ECONOMY

Commercial property maturing

The year 2004 was when commercial real estate was established as an alternative and especially profitable investment instrument in the minds of international institutional investors, suitable not only during stock market crises but also when the markets look forward to a bull run. According to multinational firm Jones Lang LaSalle, the European real estate markets attracted about 90 billion euros in direct investment in 2004 and the average gross return on their placements approached 10 percent. Greece was unfortunately again left out of the international party last year, though it can no longer be said it lacks the «appropriate» product. The sole exception was Rockspring’s purchase of an office block on Athens’s Mesogeion Avenue, belonging to the Sarantopoulos family and housing the Development Ministry, for 40 million euros. Rather curiously, at the end of 2003, Piraeus’s municipal authority ignored a proposal by Dutch firm AM Development for a 600-million-euro investment around Karaiskaki Stadium in Neo Faliron. AM Development is now active in Turkey. «Even though performance in attracting foreign investment to real estate to date is surely not impressive, I consider that the conditions are getting into place for a turnaround in 2005,» says Athinaiki Economiki-Jones Lang LaSalle’s General Manager Dika Agapitidou. «The government’s development law is facilitating investments in various segments of the real estate and tourism sectors and it is taken for granted that the plan for the utilization of Olympic installations will attract the interest of foreign companies. Even though there are delays because the installations must be rendered ‘clean,’ without legal loose ends, I think that we can see some progress in one or two venues that will improve the climate.» A further important development that can boost the market this year will be the planned listing of real estate investment companies on the Athens bourse. The notable candidates are EFG Eurobank Properties, Piraeus Real Estate and, to a lesser degree, the Hellenic Public Real Estate Corporation (KED). «This will spur foreign investors’ interest in the Greek market, giving them the opportunity of direct investments,» says Agapitidou. «This is important, as the more the Greek market matures, the lesser the investment opportunities for private investors and the greater the sway of the institutionals in a market where items promising a good income are now few.» Regarding the rest of Europe, Jones Lang LaSalle’s projections for commercial real estate are particularly upbeat and the volume of investment is considered to exceed that of 2004. According to a study by the firm, the prospects are favorable for all such property, with those catering to retail sales stealing the show, followed by office space. The largest volume of investment capital is expected to head for the markets of Germany, Central Europe and Scandinavia. But in terms of investment by enterprises and chains themselves, Central and Eastern European markets stand out, given the new opportunities in the new EU members and significant improvements in the institutional frameworks. Russia, Turkey, Slovakia and Romania are expected to lead the way.