Institutional investors across Europe are increasingly turning to homes as a safe type of placement, considering the uncertainty of fluctuating markets, bonds and interest rates, a report by international consultancy firm Knight Frank says. For Greek institutionals, investing in new homes has never been a priority, in contrast to households, which have traditionally considered it a particularly safe placement. Recent surveys have found that Greeks generally do not buy homes for investment purposes and find it hard to sell them. Their main investment incentive in buying them has been to rent them. Up to the mid-1990s returns were satisfactory, and one of the best possible shields against inflation. Since then, things have changed considerably, mainly due to Greece’s entry to the eurozone and the massive decline of interest rates. Now, across Europe, interest is turning to offices and commercial properties, as institutionals consider investing in housing developments – a sector with low returns and particularly limiting legislation. As Frank notes, the great cash flow from the decline of interest rates, the need for greater dispersion of investment portfolios, the greater transparency in markets and the revision of the sense of investment risk have given the European house market a new dimension for investors. The survey found that the recent uncertainty in stock markets and the decline in bond yields and other similar financial products have convinced pension funds and insurance companies to switch to the housing market. Many analysts argue that it was only a matter of time before institutionals turned to investing in housing, since commercial properties have been fetching returns that were hardly impressive. Furthermore, the need for balanced portfolios to include some form of real estate has upgraded the role of housing, which is less dependent on other types of properties, allows for satisfactory yields and limits risks. The continued doubts and unrest in the European pension system have also turned several investors towards housing, which they perceive as a means of protecting their capital in the long term, as this sector’s long-term yields are on a par with the best years of stock markets if the risk factor is also considered. For the 2001-2005 period, the returns of the European house market are estimated at 52.3 percent. This may not sound so impressive to institutional investors for a five-year period, while a number of them point to the high costs of managing housing investments compared to that for commercial properties, due to the high number of tenants. Other major advantages of the European housing market are its big size and the possibilities for investors. Frank estimates that the value of the house market in Europe stands at 32 trillion euros. Europe had 218 million households in 2005, a number which is expected to rise by 12 percent to 244 million by 2009. The main characteristic of the European market is its incongruity. Northern Europe has a much more mature and investment-friendly market, with greater cash flow and transparency. In contrast, Southern Europe is dominated by the lack of transparency. There is plenty of gray money in transactions, corruption and bureaucracy create problems and delays, while the lack of liquidity has been covered by the great expansion of mortgage loans in the recent years. The only exception is the Spanish market, the Frank report notes.