Investor interest in leased commercial properties in Greece has grown over the last 12 months according to leading estate agents. They stress that this property category is the only one – with the exception of tourism – to have seen any demand recently.
Yiannis Paraskevopoulos, managing director at Danos & Associates, says that leased commercial or professional properties that can fetch significant returns are monopolizing discussions with potential Greek as well as foreign investors and attracting the greatest interest. He attributes that to a number of factors, such as the strong cash flow of domestic real estate investment companies, especially after the recent inflow of funds and investors into their share capital.
Paraskevopoulos adds that another reason is the drop in rental rates, along with the increase in investment yields due to the financial crisis that has reduced the number of market players in most domains. This combination greatly benefits the Greek real estate investment market and is the main reason why foreign investors are focusing on the country, because, as he points out, “in the main European markets there is a huge volume of foreign investments, resulting in returns having reached saturation point, so that makes them turn to other markets besides the mature ones.”
A fourth reason cited for investors’ shift to local commercial property is the expectation of future capital value, a feature in the Greek market that mainly attracts long-term investors.
According to Paraskevopoulos the returns on offer have stabilized and amount to 8-8.75 percent for office space, 7.5-8 percent for commercial stores and 11-12 percent for storage/logistics space. These returns concern properties in high-demand areas and with solvent leaseholders, these being Greek enterprises and major multinationals.
On the other hand, certain factors are holding the market back, such as the unstable and constantly changing tax system, the general climate of political instability and the low supply of appropriate properties for investors.