ECONOMY

Uncertainty driving property investors away

The economic and political stability of a market are two key factors in an investor’s mind when it comes to purchasing property, according to 45 European investors surveyed by the NAI Hellas/Avent SA commercial real estate brokerage and consultancy firm, making it clear that the current political-economic risk has diminished the appeal of investing in the Greek market.

As a result, any talk about new investments in real estate has frozen in light of the political developments in the country. It was apparent that problems were lying ahead as early as mid-October, with sector officials saying that a number of foreign investors interested in property had become more reserved then, putting their decisions on hold.

Other factors discouraging foreign investors from choosing Greece are the unstable tax environment, the existing economic climate and the lack of cash flow in the market.

Market professionals point to the 20 different laws passed regarding property taxation since 2009, which generates huge uncertainty on the part of investors.

Survey respondents also noted the adverse factors of the lack of appropriate properties for investment, the limited availability of bank funding, the austerity policy in general and the unrealistic expectations of sellers regarding the level of their asking prices.

Hotels are the most popular property category for investment, drawing the interest of 37 percent of investors, followed by the office market (26 percent) and commercial properties (21 percent). Some 11 percent of investors are looking for industrial real estate and 5 percent for logistics buildings.

Greece’s plus points include the prospects for medium-term capital gains, the absence of the currency exchange risk thanks to its eurozone membership, and the constant growth of tourism. The main reason for Greece’s return to the radar of international investors in recent years has been the drop in prices that has rendered local properties very attractive, especially if the market manages to recover from its current lows.