ECONOMY

Foreign firms continue to eye property market

Even though conditions are not as favorable as before, foreign institutional investors still show interest in the Greek property market and even make some careful investments. A few months ago, Pricoa, the investment arm of US insurance giant Prudential, bought the offices of PriceWaterhouseCoopers on Kifissias Avenue, in Halandri. The money spent on the acquisition of the 5,500-square-meter building was almost a token sum compared to Pricoa’s investments of over 3.5 billion euros in Western Europe. Still, the move is proof of the company’s willingness to maintain a foothold in the Greek market and, probably, make further acquisitions later. Other firms active in the Greek market are the UK’s Pradera, owner of the Village Park Entertainment Center at Aghios Ioannis Rendis, southwest of Athens, the French company Klepierre, which has invested in the Makedonia commercial center in Thessaloniki, and US firm Lasalle Investment Management. No mere buccaneers, these companies have recognized the existing potential and are taking positions accordingly. Last summer, the government once again failed to act boldly, this time in connection with property tax reform. Maintaining a double-digit rate in the property transfer tax and failing to introduce VAT on new construction, at least until 2005, poured cold water on foreign investors’ plans. As one of the local players told Kathimerini, fund managers investing in properties were extremely disappointed. «The opportunity provided by the Olympic Games was squandered,» he says. Still, the Greek property market is a relatively buoyant one, especially since prices have climbed down from the impossible heights reached in 1999 and 2000. On the other hand, the drop in rental prices makes property owners and developers reluctant to rent space, because the return on their investment is now less. Nothing, however, shows that the prices reached a couple of years ago will return any time soon. Market watchers are quite optimistic, however. They say that foreign investors are more willing to take risks in the Greek market. Until now, they say, most foreign investors were looking to buy a medium-sized (up to 20,000 square meters) office building already leased to a solvent company. There are now investors willing to be partners in property development, as well.