Two noted Greek real estate experts spoke recently to Greek Reporter about the challenges — and opportunities — of the post-pandemic world for this vital sector of the Greek economy.
As the world begins to emerge from the strictures imposed by the coronavirus pandemic, things are heating up on the real estate market in Greece, both on the mainland and the Peloponnese — and of course on its many islands, which are a magnet for travelers from all around the globe.
“It’s happening” in Greece
Antonis Markopoulos, the co-founder and CEO of Prosperty, a growing company of real estate experts, engineers, business, operations and marketing specialists, says that since the end of 2019, the real estate market in Greece has had a very positive momentum, especially from foreign investors.
“I’m not talking only about investors from non-EU countries for the Golden Visa Program, I’m also talking about other kinds of investors,” he notes.
Markopoulos believes that this trend will continue aggressively in the future, even though it might be a little postponed due to Covid.
“There is a lot of discussion, for example in Northern Europe, about retirement homes, or vacation homes.
“Greece — and this is also very important for the Greek Diaspora — has a lot of competitive advantage against its competitors; its competitors are Spain, Southern France, and Italy. Compared to those countries, Greek real estate is relatively cheap. So, if we position ourselves as a property in the sun on the Mediterranean, we compare ourselves in a very competitive way against other neighboring countries,” says Markopoulos.
He tells Greek Reporter that real estate in Greece is one of the few industries that has failed to change in the both in terms of cost/value and experience.
Processes are lengthy, paper-based and complex to navigate — and there is a lack of professionalism, information and transparency.
He adds that most people who have dealt with a property sale have experienced the antiquated process and felt the pain of seeing unnecessary fees and commissions getting paid out of their pockets with questionable value and results.
“Prosperty aims to change all that,” Markopoulos declares.
Strong rebound in Greek real estate after decade-long recession
Ana Vukovic, the Managing Director for Collier’s Greece and Serbia, who also covers the markets of Cyprus, FYROM and Montenegro, has successfully led a number of large-scale mixed-use properties and portfolio projects from concept stage to completion.
She has a multi-faceted background in real estate consulting and commercial real estate law.
She explains that the Greek real estate market indeed experienced historic lows during the years of the financial crisis. Fears of a Grexit scenario and a challenging macroeconomic outlook raised an air of uncertainty and change, resulting in limited transactions materializing up until June of 2016, when the first review of the bailout agreement took place.
After years of recession, the market did begin to recover, however, and the first signs of stabilization occurred in 2017, in both leasing and investment transactions. Factors contributing to the improved investor sentiment were political stability and the elections in 2019 that resulted in an uplift of capital controls and the decline of government bond spreads.
Greek real estate market surprisingly stable
The stability in the Greek real estate market became evident after a significant increase in investment volumes over the past years, with prices gradually reaching pre-crisis levels and a rise in construction activity in all sectors by the end of 2020. Demand in all real estate sectors resulted in a significant compression of yields for prime investment products, Vukovic tells Greek Reporter.
The business-friendly environment is supported by governmental priorities including a reduction in tax rates and the acceleration of privatization projects, as well as the Golden Visa program. This is a scheme under which residence permits are granted to third-party nationals who buy real estate exceeding 250,000 euros.
The results of the pandemic, she adds, did not affect all sectors in the same way. The hospitality and retail sectors are most likely the ones most greatly affected, but the impact of national and local lockdowns cannot be accurately quantified at present, given that the situation is still unfolding.
The surprising paradox, Vukovic states, is that the Greek real estate market has shown resilience in the pandemic, with demand remaining strong for most sectors.
Refurbishments, renovations, new developments
The commercial market has witnessed positive trends regardless of the pandemic. Specifically, she states, the lack of quality office space to satisfy corporate demand and the outdated stock on hand resulted in a high number of refurbishments and renovations, and a significant pipeline of new developments is estimated to unfold in the next two years.
As a consequence of the increasing competition for the best products, and a lack of such product on offer, a compression of prime yields is expected. Demand on the other hand, from end occupiers is growing for Grade A energy efficient buildings at prime business districts in Athens, resulting in higher rental rates.
Prices for secondary properties have also stabilized at large, because of the revival of secondary markets, Vukovic notes.
The industrial market has also shown a resilience during the pandemic, evidencing a growth in demand during these times due to the increase in e-commerce.
Hotels will dominate Greece’s real estate sector
The hotel sector is expected to dominate investments in the coming years from both local and foreign investors and foreign hotel groups are expanding their presence in the country, despite the pandemic, she says. There are quite a number of significant projects under development, mainly the 4 and 5-star resorts and boutique hotels across the country with a significant flow of foreign capital in the country.
People looking to flip, invest in new Greek properties
Prosperty’s Markopoulos says “Regarding the Greek diaspora especially, what I’ve seen, because I lived in Melbourne for three years, and I have talked with many people there, is that there are many people — especially first generation Greeks — who might have an asset here in Greece, and they would like to flip the asset with something new.
“So, there are a lot of people coming in saying “I have a small apartment or small house in Athens or in the countryside and I would like to sell it and buy something new. There is a huge potential in the Greek real estate market that is going to be deployed into the market in the next coming years. We see a tremendous opportunity right now for those who would like to invest, because we strongly believe that the market will go up in the next five years.”
Athens real estate cheapest of any European capital
Markopoulos explains “It depends on the profile of the buyer. There are a lot of people buying in Athens. Athens remains the cheapest European capital in terms of real estate prices.
“The profile of a buyer is someone who says: ‘I would like to buy a property that will be used for myself to visit Greece, to stay there for ten days, or a month, it depends on the occasion, but it will be a property that, if I rent it, either short term or longer term, it will get me a good yield back.’
“So they understand that Athens has a big potential in terms of a tourism destination, so we see a lot of profiles of investors who are buying properties around the city center in order to have them for their own use but also to rent them during the year and to get some yield back.
Markopoulos adds that “this is the most frequent buyer profile that we handle at the moment. Of course, there are other kinds of buyers, there are kinds of buyers that are looking for a property in the Greek islands. So they’re looking for properties in the main Greek islands, like in the Cyclades, Mykonos, Paros, Santorini — those islands are a bit more expensive, so we’re talking about a different profile of customer for Paros, Antiparos, or even in smaller islands.
However, the real estate expert says that “The rationale for those investors is almost the same. It’s a property they can use to visit Greece, and to do their holidays in Greece, but during the Summer, they can rent it and it can retain some yield back to their investment.
“So, more than that, we see also some interest in the mainland, for example, the Peloponnesse, Messenia, Mani, there’s a lot of demand there. Mainly from Europe, mainly from Germany and Northern Europe, they love to drive and be on the mainland.
Markopoulos notes that “there cannot be a single answer to give to each demand we have, so we have different kinds of investors.
“The prices are quite high at the moment there. So, in Athens and in Greece we do have a variety of asset classes, we do have those who would like to buy something in Voula or Glyfada overlooking the sea, enjoying the life in those kinds of suburbs — but we also have other buyers looking for smaller apartments just to stay in during their vacations or to use them to rent out the rest of the year.
Any clouds on the horizon?
There are a great deal of “pros” regarding the real estate outlook in Greece, according to Vukovic. But what about the cons? Are there any clouds on the horizon?
She lists several factors that still weigh on the minds of real estate investors in Greece, namely the fear of a recession after the pandemic.
In addition, she states, there will be still competition for prime assets at that time. Greece’s perennial problems of high property taxes and low bank lending will also complicate the mix, she says.
But she has sunny words for how the country has dealt with the challenges of the pandemic, stating “we cannot disregard the successful handling of the outbreak by the Greek state.
“Greece is a safe destination”
“The increased investment demand in the tourism sector is linked with Greece’s performance during the pandemic and the belief that Greece is a safe destination.
“Tourism has been affected, but demand and investments in tourism-related development are growing.
“Greece appears to be one of the safest and politically stable countries in the entire Eastern Mediterranean region, providing investors with the security needed to invest,” Vukovic declares.
“Additionally, the country offers a variety of geographical destinations with unexploited potential in the development of integrated resorts — so the potential to establish new, upgraded tourism facilities all year round is the key driver from investors in this sector.
“We expect Greece to continue to attract investments in the commercial real estate and tourism sector. We further expect that the second home market to increase in demand as Greece will remain a safe place for such properties,” she notes.
“An increase in demand from UK buyers is also expected, she adds, while noting she believes that “they will take advantage of opportunities for EU residence due to Brexit.”
Disregard list prices for Greek real estate, focus on transactional prices
Markopolos notes an important point for all those members of the diaspora, or others, who are not aware of an important distinction in how the Greek real estate market operates.
As he says, “The list price, in most cases, is ten to twenty percent above the final price when the deal closes, because the Greek seller, the way they’ve been educated from the market in the past, they list the property by saying two prices. One is a hidden price given to real estate agents — they say, ‘Look, this is the price I’d like to sell it at, but please list it a little bit higher so that there is room for negotiation.'”
Markopolos explains “We’re trying to change that, but this is how the market is working at the moment.
“What we would like to educate and train the buyers in, even from abroad, is please, don’t consider the listing price,” he urges. “Get in a negotiate the price because there is always room for negotiation.
“This is very important,” he notes, “because a lot of people are getting disappointed because they see the prices increasing. However, this is not based on the transactional price — because no one knows the real transactional price — it’s based on the listing price.”
Greek real estate mass market between 150K-200K properties
Using an algorithm which is based simply on these transactional prices will enable real estate experts such as Markopoulos to evaluate the real estate situation in a much more accurate way in the future, he notes.
Greek Reporter asked Markopoulos if current prices are getting too high for the Greek or local buyer, as it appears that the newly-built properties in the south of Athens are for a chosen few, not for the mass market.
He explains “The mass market in Greece is looking for properties in the area of 150,000 euros, so the price range for a local buyer is 150-200,000 euros. They’re looking for older buildings that have been recently renovated. This is the ideal property for the local buyer.
“We strongly believe that in the next five years this demand will be satisfied by the supply coming from the non-performing loan (NPL) market,” he explains.
“In Greece, we do have around 70-80 billion in NPL; 90 percent of them are backed by real estate assets, so the assumption currently is that in the next five years more than 250,000 properties — distressed properties — will flood the market,” Markopoulos says.
“This will bring the price down on this specific asset class of properties,” he explains. “We’re talking about only distressed assets — older buildings — so we strongly believe that the big bet here, the big challenge here, is accessing the portfolio of those assets.
Markopoulos says “This is why we have partnerships with private equity funds and banks in Greece.”