State property transactions boost market growth

Direct investment in the local property market is expected to top 1 billion euros by the end of 2014, posting an increase of at least 334 percent from two years earlier, when it had amounted to just 230 million euros.

Making this forecast at the Prodexpo property conference last week, market professionals spoke of a clear spike in investor interest from abroad this year. However, a number of the parties that have only recently expressed interest are short-term investors.

In the first nine months of the year, direct investment in real estate reached 730 million euros, mostly thanks to state properties. The value of transactions supervised by the state privatization fund (TAIPED) has exceeded 660 million euros. According to the data collected by Athens Economics Ltd, which represents Jones Lang LaSalle in Greece, some 417 million euros has been invested so far this year in the acquisition of hotel properties, 270 million euros concerned office spaces and 39 million euros was placed in industrial spaces. The company’s survey only records transactions valued at a minimum of 2.5 million euros.

Athens Economics head Dika Agapitidou said that 2014 is witnessing a doubling of activity from last year, when transactions added up to 410 million euros. Volume in 2014 could have been even greater, she noted, had investor access to bank funding been easier and the tax system more stable. In end-2013 the share of loans for property market deals in Greece did not exceed 40 percent, against 70 percent in early 2007.

Still, Greece remains but a speck on foreign investors’ radars. In Romania, for example, investments this year will add up to 3 billion euros, while the Polish and Czech markets will see investments of 4 billion euros each, according to data presented at Prodexpo by Bluehouse Capital co-founder Yiannis Delikanakis.

Thomas Wootten, executive managing director at Newmark Grubb Knight Frank, said that the more the Greek economy recovers, the more investor interest will grow. However, he warned, as long as asking prices remain high transactions will flag.

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