Real Estate Market Report 2013

RE-DEFINING THE GREEK
REAL ESTATE MARKET
Commercial Real Estate Market Report 2013
E79
ALEXANDROUPOLI
ΚAVALA
THESSALONIKI
IGOUMENITSA
VOLOS
IOANNINA
PREVEZA
LAMIA
ΑTHENS
PATRAS
ΤRIPOLI
KORINTHOS
KALAMATA
RHODES
CHANIA
HERACLION
CRETE
E79
Capital: Athens
AIRPORTS
Official Language: Greek
PORTS
Currency: Euro (€)
NATIONAL ROADS
Population: 10,815,197 (2011 Cencus)
UNDER CONSTRUCTION
GDP (2012):193.7 bil €
EUROPEAN ROAD
Executive Summary
After five consecutive years of recession, in 2013 there was a steady improvement
in two of the three main macroeconomic indicators for Greece, while the rise in
unemployment showed signs of slowing:
GDP
CPI
Unemployment rate
Similarly Real Estate values, having closely followed the financial market since
2008, decreased on average (all sectors) by c. 55%. The close of 2013 showed
stabilization in rental and capital values and a new normal being created.
Towards the end of 2013, the office, retail and hotels & leisure sectors seemed the
most likely candidates for recovery.
In the Athens office market, rents and yields for Grade A offices remained at
2012 levels, ranging from 12€ to 20€/m2 per month and from 8.25% to 11%
respectively. Kifissias Avenue and Athens City Centre are still the most popular office
locations. Demand for Grade A quality accommodation is increasing as is the supply
of Grade B accommodation.
Likewise, in the retail market, rents and yields for prime locations in Athens
remained steady compared to 2012 (ranging from 60€ to 140€/m2/month for
Ermou Street, Kifissia, Glyfada & Kolonaki) and 20€ to 50€ for other retail markets,
with yields ranging between 7.25% to 8% respectively. Established prime retail
locations continue to be favored and enjoy low vacancy rates. Shopping centres
have been comparatively less affected by the credit crunch and on the
whole perform better in terms of rental values and vacancy rates. A notable trend
in the retail market has involved a large number of small retail units converting
into F&B establishments.
In hotels & leisure, the rapid increase in tourist arrivals since 2004, led to an
increase in hotel units by an average of 20% during the last 10 years. Greece is
still a favored tourist destination, showing in H1 of 2013 an increase of tourism
receipts by 15.4%. In 2013, RevPAR is estimated to exceed 30,000€ for 5* hotels and
20,000€ for 4* hotels, while the ADR is estimated to reach 150€ for 5* hotels and 90€
for 4* hotels.
In the logistics sector, a decrease of demand is noted, which resulted in a
decrease of rents and softening of yields (which ranged from 3€ to 4€/m2 and
10.5%-11.5% respectively) for Grade A logistics in prime locations.
2014 is expected to be a year of correction in capital and rental values. A new
normal is being created in the market and that has already started to show.
Opportunities are on offer for investors who buy now, at discount, and benefit
from the gradual increase of capital and rental values.
03
04
Greek Real Estate
Market Overview
During the last 15 years, the Greek real estate market went through a full property
cycle. Following closely the financial market, it fell dramatically in the beginning of
2000, only to start rising in 2001 and reached a peak in 2007. The boom period
was a result of historically low interest rates, aggressive bank lending, a rise in
income rates and high public spending on infrastructure due to the Olympic
Games of 2004. High LTV ratios and relaxation of lending terms led to high
construction and development rates. Commercial buildings in Greece increased
in capital value by almost 40% while rents grew over 20%.
After the credit crunch of 2008, Greek real estate experienced a severe downturn
characterized by falling market values. Market uncertainty, rising unemployment,
reduced income and rising taxes were the main reasons that resulted in falling
capital values and low rents; limited demand and minimum project financing also
led to frozen development and construction. Rental values are estimated to have
fallen by more than 30% in all sectors while capital values became increasingly
uncertain. It is estimated that the average decrease of real estate (all sectors)
capital values since 2008 has been c. 55%. Due to the prolonged economic
recession, oversupply of commercial space increased considerably offering
the opportunity for tenants to negotiate better terms.
Greek Investment Markets’ Yields post 2008 credit crunch Comparison
25%
20%
15%
10%
5%
0%
2008
2009
2010
10Y Gov. Bond Yield to maturity
ARY - Grade A Offices Kifissias Av.
ARY - Prime Retail Ermou Str.
2011
2012
2013
FTSE/ATHEX Large CAP Divident Yield
ARY - Prime Grade A Logistics Aspropyrgos Area
Source: European Central Bank, Hellenic Exchanges Group, NAI Hellas
The Real Estate industry appears to be less volatile than the other markets, where
the logistics industry has higher yields than the office market which has in turn higher
yields than the retail market.
Until 2009 the 10 year Greek Government bond was considered to be a risk free
investment, yet from 2010 the yield to maturity grew significantly, indicating the
economic uncertainty in the country.
The dividend yield of the FTSE/ATHEX Large Cap (top performing companies in the
Athens Stock Exchange) was considerably lower than the All Risks Yield (ARY) of the
property industry, demonstrating the low returns in the stock market.
On the whole, where the government bond's risk tripled and the return from the stock
market fell by 3% in the 5 year period after the crisis, the investment yield in real
estate increased only by 2% in all sectors to reflect risk. Property has historically
proven to be a stable investment.
Greek Real Estate
Market Overview
Greek Investment Markets’ Capital Values Comparison (2007=100)
120
100
80
60
40
20
0
2007
2008
2009
2010
OTE Stock Price
Office Grade A Kifissias Av.
Prime Retail Ermou Str.
2011
2012
2013
Prime Grade A Logistics Aspropyrgos Area
10 year Gov. Bond
Source: European Central Bank, Hellenic Exchanges Group, NAI Hellas
After 2008 capital values of real estate, bonds and stocks fell dramatically and
reached a bottom in 2011/2012. Capital values of stocks fell more than all other
markets while capital values of bonds during 2010-2012 fell less than capital
values of grade A offices and prime retail. On the whole real estate capital values
followed a similar trend as the values of stocks and bonds. However, bonds' and
stocks' capital values appear to be growing since 2011, while property capital values
follow with a slower rate. The year 2013 shows that the increase in capital values of
bonds and stocks continues while real estate values stabilize. Capital values in 2013
appear to be at a turning point given also the change in macroeconomic indices.
As the real estate market began to stabilize in 2013, the last quarters of the year
presented a number of noteworthy transactions:
Major Transactions for 2013
Project Name
Period
Type
Vendor
Taiped I
Q4
Office Portfolio
Taiped II
Q4
Office Portfolio
Pangaia REIC
Q4
66% capital share
National Bank of Greece
Invel
653 mil €
Fairfax
Q3
41.2% capital share
Eurobank Properties REIC
Fairfax Financial Holdings LTD
146 mil €
Praktiker
Q4
4 DYI Stores
Rockspring
Eurobank Properties REIC
50 mil €
Dolphino Capital
Q3
Office Building
BNP Bank
Dolphino Capital
10.3 mil €
City Gate
Q3
Mall
APN
Marinopoulos Group
6 mil €
Cosmote Headquarters
Q1
Office Building
DIMAND
Pangaia REIC
Asteras Vouliagmenis
Q4
Ermou 19
Q3
Source: NAI Hellas
Buyer
Price
Greek State
Pangaia REIC
115 mil €
Greek State
Eurobank Properties REIC
145 mil €
Long term Hotel Concession Greek State & National Bank of Greece Jermyn Street Real Estate Fund IV LP
Retail Shop
Greek State
Pangaia REIC
120 mil €
493 mil €
5.9 mil €
05
06
Macroeconomic
Outlook
The year 2013 shows a steady improvement of the main macroeconomic indicators
of Greece. This is reflected in the Economic Sentiment Indicator which continues to
rise from 80.0 units in 2012 to 91.2 units in 2013, the highest in the last five years.
The expected 2013 contraction of the GDP is c. 3.5%, lower than the 2012
expectation (-6.4%). GDP is expected to rise by 0.6% in 2014 and by 2.9% in 2015. In
total the GDP for the period 2007-2013 shrank by c. 27%.
CDP (% change)
8%
6%
4%
2%
0%
-2%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013E
2014F
-4%
-6%
-8%
Source: Eurostat, processed by NAI Hellas
Inflation (CPI) in 2011 was 3.1%, in 2012 was 1.00% and is expected to fall by 0.8%
in 2013 and by 0.4% in 2014. The Uniformed CPI in October 2013 reached a record
low of -1.9% (12 month change).
Inflation Rate (% change)
5%
4%
3%
2%
1%
0%
-1%
-2%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013E
2014F
Source: Eurostat, processed by NAI Hellas
The unemployment rate reached a high of 27% in 2013 and is expected to remain
at this level in 2014.
Unemployment Rate (% change)
30%
25%
20%
15%
10%
5%
0%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013E
2014F
Source: Hellenic Statistical Authority, processed by NAI Hellas
Net disposable income fell in 2013 by 6.7% since 2011 and is expected to fall by
4.8% in 2013 as an outcome of stringent austerity measures that resulted in a decline
in salaries and social benefits while is estimated to rise by 0.63% in 2014.
Disposable Income (% change)
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
2003
2004
2005
2006
2007
Source: Hellenic Statistical Authority, processed by NAI Hellas
2008
2009
2010
2011
2012
2013E
2014F
Macroeconomic
Outlook
Current Trade Balance showed a surplus of 1.5 bil.€ in 2013 compared to a 2.8 bil.€
deficit in 2012 as a result of improved performance in the food and drinks industry,
tourism and the non-metallic minerals industry.
Trade Balance (bil. €)
5
0
-5
-10
-15
-20
-25
-30
-35
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013E
2014F
Source: Bank of Greece, processed by NAI Hellas
The Automobile industry was one of the sectors in Greece that was hit by the
2008 recession. According to the Hellenic Association of Automobile Merchants &
Importers, in 2013 the number of new car licences rose by 0.4% since 2012.
Merchants and Importers are optimistic that the car market will slowly pick up and is
forecasted to further rise by 5% in 2014.
New Car Licences
350,000
300,000
20%
-12.6%
-6.9%
-4.2%
-0.8%
-4.5%
-4.5%
250,000
0.4%
5.0%
-10%
200,000
-35.8%
150,000
100,000
-31.0%
-40.1%
2011
2012
-20%
-30%
-40%
50,000
0
10%
0%
-17.5%
2003
2004
2005
2006
2007
2008
2009
2010
2013E
2014F
-50%
Source: Hellenic Association of Automobile Merchants & Importers, processed by NAI Hellas
After a deficit in the Budget of 2.8 bil. € in 2012 the Greek Government achieved a
surplus of 0.6 bil.€ for 2013 and the forecast for 2014 is nearly 2.9 bil.€.
Government Budget (bil. €)
4
3
2
1
0
-1
-2
-3
-4
2012
2013E
2014F
Source: Hellenic Republic Ministry of Finance, processed by NAI Hellas
2014 Forecast
GDP
CPI
Unemployment
Trade Balance
Disposable Income
Source: NAI Hellas
2015 Forecast
07
08
Office Market
The Office Market in Athens since 2008 has witnessed an average fall in capital and
rental values of between 40% and 50% respectively. Occupiers' priority has shifted
to downsizing in space and achieving more affordable rents.
N
W
C
S
Athens Office Market
Athens West (W)
Athens North (N)
Athens Centre (C)
Athens South (S)
City Centre
National Rd
Kifissias Av.
Sygrou Av.
Alexandras Av.
Petrou Rali
Mesogeion Av.
Faliron
Patision Av.
Iera Odos
National Rd
Vouliagmenis Av.
Piraeus Av.
Thivon Av.
Attiki Odos
Poseidonos Av.
Vas. Sofias Av.
Athinon Av.
Piraeus
Ampelokipi
The Athenian Office Market is characterized by a large supply of Grade C or even
D offices and a much lesser offer of Grade A and B accommodation. This specificity
drives vacancy rates of offices to an average range of 3% to 6% for Grade A and from
5% to 10% for Grade B, much lower than the EU average. On the other hand,
vacancy rates for Grade C or D offices range between 20% to 30% while the stock of
ageing buildings continues to rise.
Grade A Office Market - Historic Overview
30 €
8.50%
8.25%
7.50%
25 €
7.25%
7.50%
7.00%
6.50%
8.00%
8.25%
8.25%
9%
8%
7.00%
7%
20 €
6%
5%
15 €
4%
10 €
3%
2%
5€
1%
0€
0%
2003
2004
2005
2006
2007
2008
Rent (€/sq.m./month)
Source: NAI Hellas
2009
2010
Yield
2011
2012
2013
Office Market
Office stock Allocation per Area (Grades A & B)
6%
19%
15%
City Centre
West Athens
10%
Kifissias Av.
Sygrou Av.
Vouliagmenis Av.
50%
Source: NAI Hellas, on-site inspections
On the whole, vacancy rates for Grade B buildings remain higher than Grade A as
demand for good quality accommodation is ongoing.
Rental values and yields for Grade A office buildings in Athens in 2013 remained at
2012 levels. Athens City Centre is still expected to achieve higher rents than other
locations followed by Kifissias Av. (North Athens) which is the second preferred
office market in Athens.
Grade A
Prime
Rent
Prime
Yield
Grade B
Vacancy
Rate
Rent
Yield
Vacancy
Rate
Athens CBD
20.00 €
8.25%
3%
12.00 €
9.50%
16%
Athens West
12.00 €
11.00%
n/a
7.00 €
11.00%
n/a
15.00 €
8.25%
3%
10.00 €
9.50%
3%
14.00 €
8.50%
2%
10.00 €
9.50%
5%
12.00 €
9.00%
0%
9.00 €
10.00%
6%
Kifissias Av.
Mesogeion Av.
National Rd
Sygrou Av.
Faliron
Surroundings
Vouliagmenis Av.
South Athens
Source: NAI Hellas
Athens Office Market 2014 Forecast
Rents
Grade A
Grade B
Yields
Demand
Supply
09
10
Retail Market
The growing disposable income up to 2008 led to an increase in retail spending
which consequently pushed retail rental values significantly higher especially in
prime locations such as Ermou, Kifissia and Glyfada. Post 2008, a reduction in
disposable income, credit availability and unemployment reduced consumer
activity. The average reduction in 2013 retail sales has been lower than 35% since
2008. According to the National Confederation of Hellenic Commerce the
percentage of stores that closed down in the city centre of Athens in March 2012 was
29% higher than August 2011 and 27% higher in Piraeus.
Kifissia
Chalandri
Peristeri
Aegaleo
Athens
Pagrati
Patission Str.
Piraeus
Stadiou Str.
Glyfada
Ermou Str.
Grade A Office Market - Historic Overview
350 €
300 €
8%
5.00%
6.50%
6.50%
7.25%
5.00%
6.75%
6.50%
6.00%
7.25%
5.75%
7%
6.25%
6%
250 €
5%
200 €
4%
150 €
3%
100 €
2%
50 €
-€
1%
2003
2004
2005
2006
2007
2008
Rent (€/sq.m./month)
Source: NAI Hellas
2009
2010
Yield
2011
2012
2013
0%
Retail Market
Retail rents in 2013 remained stable at 2012 levels while yields in prime locations
reached 7.50%. Throughout the years of the recession, established prime retail
locations continued to be favored and have enjoyed comparatively lower vacancy
rates whereas secondary locations have suffered high vacancy rates and falling
rental values.
New conditions in the market created an opportunity for big retailers to
consolidate their market positions, reduce occupational costs through negotiation
and continue their expansion program. The Food and Beverage sector has grown
significantly as the new trend in the retail market is to convert small retail units
into bars, cafes, and restaurants.
High Street Retail Space (sq.m.)
60,000
25%
22%
50,000
20%
20%
19%
40,000
17%
16%
15%
14%
30,000
10%
20,000
9%
10%
9%
6%
10,000
5%
3%
0
Glyfada
Kifissia
Ermou
Stadiou
Retail space sq.m.
Patission
Pagrati
Aegaleo
Piraeus
Peristeri
Vacant space sq.m.
Kolonaki Chalandri
0%
Vacancy rate
Source: NAI Hellas on-site inspections
Athens High Street Retail Market 2013 Outlook
Rents
Yields
Prime
Secondary
Glyfada
60€-80€
30€-50€
Kifissia
70€-100€
30€-50€
Ermou
90€-140€
45€-70€
Stadiou
80€-100€
50€
Patission
20€-30€
8€-15€
Pagrati
25€-50€
8€-15€
Aegaleo
30€-40€
15€-20€
Piraeus
25€-35€
10€-15€
Peristeri
30€-50€
10€-15€
Kolonaki
60€-110€
25€-50€
Chalandri
30€-75€
15€-25€
Source: NAI Hellas
Prime
Secondary
7.25% - 8.00%
8.00% - 9.00%
11
12
Retail Market
Occupancy by Sector
Ermou
Glyfada
Kifissia
Stadiou
Patission
Pagrati
Aegaleo
Piraeus
Peristeri
Kolonaki
Chalandri
Food & Beverage
Cosmetics
Clothing & Footwear
Cars/Moto/Heavy Equip.
Household Goods
Services
Books/Electronics/Toys/Mobile
Vacant
Supermarket/Grocery/Butcher
Other
Source: NAI Hellas on-site inspections
Athens High Street Retail Market 2014 Forecast
Rents
Prime
Secondary
Yields
Demand
Supply
Shopping Centres
Shopping Centres in Greece appeared after 1990 and are typically multi-storey
buildings of 3 retail floors where normally one or more large anchor tenants generate
footfall. In Athens, Shopping Centres (Malls) followed the same trend whereas
bigger outlets commonly known as Retail Boxes or Retail Parks consist of a single
large floor space and are found in outer Athens. Shopping Centres compared to
High Street retail were less affected by the credit crunch and on the whole performed
better than high street retail, with lower vacancy rates, higher footfall and more stable
rates. The average leasable space per 1,000 inhabitants (for the greater Athens area)
remains less than 100m2 /1,000 persons compared to the EU-27 average of
246m2 /1,000 persons.
Shopping Centers - Key Figures
Maintenance (pa)
4 - 6 € / m2
Property Management (% of GPI pa)
2 - 4%
Allowance of risk of rental loss
> 5%
Useful Life
50 years
No. of parking spaces requirred
guide: 1 space for 15-20 m2 of sales area
No. of storeys
multi-storey, 2 - 3 retail floors
Fitout Specification
average to high
Building Costs (excl. site improvements)
1,000 - 1,500 € / m2 GEA
Ancillary building costs
7 - 15% of building costs
Source: International Council of Shopping Centers (ICSC), processed by NAI Hellas
Malls
Boxes
Name
Location
Name
Location
Athens Heart
Tavros
Airport Retail Rark
Attica Rd
Avenue
Kifissias Av., Maroussi
Jumbo
Pireos Str.
Golden Hall
Kifissias Av., Maroussi
Media Markt
Metro Mall
Agios Dimitrios
Leroy Merlin
River West
Kifissos Av., Tavros
Smart Park
Spata
The Mall Athens
Maroussi
IKEA
Kifissos Av.
Village Shopping & More
Thivon Av., Rentis
McArthurGlen Designer Outlet
Spata
Total sqm of retail space
272,500 m2 approx.
Tavros
Total sqm of retail space 175,000 m2 approx.
Source: NAI Hellas
Athens Shopping Centres
Rents
Mall - Anchor Tenant (2,000m2 +)
11€-15€
Mall > 100 m2
35€-60€
Mall < 100 m2
50€-90€
Box (min. 5,000 m2)
8€-16€
Turnover Rent
Yields
7%-13%
8.25%-9.00%
2%-7%
8.50%-9.50%
Source: NAI Hellas
Athens Malls’ Vacancy Rate
Athens Boxes’ Vacancy Rate
Occupancy Rate
Vacancy Rate
Source: NAI Hellas
Athens Shopping Centres Market 2014 Forecast
Rents
Malls
Boxes
Yields
Demand
Supply
13
14
Logistics
Investment and development interest for logistics from international players
remained low in 2013, with very few transactions to report and low business activity.
The market remains owner occupied and demand for logistics during 2013
decreased. Supply of newly constructed logistics buildings was very limited in 2012
and 2013, as developers only look to pre-let or pre-sell before commencing any new
development. Falling demand created an opportunity for occupiers to bargain rents
on Grade A logistics buildings in prime locations.
Attica Logistics Market
Schimatari
Athens North (1)
Inofita
4
Metamorfosi
Kifissia
Krioneri
Agios Stefanos
Krioneri
3
Magoula
Athens East (2)
Ag. Stefanos
Kifissia
1
Koropi
Spata
Aspropyrgos
Metamorfosi
Airport (El. Venizelos)
Elefsina
Peania
2
Peania
Athens West (3)
Spata
Aspropyrgos
Airport
(El. Venizelos)
Magoula
Koropi
Elefsina
Inofita & Schimatari (4)
Rents in 2013 varied from 3€/m2/month to 4€/m2/month for the best quality
buildings, while yields ranged from 10.50% to 11.50% depending on the location.
It is estimated that for 2014 rents and yields for prime logistics will remain
constant as the market appears to be stabilizing. Supply of logistics space is not
expected to increase as no new development plans are on the way, while existing
stock is ageing. Demand for prime logistics is expected to increase due to the
new development of the freight center in Thriassio (Athens West).
Prime Logistics Market - Historic Overview
7€
10.50%
6€
9.50%
9.50%
8.50%
7.00%
8.00%
9.00%
9.00%
9.00%
10.75%
9.50%
12%
10%
5€
8%
4€
6%
3€
4%
2€
2%
1€
0€
2003
2004
2005
2006
2007
2008
Rent (€/sq.m./month)
2009
2010
2011
2012
2013
0%
Yield
Source: NAI Hellas
Athens Logistics Market 2014 Forecast
Rents
Prime
Secondary
Yields
Demand
Supply
Infrastructure
Road Network
The continuous upgrade of the E79 international road network will link Athens
with the rest of Central Europe. The construction of IONIA ODOS highway will
connect the whole of Western Greece linking also three ports (Patra, Astakos,
Igoumenitsa) and three airports (Araxos, Preveza, Ioannina). It will run from Antirrio
and end on Egnatia Odos highway, which connects the whole of North Greece and
E79. It also connects the industrial centres of Western Europe with Eastern Europe
and acts as the main road axis for transportation in the Balkans and SE Europe.
Ports
Due to Greece's extensive coastline, there are several commercial ports located
strategically in the country; in Attika (Piraeus, Rafina, Lavrio), Crete (Heraklion,
Chania), Western Greece (Kalamata, Patra, Korinthos, Astakos, Igoumenitsa) and
Northern Greece (Volos, Thessaloniki, Kavala, Alexandroupoli).
New Projects
Cosco Pacific Ltd which is already exploiting Pier II of the Piraeus container terminal
has announced an additional 230 mil € investment in the port of Piraeus until 2015
including:
- the construction and exploitation of Pier III
- the upgrade with new machinery of Pier II and East Pier III plus installation of Superpost Paramax cranes
- the construction of a Petroleum Pier
The capacity of Piers II & III will increase from 3.7 mil TEU to 6.2 mil TEU.
Piraeus is becoming a bigger trade gateway and the Southern Europe entry point
serving the Balkans and the Black Sea.
2002
Total
% change
2003
2004
Piraeus Container Terminal (in TEUs)
2005 2006 2007 2008 2009 2010
2011
2012
1,404,939 1,605,135 1,541,563 1,394,512 1,403,408 1,373,138 433,582 664,895 513,319 490,904 625,914
n/a
14.2%
-4%
-9.5%
0.6%
-2.2%
-68.4%
53.3%
-22.8%
-4.4%
27.5%
Source: Piraeus Port Authority SA, edited by NAI Hellas
Railways
The new freight centre (Athens West) of TRAINOSE (subsidiary of the Hellenic
Railways Organization) in Thriassio is expected to complete by the end of 2015. The
257 mil € investment includes sorting stations, container management stations,
terminals, customs office and warehouses. TRAINOSE and the Piraeus Port
Authority have reached an agreement for the construction of two railway stations in
the port of Piraeus; one for container transportation and one for car transportation.
The 17 kilometer railway route will link Piraeus Port with the Thriassio freight centre
and the national railway network where 1.7 mil TEU per annum are estimated to be
transported to SE Europe via the national railway network.
Cosco and Hewlett-Packard along with other SE Asian companies have reached
an agreement for a logistics centre in the modern freight centre in Triassio. To ease
the process of the previous mentioned plans, the Greek Government is preparing to
sell 49% of the publicly owned TRAINOSE in order to privatize the company.
The strategic location of the new freight centre in Thriassio in terms of road
network, rail linkage and access to Greece's biggest port has raised an international
investment appetite for the area.
15
16
Hotels & Leisure
In 2012 Greek Tourism contributed to GDP
by 16.4% and to employment by 18.3%. The
Association of Greek Tourism Enterprises
reported that income from tourism in the year
reached 10.4 bil € coming from 16.9 mil
visitors. Greece holds a market share in
Europe of 2.9% and 1.5% globally, offering
9,670 hotels spread around the country.
Traditionally 80% of visitors to Greece are for
holiday; on the contrary only 6.8% travel to
Greece on business.
The number of tourists arriving in Greece
has been growing rapidly since the 2004
Olympic Games of Athens and it is estimated
that c.5% more tourists visited Greece in
2013 compared to 2012.
International Tourist Arrivals 2000-2012
Year
Arrivals
% change
2000
12,378,282
n/a
2001
13,019,202
5.2%
2002
12,556,494
-3.6%
2003
12,468,411
-0.7%
2004
11,735,556
-5.9%
2005
14,388,182
22.6%
2006
15,226,241
5.8%
2007
16,165,265
6.2%
2008
15,938,806
-1.4%
2009
14,914,537
-6.4%
2010
15,007,493
0.6%
2011
16,427,247
9.5%
2012
16,946,543
3.2%
2013E
17,500,000
3.3%
2014F
18,500,000
5.7%
Source: Hellenic Statistical Authority, processed by NAI Hellas
The continuing increase in the
number of foreign visitors to Greece
created a need for more hotel
accommodation. Therefore, the
number of hotel units in Greece has
been growing since 2004; it is worth
noting that between 2000-2012 the
number of hotel units in Greece
increased by almost 20%.
Tourism Receipts according to travel purpose in 2011
Holiday
Academic
Visiting Family
Business Reasons
Other Reasons
Source: The Association of Greek Tourism Enterprises, processed by NAI Hellas
All Type Hotel Evolution (Δ% change 2000-2012)
30%
25%
20%
15%
10%
5%
0%
No. of Hotels
No. of Rooms
No. of Beds
Source: Hellenic Chamber of Hotels, processed by NAI Hellas
Evolution in Hotel Numbers by Category 2000-2012
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2003
5* No. Hotels
2004
2005
2006
4* No. Hotels
Source: Hellenic Chamber of Hotels, processed by NAI Hellas
2007
2008
3* No. Hotels
2009
2010
2* No. Hotels
2011
2012
1* No. Hotels
Hotels & Leisure
The 2008 recession had an effect on tourism, as shown in the graphs below.
Since the crisis started in 2008, while arrivals increased steadily to 18 mil. a year,
tourism receipts published have remained stable at around 10 mil. €, suggesting
people are spending less and stay less time.
Greek Tourism Receipts 2000-2012 (bil.€)
14
12
10
8
6
4
2
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: The Association of Greek Tourism Enterprises, processed by NAI Hellas
Non-Residents’ Overnight Stay in Greece - All Type Hotels (mil.)
165
160
155
150
145
140
135
130
125
2005
2006
2007
2008
2009
2010
2011
2012
Source: The Association of Greek Tourism Enterprises, processed by NAI Hellas
The years 2009 and 2010 were the most
difficult for the Tourism Industry in Greece.
However the market appears to be
recovering and Tourism Receipts increased
in 2012 by 3.2% compared to 2011
according to the World Tourism Organization
(UNTWO), which further continued in 2013.
Travel balance for the period Jan-May 2013
presented a surplus of 306 mil. € compared
to the same period in 2012 according to the
Bank of Greece which mainly comes from an
increase in tourism receipts of 15.4% in H1 of
2013.
Greek Tourism Ranking
based on
International Tourism Receipts
2007-2012
Country
Country
Ranking
Year
Ranking
Europe
World
2012
23
11
2011
19
9
2010
21
10
2009
15
8
2008
12
8
2007
12
8
Source: World Tourism Organization, processed by NAI Hellas
The average occupancy of hotels in Greece before the recession ranged from
45% to 50%. After 2009 occupancy fell as low as 34% in 2012. In 2013 however,
occupancy reached almost 40% and is expected to increase further in 2014.
Occupancy Rates of Greek Hotels
60%
50%
40%
30%
20%
10%
0%
Source: Hellenic Chamber of Hotels, processed by NAI Hellas
17
18
Hotels & Leisure
The annual Revenue per Available Room (RevPAR) in a 5* Hotel is estimated to
exceed 30,000€ from 2013 onwards and over 20,000 € for a 4* Hotel room.
Change in RevPAR of Greek Hotels
35,000 €
30,000 €
25,000 €
20,000 €
15,000 €
10,000 €
5,000 €
0€
2008
2009
2010
2011
RevPAR 5* Hotels
2012
2013E
2014F
RevPAR 4* Hotels
Source: NAI Hellas
Moreover, the Average Daily Rate (ADR) of a 5* Hotel room in 2013 is estimated to
reach 150€ while for a 4* Hotel room the rate is estimated to exceed 90€.
ADR of Greek Hotels
180 €
160 €
140 €
120 €
100 €
80 €
60 €
40 €
20 €
0€
2008
2009
2010
2011
RevPAR 5* Hotels
2012
2013E
2014F
RevPAR 4* Hotels
Source: NAI Hellas
Lastly, the implied EBITDA multiplier for a 5* Hotel is estimated to increase to 10.5 in
2013 compared to 9 in the years 2010, 2011 and 2012. Likewise, the implied EBITDA
multiplier for a 4* Hotel is estimated to reach 10 in 2013 compared to 8 in the years
2010, 2011 and 2012.
EBITDA multiplier in Greek Hotels
11.5
11.0
10.5
10.0
9.5
9.0
8.5
8.0
7.5
7.0
2008
2009
2010
5* Hotels
Source: NAI Hellas
2011
2012
4* Hotels
2013E
2014F
Opportunities in the
Greek R.E. Market
Hotels
&
Leisure
Refurbishment
&
Re-Development
Grade A Office
@ discount
Investment
Opportunities
Prime Logistics
@ discount
RECOVERY
2014 is the year of stabilization
in capital and rental values.
Prime Retail
@ discount
GROWTH
Growth will emerge as a result
of the new base of values
established.
INVESTMENT
The investment opportunity lies
in buying property at current low
prices and benefiting from the
rise in capital and rental values
to come with recovery.
19
Deloitte Athens Headquarters
21
The taxation of real estate in Greece
The past years the legislative framework of the taxation of real estate ownership in Greece has significantly
changed. As from 1.1.2014 onwards new types of taxes are applicable both for the acquisition of real property
and its ownership. Investing in real estate in Greece requires careful design and planning from the very
beginning. Different rules apply for individual and corporate investors, while the scope of the investment (whether
short term or long term) merit different approach in the design phase. The following paragraphs aim to outline the
main tax aspects of real property acquisition and ownership in Greece and to provide the potential investors with
an overview of the key points of the applicable legislation.
Acquisition of the real property
Upon acquisition of real property located in Greece, the potential investor will be
liable for the payment of either Real Estate Transfer Tax at 3% (for land and “old”
buildings on the higher of the tax value of the property or the value depicted in the
notarial deed) or Value Added Tax at 23% (for the supply of “new” buildings). If the
investor is an individual Greek tax resident, he should also consider the imputed
income provisions that require the taxpayer to be able to prove that he has the
funds available to acquire the property in question.
Transfer of real estate
Investor
Real Estate
Transfer Tax
Value
Added Tax
Ownership of real property
Taxes on the ownership of real property may be divided in two
Real Property exploitation
main categories:
-Taxation of rental income
-Capital ownership taxes
For individuals, the annual rental income up to €12,000 is taxed
Stamp tax
at 11% and any income above €12,000 at 33%. For corporate
Income tax
or VAT for
on rental
investors, the rental income is deemed as business income,
commercial
income
taxed at the prevailing 26% rate. It is also noted that commercial
leases
leases are either subject to 23% VAT (if such an election is made
and allowed) or to 3.6% stamp tax. Residential leases are exempt
from both VAT and stamp tax. The Capital ownership tax is
Annual Real
Property Tax
comprised by the Main Tax and the Supplementary Tax. The Main
Tax is computed on a per property basis, whereas the
Supplementary Tax is computed on the total tax value of the
property held. The Main Tax is computed taking into account a
variety of factors (such as the address of the property, its use, the floor and the total surface) and the
Supplementary Tax for individuals range from 0.1% for total property value of €300,000 to 1% for total property
value exceeding €1MN. For corporate owners, the tax is 0.5% on the total value of the property which is not
self-used by the owner. Finally, it is underlined that for individual Greek tax resident owners, imputed income is
also computed for the real property self-used. In addition, there is a special property tax (the so called “off-shore”
tax) which applies to corporate owners. Several exemptions apply, the most usual being based on disclosure of
the ultimate individual owner.
Disposal of real property
A Greek tax resident individual owner selling real property is subject to a 15% tax on the capital gain derived from
the sale. Certain exceptions apply for low capital gains or for real estate held for a long period of time. The same
tax applies if the object of the sale is a company, whose value significantly comprises from real estate (>50%).
For corporate owners, the gain from the sale of real property is deemed as business income and is subject to the
prevailing 26% Corporate Income Tax rate. The change of ownership due to a donation or inheritance is subject to
the special donation or inheritance tax imposed under Greek law.
For further information please contact:
Thomas Leventis, Tax Partner [direct: +30 210 6781262 / tleventis@deloitte.gr]
Kostas Roumpis, Tax Manager [direct: +30 210 6781272 / kroumpis@deloitte.gr]
22
Acquisition of Residence Permits through Real Estate Ownership
The application of articles 16 (B) and 20 (B) of the Greek Immigration and Social Integration Code
Guide to Residence Permits for Real Estate investors in Greece
[Article 20 of the Greek Immigration and Social Integration Code (“Immigration Code”)]
The Greek State introduced a procedure for granting five year renewable residence permits to citizens
of non EU member States who invest in real estate in Greece, the value of which is at least 250,000€.
Third country citizens that either personally or through
a legal entity:
- Own Real Estate property of 250,000€ minimum value;
- Have a time-sharing contract of 250,000€ minimum value;
- Have a 10 year at minimum lease of hotel accomodation
or furnished tourist accomodations (houses) in tourist
accomodation complexes of 250,000€ minimum value;
Can obtain a five year renewable residence permit for
them as well as their spouse and children.
Residence permit is valid for 5 years but can be renewed
for the same duration as long as the real estate property
remains in the ownership of the applicant or the said
leases are active.
As per article 16 (B) of the Immigration Code, a strategic
investor, (who invests from 3 mil.€ to 100 mil.€ depending
on the type of investment) can be granted up to 10
residence permits for individuals key to the investment
who may be escorted by their family members.
Such residence permits shall have a 10 year renewable
duration.
Residence permit allows access to the 26 Schengen
member states for 3 months every 6 months.
Schengen Area as of 1/7/2013
EU Schengen States
Non - EU Schengen States
Non - EU Schengen States
Schengen candidate States
For further information please contact:
Spyros Alexandris, Partner [direct: +30 210 3318170 / salexandris@bahagram.com]
Contacts
Thomas Ziogas
Business Development Manager
t.ziogas@naihellas.gr
Eleni Makri
Research
e.makri@naihellas.gr
Tim Hughes
Agency
t.hughes@naihellas.gr
George Smalis
Valuation
g.smalis@naihellas.gr
NAI Hellas/AVENT S.A. is a full service commercial real estate brokerage and
consultancy firm, member of NAI Global the world's largest network of
independent commercial real estate service providers.
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Disclaimer
All data contained in this report has been compiled by NAI Hellas/AVENT S.A.
and is published for general information purposes only. While every effort has
been made to ensure the accuracy of the data and other material contained in
this report, NAI Hellas/AVENT S.A. does not accept any liability (whether in
contract, tort or otherwise) to any person for any loss or damage suffered as a
result of any errors or omissions. The information, opinions and forecasts set out
in the report should not be relied upon to replace professional advice on specific
matters, and no responsibility for loss occasioned to any person acting, or
refraining from acting, as a result of any material in this publication can be
accepted by NAI Hellas/AVENT S.A.
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