“The Greek real estate market: characteristics and prospects” in Thessaloniki

Eurobank EFG organised a meeting on “The Greek real estate market: characteristics and prospects” in Thessaloniki, at the Hyatt Regency Hotel, on May 19^th 2006, with the participation of seven speakers. The event was supported by Eurobank EFG Economic Studies and Forecasting Division and the programme included, among other topics, a presentation of part of the results of a Greek household survey on the expected development of the real estate market in this country, which was conducted in December 2005-January 2006 on the initiative and with the support of  Eurobank EFG.

This meeting is part of a new series of initiatives taken by the Bank in the context of its efforts to contribute to public debate on the one hand and to provide, on the other, systematic and comprehensive information to its clients and the broader public in Greece on critical issues related to the economy, markets, society and economic policies.

Opening the meeting, the Bank’s Deputy CEO, Nikolaos Karamouzis, referred to the dramatic increase in real estate prices in developed countries. Total real estate value has risen by 30 trillion dollars in the last five years, an increase that is very close to these countries’ GDP. Mr. Karamouzis noted, among other things, that in Greece today, in addition to the taxation system, many other additional measures are being adopted in the real estate market. He mentioned the typical example of the Real Estate Investment Trusts (REITs), which have also been introduced in Greece, public-private partnerships (PPPs), public organizations housing projects, the development of new financial instruments, such as sale and lease back and the promotion of a national land planning program.

Eurobank EFG Financial Adviser and Head of the Economic Studies and Forecasting Division, Gikas Hardouvelis, introduced the speakers of the meeting’s two thematic sessions.

The first thematic session dealt with the characteristics of the Greek housing market and mortgage credit.

Mr. Dimitris Malliaropoulos, Research Consultant of the Bank’s Economic Studies and Forecasting Division, after describing the profile of home buyers, pointed out that the impact of higher rates in the Eurozone and Greece will be limited as a rise in rents is also expected.

Mr. Theodoros Kalantonis, Manager of Eurobank EFG Mortgage Credit Department referred to the development of mortgage credit in Greece, affirming that its dynamic progress will be maintained, since the relevant loan percentage of GDP and the cost of money are small. At the same time, he added, there are significant margins for further growth of mortgage credit in Greece, particularly at regional level.

Mr. Manolis Davradakis, economist at the Bank’s Economic Studies and Forecasting Division, observed that one out of seven borrower in Macedonia and the overall sample has used the amount of the housing-repairing loan obtained for other purposes. This amount is estimated at 2.5% of GDP for 2005.

The meeting’s second thematic session focused on the business premises market.

Mr. Demetrios Tzivras, Manager of Lambert Smith Hampton’s Thessaloniki office, analysed the commercial and professional premises market in Thessaloniki. He reported that the highest demand for commercial real estate can be observed in the organized industrial zones of the northern and western parts of the city, since they are closer to the port. At the same time, the demand for offices and business premises in downtown Thessaloniki is similarly high.

Ms. Niki Syboura, Managing Director of Cushman & Wakefield Hellas, analyzed the Greek real estate market’s growth prospects. She stressed that in the next two to three years, a rise is expected in investment volume with a participation of mostly foreign investors, as the upgrading of infrastructure and the opening of new markets are significant. Regarding, in particular, offices and shops in central areas, she predicted that they will attract institutional investors in 2006.

Mr. Aris Karytinos, Deputy General Manager of Eurobank EFG and head of the Real Estate Department, stressed that the future of Real Estate Investment Trusts (REITs) in Greece appears as highly promising thanks to the large institutional portfolios, which can contribute to a significant rise in the demand for REIT investments. At the same time, REITs offer a type of investment that is fully compatible with the Greek investor’s profile, given his special relationship with real property.

Finally, Mr. Sotiris Papantonopoulos, Eurobank’s EFG Leasing Manager for Northern and Central Greece, referred to the advantages of leasing in the business premises market. These advantages include favourable tax and accounting treatment, easy bank financing and no tying up of capital.

The conclusions of the meeting were summarised by Gikas Hardouvelis, who stressed the positive climate prevailing in the home and office real estate market, as well as Thessaloniki’s very promising prospects.