In late 2017 Grivalia Properties formed a consortium with Dimand Real Estate for the development of part of the former premises of the Papastratos tobacco company in Piraeus.
Real estate investment companies (REICs) are planning to develop new buildings and renovate existing ones this year as they seek more efficient ways of enhancing their property portfolios.
Senior officials in the sector say that, in doing so, the companies will have full control of the investment product they wish to create, and will be able to determine the standards and specific features they want down to the last detail so that they they can obtain the greatest capital gains possible. This becomes all the more important given that in recent years the Greek market has been deprived of new property developments due to the abstention of development companies from new investments.
In this context 2019 will bring the first such development by NBG Pangaea, the biggest REIC in Greece. The company will construct a bioclimatic office building in the Paradisos neighborhood of Maroussi in northern Athens. The planning of the project is being conducted by NBG Pangaea itself, in cooperation with an external partner, and concerns a leasable area of 5,000 square meters plus 3,800 sq.m. of basement space.
“In 2019, and generally over the next few years, we will place great emphasis on property development so that the assets meet the standards we want our portfolio properties to bear. I believe the Greek market is short of modern bioclimatic buildings, which are at the forefront of demand, and that is where we need to focus immediately,” says Aris Karytinos, chief executive at NBG Pangaea.
Sector professionals note that the existing office stock is obsolete and consists of buildings that are not energy-efficient. Moreover, the investment by a REIC from the development stage ensures a higher return on its capital compared to buying a ready asset, as the costs are lower.
The swing toward property development by REICs started in the last few months of 2017, when Grivalia Properties formed a consortium with Dimand Real Estate for the development of part of the former premises of the Papastratos tobacco company in Piraeus. Since then Grivalia, which is about to be absorbed by Eurobank, has signed another three similar deals with Dimand, to participate in the development and reconstruction of the entire Papastratos complex in Piraeus, through which it will obtain state-of-the-art office space.