Each time the local bureaucracy turns away a foreign company wishing to be involved in the domestic real estate market, through the complex and often obscure town-planning and tax system, the blow is much greater even than the loss of a foreign investment amounting to hundreds of millions of euros. It also reinforces Greece’s already negative reputation in the international market, keeping the country off the map of foreign institutional investors. The latest worrying sign comes from the recent annual report by Urban Land, one of the most significant real estate institutes globally, in cooperation with the PricewaterhouseCoopers consultancy firm, titled «Emerging Trends in Real Estate Europe 2005.» Having processed the responses from officials of 25 of the biggest companies in the property development and services sector, based on returns in relation to risk, Athens is classified among the markets where liquidation of invested capital is recommended. «Athens’s market is isolated from the rest of Europe and is almost exclusively covered by local agents. The biggest part of the market is owner-used or let by banks and their subsidiaries, while any foreign institutionals who did show interest soon realized that the existing tax system discourages any investment move. There isn’t even sufficient volume of notable investment product,» the report explains. On the other hand, property development companies that have come to Greece seeking out opportunities emerging in developing housing and commercial plans, either rushed away or are still fighting with the beast of Greek bureaucracy; but their patience is wearing thin. Typical examples are the Dutch AM Development, which last year presented a complex housing-commercial plan in Piraeus, budgeted at 800 million euros, which never got off the ground; and the Portuguese Sonae Sierra, which in its six years of presence in Greece has only developed one shopping center, even then not on its own but in cooperation with Lamda Development. The plan to create a shopping center in Piraeus at the HROPEI plot is still pending. Recently Sonae, which has set up a consortium with Acropol Haragionis, presented its new proposal with improved offsets for the Municipality of Piraeus, asking for a response within a reasonable period of time. Slow changes The modern commercial developments under construction are the cream of what the Greek real estate market can show to the international investing community, according to the report, while in the office market the stock of spaces far exceeds demand, although there is a significant shortage of high-quality spaces. The report also highlights the government’s intention to promote changes in the tax system and town planning, but stresses that any initiatives taken proceed at slow pace, meaning that the market’s picture cannot change within 2005. Urban Land believes that the acceleration of procedures for the creation of listed Property Investment Companies (PICs) is the most hopeful development in the Greek market, paving the way for even the indirect attraction of foreign capital. The curtain-raiser was the completion of the public offering of the PIC of Piraeus bank, while toward the end of the year similar moves are expected from Eurobank and the Hellenic Public Real Estate Corporation (KED). The worst investment markets for 2005 according to the survey by Urban Land are those in German cities (Frankfurt, Berlin, Hamburg, Munich) and Amsterdam. The choicest investments – real estate’s el Dorado – taking into account returns and investment risk, is in central and eastern Europe, while the market always prefers mature cities like London, Paris and Brussels. Notably, Turkey, and Istanbul in particular, is among the market with the most positive development prospects.