that is, because when it comes to villas with private pools, large gardens dotted around the beachfront of the aristocratic coastal town of Porto Heli, the landscape changes dramatically.
Top End Properties Remain Immune to Crisis Fever
It’s surreal but true: top-end property prices are immune to the Greek problems. The reason is simple: despite the current Grecian tragedy, Greece still remains the favorite Mediterranean playground of the world’s rich and famous as it comes packaged with heavenly islands, archaeological miracles, fabulous cities, warm weather and great food. Only difference is that buying a piece of this playground now comes cheaper.
In fact, if someone takes a look at the country’s luxury property developers who continue to build with confidence – and in an increasingly sustainable manner – it’s obvious that high-end investors still have their eye on Greek properties. “It’s like asking me if Gucci handbags are going to be cheaper in Athens,” says Miltos Kambourides, co-founder of Dolphin Capital Investors-the largest real estate investment company listed on AIM in terms of net assets, one of the largest private owners of developing seafront land in Greece and Cyprus and the leading investor and developer of large-scale residential resorts in emerging markets.
Dolphin Capital created the Porto Heli Collection, that includes a seven star hotel, golf and residential project in the Peloponnese region, near the posh coastal town of Porto Heli-an area that has always been popular with high-spending/high-status summer visitors. Should you visit the development, you’ll realize that some parts of Greece still remain intact through the crisis. It’s still all there: the charms of the beach, the glamour, the history.

Pierre Charalambides, the other co-founder of Dolphin Capital Investors, talks to us about the crisis, the bargains and why buying a top-end property in Greece now is a smart investment.
Please tell us a little bit about Dolphin Capital, and what your role is in the company.
Dolphin Capital Investors (“Dolphin”) is a real estate investment company founded in 2005 by my partner Miltos Kambourides and myself.
Dolphin specializes in acquiring large coastal land sites of striking natural beauty and developing them into luxury residential communities integrated with leisure components (such as hotels, golf, marina, other). Dolphin invests in accessible and attractive locations for affluent holiday and retirement home buyers within the Eastern Mediterranean, the Caribbean and Latin America. Today, Dolphin is a leading global investor in the residential resort sector and the largest real estate investment company quoted on the AIM of the London Stock Exchange in terms of net assets. Since its inception in 2005, we have raised €898 million of equity, have become one of the largest private seafront landowners in Greece and Cyprus, and have partnered with some of the world’s most recognized architects, golf course designers and hotel operators such as Amanresorts, Oberoi, Kempinksi, Waldorf Astoria, Nikki Beach, Jack Nicklaus and Gary Player.  In our portfolio we currently have 14 large residential resort projects under development in Greece, Cyprus, Croatia, Turkey, Panama and the Dominican Republic and over 60 smaller residential developments in Cyprus.
As one of the two founding partners of Dolphin, I have relocated to Miami 3 years ago in order to oversee the expansion of our Company in the Americas and the development our first two projects there, namely the development of Playa Grande Club and Reserve in the Dominican Republic, and Pearl Island, our island in Panama.
What was your professional background before you established Dolphin Capital? 
Prior to co-founding Dolphin and until 2003, I worked at JPMorgan in London where I advised some of Europe’s leading corporations and entrepreneurs on financial transactions totaling over US$6 billion.
Prior to joining JPMorgan, I was a founding member of Hilton International’s Corporate Development team where I developed numerous new Hilton International hotel projects in Canada, the Caribbean, France, India and Scandinavia.
Who is included in your clientele?
While Dolphin’s shareholder base consists of some of the biggest names in the industry such as Blackrock, F&C, Fortress Investments and Scottish Widows, our leisure developments are designed to attract mainly affluent international buyers and high net-worth individuals principally from Europe, the Middle East, Russia and the Americas.
Can you tell us a few words on the Porto Heli Collection?
The Porto Heli Collection is a truly integrated community nestled in an exclusive enclave on the shores of the Peloponnese. By combining some of the world’s best hotel brands and designers, Dolphin is creating probably the most upmarket, chic and elegant destination in South East Europe, comprising a  selection of three leading hotels, beach clubs, a golf course, and branded as well as unbranded residential units currently under development in the greater Porto Heli area.  We have so far almost completed the construction of the first phase of the project which includes the Aman Hotel and Residences at Porto Heli, which is supposed to open in June 2012, in addition to the Seafront Villas in Kilada.
What can we expect from Dolphin Capital in the near future? What projects are you working on now?
We are currently focusing on developing our existing locations. More specifically, 4 out of our 14 large projects are currently under construction and sales: the Porto Heli Collection in the Peloponnese in Greece, Playa Grande Club and Reserve in the Dominican Republic, Pearl Island in Panama, and Venus Rock Golf Resort in Cyprus. In 2012, Dolphin will see its first resort come into operation: the Aman at Porto Heli in Greece, which will also be complemented by branded Aman villas for sale, 5 of which have already been sold. Additionally, we plan to launch the Aman Resort phase of Playa Grande Club and Reserve in the Dominican Republic, as well as progress with the construction of the main infrastructure and leisure facilities of Pearl Island in Panama. On that private island we are including a landing strip, a marina, full beach club facilities, and much more, which can be enjoyed by the owners of villas on the island. Last but not least, our second golf course is under construction in Venus Rock in Cyprus, designed and branded by Tony Jacklin, which we anticipate to be a big asset when we launch sales for the new phases of what is Southeast Europe’s largest seafront development.
What were the reasons you chose Porto Heli?
The key features we examine prior to acquiring any of our sites are: access, proximity to sea, unspoiled natural beauty, surrounding activities, and of course available developable land.
The Porto Heli area in the Peloponnese met all the above conditions, as it is just two hours by car from the Athens Airport and approachable year round, is located on the sea, has spectacular views whether you look at the rolling olive covered hills, secluded coves or deep in the horizon, and of course combines island life in Spetses and Hydra with mainland conveniences and rich history.
After we “tick” all the above, then we always ask ourselves “would we personally want to vacation there?” In answering this question, there was no hesitation when it came to Porto Heli that represents to wealthy Athenians and Greek expats what the Hamptons is to New Yorkers.
Are you worried about the impact of the crisis?
It goes without saying that we are all worried about the current economic situation, nevertheless in times like these great opportunity arises and Dolphin is fortunate to be one of the only real estate investors in the residential resort sector to have a strong asset base of approximately € 1.7 billion, with low corresponding financial debt. To adjust to the recent economic climate, Dolphin slowed down its investment activity and concentrated its efforts on taking forward the existing portfolio, focusing primarily on progressing the construction and sales of its most advanced projects.
How has the crisis affected the prices of luxury estates?
The crisis has negatively affected the prices of luxury real estate in Greece, as well as our other key markets. Nevertheless, when it comes to prime seafront locations in much sought after areas, the prices have only shown a small percentage fall. In addition, some of our markets, like Greece, have very little supply of luxury branded serviced residential villas (that can compare for example to our Aman villas being sold at Porto Heli) and continue to show strong growth in tourist arrivals. So we expect to experience strong demand from high-end buyers or tourists looking out for the best as our projects reach completion, despite the setbacks of the crisis.
Are there any positive side effects of the crisis on the real estate industry?
Times of crisis typically provide great opportunities, so yes there are many positive side effects. The past few years have cleared up all small inexperienced developers, meaning that Dolphin’s projects are among the only luxury projects currently getting completed and going to market. Secondly, construction and operating costs are a lot lower than in the past, which also works to our advantage. Thirdly, this has incentivized governments to improve second home legislation and provide investment incentives to our sector. Lastly, there are some amazing buying opportunities for those who have the capital to see them through to completion, and Dolphin should act as one of the consolidators when it relates to the luxury residential resort sector.
Has the crisis hit mass market real estate and luxury estate in a different way?
The sharpest drops in real estate prices have so far been in the mass real estate market when compared to the luxury estates. In Greece, mass market residential real estate transactions have fallen in numbers, volume and value, approximately 40% over the past year, a trend reinforced not only by the newly introduced Property Tax, but also by the greater austerity measures, the frozen mortgage market and the uncertainty that exists. Globally, luxury real estate prices also had to adjust from their peak but to a lesser extent.

Have you noticed a decline in luxury properties in Greece or are the amount of transactions the same?
Transaction in the luxury property market are still going on in Greece, as foreigners, a number of Greek expats, but also cash-rich Greeks are taking advantage of the opportunities that come to the market.  Admittedly, movement has slowed down, nevertheless there is a re-ignited interest in the Greek luxury second home market, as prices have dropped and unique properties are hitting the market.  From our experience, with the Aman Resort Villas at Porto Heli, which sell between 3 and 6 million Euros, we can confidently say that there is still interest, and there are people who can afford them. It is just that people are more conscious of what they are buying.
How do you thing the real estate landscape will be in Greece, in ten to fifteen years from now?
10 to 15 years from now, Greece will look like a very different country. We think the crisis could be one of the best catalysts to make the country productive and dynamic again and to propel the right development of luxury residential resorts (integrated with hotels and/or golf courses and other facilities) such as those currently being developed by Dolphin. By that time it will remain one of the most beautiful beachfront resort areas in the world but it will also have the right infrastructure and luxury products to attract the best tourists. With such vision in mind, we think this is the optimum time for buyers and investors, who want to benefit from strong capital appreciation, to come into the market and follow Dolphin, who has already been making that bet since our first investment in 2006.
What are the challenges facing the expansion of foreign investment in Greece? What obstacles did you face?
Bureaucracy and lack of a solid investment framework are undoubtedly the two largest obstacles for foreign investment in Greece.  The recent implementation of the fast track procedure aims towards helping an investor succumb to those problems and expedite the investment.  Specifically for the tourism industry, it is important to further improve legislation relating to “integrated resort developments” that include holiday homes for sale, as this would be a significant source for GDP growth. Also, it would be of great value to have a more efficient, transparent and stable legislative regime with respect to planning, permitting and constructing, so that investors are fully aware of all parameters rather than have to constantly revise their project-planning. I strongly believe that the law on holiday homes serviced by a hotel which was just passed through parliament in August 2011, is a step in the right direction and, when improved further, should give a strong boost to the tourism and real estate industry of the country and contribute to exiting its current recession.
Tell us a bit about your investments in Cyprus.
Our largest investment in Cyprus is Aristo Developers (“Aristo”), the leading real estate developer in the country, which we acquired from the Cyprus Stock Exchange during 2007 in partnership with the company’s founder Mr. Theodore Aristodemou. Aristo has a positive 25 year track record and is the largest private land-owner and residential developer in Cyprus. Aristo’s largest project is Venus Rock Golf Resort which is the biggest seafront luxury residential resort under development in Europe today.