Bank of Greece: commercial property yet to return to normal

Greece's commercial property market has started recovering from the country's nine year debt crisis but has yet to return to normal, says Bank of Greece, the country's central bank.

"The rate at which demand is being restored differs significantly, depending on the use, position and qualitative characteristics of the property, while the development of new properties is mainly limited to those in the tourism sector," says Yiannis Stournaras, the governor of the Bank of Greece, in his annual report.

Price hikes are particularly high in tourist heavy districts where investor interest goes beyond hotels onto other areas, such as housing and retail space, the report added.

Most of the deals being done in commercials asset in Greece focus on the hospitality sector.

A construction freeze brought on by Greece's severe economic problems has resulted in no new developments hitting the real estate market, meaning that prime assets are hard to come by. This is limiting investment activity in property that is also being weighed down by ongoing tight lending conditions.

For buying interest to spread to the broader market, the economy needs to lift a few notches and growth to spread to areas other than tourism.

This is reliant on stronger private consumption rates, higher disposable income and a reduction in unemployment - factors that will support demand for new real estate and help draw fresh capital to the sector, adds the report.

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