Real estate developer Babis Vovos expects to complete two major office and retail space projects next year, which is likely to boost its net asset value (NAV) per share, its chief executive said yesterday. «We estimate a contribution of around 2 euros to our NAV per share from these two projects in the next 18 months, based on a conservative scenario,» Chief Executive Aris Vovos told Reuters in an interview. Net asset value, which reflects a company’s total assets minus its liabilities, is the financial yardstick used internationally to evaluate property developers as opposed to earnings, which may be erratic. Vovos had net profits of 125 million euros in 2005 and NAV per share of 17.10 euros, up from 12.30 euros in 2004. It sees NAV per share rising to 21 euros in the second quarter from 19.34 euros in the first quarter. Last year, Vovos, which mainly develops and leases office property, was awarded a contract to build a 24,000-square-meter office complex in central Athens to house the stock exchange. About one-third of the property is owned by Hellenic Exchanges. Vovos plans to lease the rest to banks and insurance firms, which have already expressed interest. «I estimate an annual rental fee of 4.5 to 5 million euros from the Athens avenue project, while the total cost will reach 30 to 32 million,» Vovos said. He added the firm would not sell the property, expecting strong rental income as the Athens Stock Exchange’s move will create a new prime location. «We will remain owners of the property unless prices rise significantly,» he said. Vovos recently switched strategy: Instead of selling, it retains the real estate it develops to cash in on increasing demand and rents for large office and retail space in the Greek capital as major foreign companies step into the market. More projects in pipeline Vovos, with a current market value of 628 million euros, is also planning to develop and possibly sell a commercial property and parking facilities along Syngrou Avenue, which links central Athens with the southern suburbs along the city’s coastal frontline. «There is great possibility the office and retail space project on Syngrou Avenue will be sold. There is much interest from foreign property funds that are willing to pay in advance, well before completion,» Vovos said. He said the property could sell for 65 to 70 million euros. In the next three years, Vovos plans to develop three to four office and retail space properties totaling 150,000 square meters in different Athens locations to meet growing demand. «Big international and local companies are interested in large-scale office buildings in excess of 100,000 square meters,» Vovos said. «The estimated value of the investment is 750 million euros with the average monthly rental fee conservatively estimated at 25 euros per square meter, implying a 6 percent yield,» he said. He also sees good growth potential for large-scale shopping malls in Athens, which currently has just a couple. Budapest, with less than half the Greek capital’s 4 million population, has more than 11. Vovos’s shares have gained 33 percent since the start of the year, outperforming the broader market, as the firm offers high visibility in its future NAV appreciation. The stock trades 4.2 times estimated 2006 earnings, at a hefty discount compared to a 26.07 multiple for the European real estate sector.