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Greece Real Estate Report Q3 2010
Business Monitor International, June 2010, Pages: 61
This Greece Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Greece's Real Estate industry.
In spite of the massive crisis that evolved through late 2009 and early 2010 when investors lost confidence in the Greek government’s ability to service and roll over its bonds, Greece has not suffered a sharp recession. Rather, the main impact of the crisis is that the economy should shrink by around 2% in each of 2009 and 2010 before returning to a trend of (very) sub-par growth.
Political problems have contributed to a sharp fall in rents in Athens, Piraeus and Thessaloniki across all three sub-sectors (office, retail and industry). Our sources in the three cities suggest that rental rates dropped by 20-30% across the board during 2009. The global financial crisis and the development of new property have also contributed to this fall in rents.
Nevertheless, there is not a commercial property glut in Greece. Vacancy rates are 10% in the Piraeus industrial sub-sector, but lower everywhere else. New projects that are becoming available to tenants should command superior rents.
The main issue is that, in a country where the authorities do not have the scope to devalue, and where brutally austere fiscal policies will crimp domestic demand for the foreseeable future, the process of adjustment to the crisis must involve still-lower rental rates as well as reduced capital values and property prices.
Intriguingly, our in-country sources take a different view. They suggest that rents have fallen to the lowest level that landlords will accept. Despite evidence to the contrary (such as the falls that have taken place, the depressed state of the Greek economy and the relocation of businesses to nearby countries where land and labour costs are cheaper), they argue that rents will stabilise – or, in Thessaloniki, increase – over the course of 2010.
The report forecasts assume that rents will move sideways or downwards, and that there will be an even greater fall in capital values and prices. Accordingly, we are looking for net rental yields to rise steadily. Interviews with our in-country sources were conducted in mid-March 2010.
Key Features Of This Report:
This is the latest edition of a new series of industry reports published by BMI that seeks to identify the key dynamics of the real estate sectors of 44 countries around the world, some of which are developed and some of which are, in every sense, emerging markets. Once again, the questions that we seek to answer for each country remain as follows: What are the main issues that will matter to actors in and around real estate development in the country concerned, both over the long and the short term? What are the main constraints that they face? What are the key insights that one garners when one compares the real estate sector of the country concerned with its peers in other countries?
For Q3 we have introduced a very substantial new improvement to the reports. We have incorporated data and qualitative observations provided to us by commercial real estate agents operating in the countries we survey. As a result we have gained a much clearer picture of the balance between demand and supply in each of three main sub-sectors – office, retail and industrial. We have also introduced a new approach to the forecasting of rental yields, which is discussed in the methodology sector of this report.
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