Giannis Kaligiannakis, MRICS
Manager Valuations & Investments
In late 2016, signs of early recovery were evident, but we could not predict what 2017 would bring in the real estate market.
After starting off slow, 2017 proved to be a year with major improvements towards the recovery of the Greek real estate market.
We have witnessed the first major NPL portfolio sales, banks’ understanding the need to accept discounts for “bad loans”, investors’ increasing share in property market, advanced developments to attract foreign investors and secure financing, ECB lowering the funding cap for Greek banks, government bond yields decreasing and major reforms accomplished in line with the bailout program.
In terms of the real estate market, rental values in prime locations remained stable, with an upward trend, while activity increased.
One of the most challenging reforms, property auctions for bad debts, was enforced in 2017 and is expected to be used intensively in 2018 via a web-based platform. As a result, the excess supply of residential properties, combined with the structured disposal of properties by banks and NPL portfolios are likely to reduce prices in the residential market. However, properties located in prime locations, with high quality construction specifications are not expected to be affected as much.
Commercial properties witnessed a decrease in rental values in the past years, boosting the market restructuring and in some cases, increasing demand. The positive trend is expected to continue in 2018, especially for Class A properties which attract reliable tenants and are offered as an investment product.
Excess supply of residential properties, combined with the structured disposal of properties by banks and NPL portfolios are likely to reduce prices in the residential market.
The tourism market has grown following the consecutive arrivals increase in previous years, combined with new hotel developments and redevelopments, the repositioning of the Greek hospitality product and the privatization of 14 peripheral airports.
The major anticipated changes in the market for 2018 is that banks will try to drop off bad debt and decrease further non–performing loans through the disposal of large NPL portfolios and the successful implementation of auctions.
The property market has been underperforming during the eight years of recession, yet it has been an opportunity for it to be restructured. 2018 is expected to be the year in which properties will no longer be considered as reserved capital but will start to participate more actively in the economy.