ECONOMY

Foreigners eye Greek property market

Greek real estate does not have the best of relationships with the international investment community. Company officials, analysts and local and foreign organizations have for years singled out Greece’s insufficient legal framework as the main reason the local market is deprived of foreign capital. Add to this town planning, zoning and tax problems, as well as the lack of appropriate products. Nevertheless, the recent development of shopping centers, housing complexes and the Olympic installations are proving that the Greek market is getting some attractive products at a time when mature European markets are showing visible signs of investment saturation and institutional investors are turning toward emerging and rapidly developing markets in Central Europe and the Balkans. Market professionals say a significant number of foreign funds are scanning the country and waiting for the right moment to act. For instance, foreign institutionals are now the owners of 43 percent of listed construction company Babis Vovos. This goes some way to prove that foreign investors are indeed interested in the Greek market. Furthermore, Greece is giving good signs to the international investment community: The government is making efforts for shifts in the tax status of properties and the rationalization of the market through value-added tax; the Public Works Ministry is promoting a new zoning plan; and public-private partnerships are in the works. The most recent international investment in the Greek market came with the deal of listed firm REDS, with France’s La Societe Generale Immobiliere Espagne (LSGIE). This was announced in early August and refers to the construction of a shopping center at a 320,000-square meter estate at Kantza, Eastern Attica, which the French company will buy for 70 million euros, following a provisional agreement with a REDS subsidiary. The total amount of the investment is estimated at 300 million euros. Biggest deal ever Rockspring Property Investment Management (formerly PRICOA) was the first foreign investment company to position itself in 2002 in the Greek office market by purchasing the property of PricewaterhouseCoopers, covering 5,500 sq.m. on Kifissias Avenue at Halandri. Last summer, Rockspring proceeded to the biggest deal ever by a foreign investor, buying the office building where the Development Ministry is housed at Mesogeion Avenue for 40 million euros. The catalyst for that was the housing of a state agency and the secured return of 7.6 percent. Market officials note that the legal framework regarding lease of professional space, which effectively does not protect the owner, is a major obstacle for foreign investments in the office market. Now the Greek portfolio of Rockspring is estimated at 60 million euros, an amount that is almost symbolic compared to the company’s portfolio in the rest of Europe, reaching 7 billion euros. One of the most important foreign investments in Greece was Pradera’s 2001 purchase of Village Park at Renti, between Athens and Piraeus. Its estimated value of 64 million euros, and the move belongs to the fund’s general strategy for expansion in the European market. Pradera is a London-based mutual fund with various shareholders, some of them being social security funds in Germany, France and the Netherlands. France’s Klepierre, one of the top companies in shopping center management in Europe also made a significant investment, purchasing the Macedonia Center in Thessaloniki, whose total surface comes to 11,687 square meters. It hosts a Carrefour supermarket, 27 retail stores, a bowling center, an 11-screen cineplex, catering spaces and 2,400 parking spaces.The Paris-based company has the management and operation of shopping centers as its main activity, fetching 78 percent of its annual revenues. Another foreign company active in Greece is Britain’s Loyalward, which is promoting a major tourism investment in Crete that costs 700 million euros, but which has had significant difficulties: Sources say the company is still a long way from securing the permits required. The story of this investment stretches back to 1998, focusing on the use of 26 square kilometers owned by the monastery of Toplou. The project provides for the creation of hotel units, conference facilities, golf, and four «villages» of 360 people each, for customers mainly from Northern Europe.