Please provide us with your investment outlook for Real Estate in Athens, Greece for 2021 and 2022 (e.g. compared with last year and the last decade, how COVID-19 has affected the sector, how the market has changed or not, how Athens compares with other world capitals for investment, etc.)
The coronavirus pandemic has caused quite a stir in the real estate sector and has tipped the balance in how the sector is being managed by financial institutions in Greece. It is a fact that the real estate sector has not been affected to such a degree as other economic sectors. The uncertainty and insecurity for what the next day will bring, as well as the insufficient level of preparedness by the involved stakeholders to operate under lockdown conditions have both inevitably affected the real estate market. Let us not forget that visiting properties and public services was difficult to impossible, which meant transactions in the real estate market were being postponed. At the same time, there were issues with rent payments and short-term house rentals were being cancelled. Travel restrictions stressed the market even more since foreign buyers’ access to the Greek real estate market has been significantly impaired. Despite that, to a large extent, the shock was temporary, and the market has started to pick up. In order to mitigate these unprecedented challenges, technological advances came to bridge the gaps. Using modern technological tools, they brought properties to the fore for prospective buyers. Virtual tours in real time, rich audio-visual footage and instantly sharing information became the new reality for both buyers and sellers. By doing so, it was possible to contain market depression and complete sales in a way that a few months ago would have seemed inconceivable. It will take more time for things to completely return to normal and it is possible that we will see increased pressure on certain property types. Our prediction is that industrial properties, as well as touristic, will continue to be under pressure for the remainder of 2021 but we foresee growth in prices for industrial/ warehouse/ distribution properties in good locations with good accessibility/ connectivity and build quality. It is widely acknowledged that the pandemic has accelerated the transition to e-commerce and, clearly, this affects commercial properties. However, whether this transition will continue at the same pace or not, can only be evaluated in the coming months when reality will start returning to pre-pandemic levels.
Why should someone invest in Real Estate in Athens?
Athens is a fantastic destination which offers everything from a historical center and monuments, to beautiful beaches and delicious Mediterranean cuisine. Athens offers a unique opportunity for investment, as the economic crisis led to a real estate price drop, between 20-40% in real estate values in some areas. Without a doubt Athens is a hub and financial center - investing in real estate is the most secure way for one to yield maximum sustainable returns with good liquidity and medium-term capital gains. This is the reason why family offices, corporate and private investors as well as funds have been investing heavily in Athens during the past 4 years.
Where would you advise someone to invest in Athens? (e.g. commercial, residential, location, etc.)
In Athens there is a plethora of investment opportunities and each location has something special to offer. With regards to specific property types, we believe that office spaces will experience a small drop in values, as a lot of businesses adapted quickly to remote work and realized they could be as productive without their workers commuting to city centers. The demand for smaller, technologically-enabled spaces will be substantial and there will be increased demand for smart and sustainable buildings. Demand for buying a second home or vacation home is expected to return to pre-pandemic levels including asset acquisition of primary residences noting an upward trend from domestic buyers. Industrial and warehouses in easily accessible locations will be another “hot” asset class including hospitality assets. We as Delfi Partners & Company, note significant interest in these 2 asset classes from local and international institutional investors and private equity funds.
What kind of returns can a long-term investor of real estate in Athens expect in the coming years?
The long-term outlook of the Greek housing market will depend on Greece's ability to recover from the economic effects of the pandemic. Greece will also need to regain and further to strengthen the investors' confidence by improving the long-term prospects of the Greek economy and continuing with structural reforms. The recovery of the Greek residential property market gained pace in 2019. After experiencing a sharp contraction between 2010-16, falling cumulatively by 55%, we anticipate that house prices will continue having an upward trend for 2021 and peaking in 2022. Greece’s residency by investment program, initiated in 2013 which involves a five-year resident permit in return for a €250k investment in real estate will also contribute to the growth in FDI inflows. Increasing demand for short-term rentals in Athens and other tourist areas has grown significantly over the past few years achieving gross returns more than 12%. Long term resi gross annual returns achieve 7%.
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