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Greece Real Estate Report Q1 2013

Greece Real Estate Report Q1 2013

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Price $1,175.00
Meta Description Greece Real Estate Report Q1 2013
Publisher Business Monitor International
Date of Report Sep 1, 2013
Quick Overview
The Greece Q113 real estate report examines the commercial office, retail, industrial and construction
segments alongside the construction sector in the context of the country's continuing economic struggles.
With a focus on the principal cities of Athens, Piraeus and Thessaloniki, the report covers the rental
market performance in terms of rates and yields. It also examines how best to maximise returns in the
commercial real estate market, while minimising investment risk and exploring the impact of the
government led austerity on a long-stagnant market. Key complementary industry areas are also
examined including the construction industry and business environment, key in analysing investor
sentiment.
While the Greek government has overcome a number of obstacles, with the pace of contraction having
eased in 2012, we stress that a return to sustainable growth is predicated not just on successful economic
reforms, but also on targeting policies at future growth industries and restoring confidence. The shortterm
outlook for the real estate sector is not likely to restore investor confidence over the near term; the
pipeline is glacial, demand-destruction is endemic and oversupply is rife. The risks for the real estate
sector as a whole are therefore firmly weighted to the downside, with a slight silver lining coming in the
form of high-end space, particularly in the retail and office segments. Greece's construction industry is
expected to remain in recession for the sixth consecutive year in 2012, and we do not expect a recovery
until 2014.
Key Points:
?? The pace of economic contraction in Greece could finally start to ease, which would be
supportive of our view that the depression will moderate in 2014 and the economy will return to
growth. However, we expect this growth to be subdued, at least over the medium term.
Moreover, while we still believe that Greece's decision to leave the eurozone is not clear cut, we
warn that should this scenario materialise, the economy would be facing a double-digit
contraction as the banking system collapses and private sector wealth is destroyed.
?? Ongoing economic pressures, investors' caution and government austerity drive will act as the
main impediments for recovery in the Greek commercial real estate sector.
?? Our outlook for the Greek construction industry has turned more bearish, and we forecast a
10.6% y-o-y contraction in real terms in 2012, marking a third consecutive year of decline for
the industry. Most infrastructure projects have EU funding and the government is looking to
speed up infrastructure growth; however, as a way to buoy the recession-hit economy, we see
little prospects for recovery in the sector anytime during our 10-year forecast period to 2021.
?? Faced with weak economic growth prospects, reduced spending on planned projects and
diminished demand from the private sector, there is little reason for investors to return to the
market. Growing at a lacklustre 0.9% annual average between 2012 and 2016, we expect the
infrastructure industry value to reach only EUR3bn by 2016, compared with the EUR5.2bn seen
in 2007. In the residential and non-residential segment, higher property taxes, tight credit and
rising unemployment have resulted in 200,000-270,000 unsold properties, forcing a significant
proportion of contractors to offer discounts of 30-50% as a way to avoid looming bankruptcies.
Table of Contents
Executive Summary ......................................................................................................................................... 5
SWOT Analysis ................................................................................................................................................. 7
Greece Real Estate/Construction SWOT ................................................................................................................................................................ 7
Greece Political SWOT .......................................................................................................................................................................................... 7
Greece Economic SWOT ........................................................................................................................................................................................ 8
Greece Business Environment SWOT .................................................................................................................................................................... 8
Real Estate Market Overview .......................................................................................................................... 9
Market Analysis - Office ................................................................................................................................ 14
Supply And Demand............................................................................................................................................................................................. 14
Rents And Yields .................................................................................................................................................................................................. 14
Table: Historic Rents - 2011-2012 (EUR per m2/month) ..................................................................................................................................... 15
Table: Net Yield, 2011-2012 (%) ......................................................................................................................................................................... 15
Table: Terms of Rental Contract/Leases - H112 ................................................................................................................................................. 15
Industry Forecast Scenario ....................................................................................................................................................................................... 16
Table: Forecast Rents - (EUR per m2/month) ...................................................................................................................................................... 16
Table: Forecast Net Yield, 2010-2017 (%) .......................................................................................................................................................... 16
Market Analysis - Retail ................................................................................................................................ 17
Supply And Demand............................................................................................................................................................................................. 17
Rents And Yields .................................................................................................................................................................................................. 17
Table: Historic Rents - 2011-2012 (EUR per m2/month) ..................................................................................................................................... 17
Table: Net Yield, 2011-2012 (%) ......................................................................................................................................................................... 18
Table: Terms of Rental Contract/Leases - H112 ................................................................................................................................................. 18
Industry Forecast Scenario ....................................................................................................................................................................................... 18
Table: Forecast Rents - (EUR per m2/month) ...................................................................................................................................................... 18
Table: Forecast Net Yield, 2010-2017 (%) .......................................................................................................................................................... 19
Market Analysis - Industrial .......................................................................................................................... 20
Rents And Yields .................................................................................................................................................................................................. 20
Table: Historic Rents - 2011-2012 (EUR per m2/month) ..................................................................................................................................... 20
Table: Net Yield, 2011-2012 (%) ......................................................................................................................................................................... 20
Table: Terms of Rental Contract/Leases - H112 ................................................................................................................................................. 21
Industry Forecast Scenario ....................................................................................................................................................................................... 21
Table: Forecast Rents - (EUR per m2/month) ..................................................................................................................................................... 21
Table: Forecast Net Yield, 2010-2017 (%) .......................................................................................................................................................... 21
Forecast Scenarios ........................................................................................................................................ 22
Infrastructure Report ................................................................................................................................................................................................ 22
Table: Greece Construction And Infrastructure Industry Data, 2009-2016 ......................................................................................................... 22
Table: Greece Construction And Infrastructure Long-Term Forecasts, 2014-2021 ............................................................................................ 23
Construction and Infrastructure Forecast Scenario .................................................................................................................................................. 25
Macroeconomic Outlook ...................................................................................................................................................................................... 28
Table: Greece - Economic Activity ...................................................................................................................................................................... 30
Real Estate Risk/Reward Ratings ................................................................................................................. 31
Real Estate/Construction Risk/Reward Ratings ........................................................................................................................................................ 31
Table: Real Estate Risk/Reward Ratings .............................................................................................................................................................. 31
Greece's Business Environment ................................................................................................................................................................................ 31
Table: BMI Business And Operation Risk Ratings ............................................................................................................................................... 32
Institutions ........................................................................................................................................................................................................... 33
Table: BMI Legal Framework Rating .................................................................................................................................................................. 33
Infrastructure ....................................................................................................................................................................................................... 35
Table: Labour Force Quality ............................................................................................................................................................................... 37
Market Orientation .............................................................................................................................................................................................. 38
Table: Emerging Europe, Annual FDI Inflows .................................................................................................................................................... 39
Table: Trade And Investment Ratings .................................................................................................................................................................. 40
Operational Risk .................................................................................................................................................................................................. 41
Competitive Landscape ................................................................................................................................. 42
Company Profiles ........................................................................................................................................... 45
Babis Vovos International Construction .............................................................................................................................................................. 45
LAMDA Development .......................................................................................................................................................................................... 46
PASAL Real Estate Development ......................................................................................................................................................................... 47
Demographic Data .......................................................................................................................................... 48
Table: Greece's Population By Age Group, 1990-2020 ('000) ............................................................................................................................. 49
Table: Greece's Population By Age Group, 1990-2020 (% of total) .................................................................................................................... 50
Table: Greece's Key Population Ratios, 1990-2020 ............................................................................................................................................ 51
Table: Greece's Rural And Urban Population, 1990-2020 .................................................................................................................................. 51
BMI Methodology ........................................................................................................................................... 52
How We Generate Our Industry Forecasts ............................................................................................................................................................... 52
Construction Industry ............................................................................................................................................................................................... 53
Bank Lending ............................................................................................................................................................................................................ 54
Real Estate/Construction Business Environment Rating ........................................................................................................................................... 54
Table: Weighting Of Indicators ........................................................................................................................................................................... 55
Sources ..................................................................................................................................................................................................................... 57




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