The lack of a central plan that favors large residential developments is discouraging major foreign players who could help alleviate the housing crisis from entering the Greek market, according to Kostis Papadopoulos, president of ULI in Greece and Cyprus, in statements to Euro2day.gr.
With a presence in over 80 countries, the Urban Land Institute (ULI) is an international non-profit organization active in urban development and land management, with companies such as Dimand, Hines, Prodea, and Blueground participating in Greece.
Mr. Papadopoulos emphasizes that in "the Greek market, which is fragmented mainly into small horizontal and vertical properties, there is a lack of large plots of land."
"There is no central plan that favors large residential developments, with the result that institutional investors, who are the ones who could carry out large-scale residential projects - which would breathe life into the supply of housing that Athens needs and could relieve market and rental prices- exist to a very limited extent, with the exception of the Elliniko special project."
However, in the tourism sector, there is the market size required by foreign funds, as the main factors that interest foreign long-term institutional investors are scale, liquidity, transparency, and investment returns.
"Foreign investors in Greece are mainly active in tourism and residential real estate and, to a much lesser extent, in commercial real estate. The tourism sector is the only one that attracts institutional capital, as, in addition to the momentum and return prospects in our country, it also offers a scale that is necessary for such capital, as well as strong fundamentals, " he explains.
He goes on to point out that such projects are mainly resorts and are located in tourist destinations outside Athens. In addition, Athens' tourism product has been significantly upgraded in recent years due to its growing popularity and its transformation into a year-round city break destination, offering quality and scale and attracting more and more institutional capital.
Interest remains
Despite all the problems in the Greek market, there is still "quite serious interest" from foreign investors in the Greek real estate market, he argues.
The decline we are seeing in some indicators such as FDI (Foreign Direct Investment) in Athens real estate is mainly linked to the change in the Golden Visa thresholds and not so much to a real decline in interest in the city's real estate.
"As long as our country offers more attractive prices compared to other European cities and given that there is relative political stability, then foreign interest is expected to remain high both for the capital and for tourist destinations,"according to Mr. Papadopoulos.
The need for liquidity
One of the major challenges facing the Greek market is the lack of liquidity, which is weighing on the commercial real estate sector and REICs.
"Liquidity has to do with the ability of an investor to trade efficiently, quickly, and effectively. A more general institutional market framework is needed that can play the role of sellers and buyers on a case-by-case basis.
We need a sufficient number of large-scale domestic developers, investors, financial institutions with the appropriate tools and, very importantly, the existence of an institutionally organised and predictable listed real estate market (e.g. AEEAP) with a strong presence in international indices such as EPRA,"says Mr. Papadopoulos.
It should be noted that no Greek companies are included in the EPRA (European Public Real Estate) index, which tracks approximately 500 companies.
"Greece needs to improve in all these areas so that investors, foreign and domestic, have options when the timecomes to exit an investment," concludes Mr. Papadopoulos.