Prices may be rising but properties weigh down Greek banks

Greek banks are looking to offload some 25,000 properties left in their possession by borrowers who defaulted on loan payments as they move to clean up their balance sheets.

The assets, estimated by some to be worth some 7 billion euros, are weighing on lenders that have picked up efforts recently to slash non performing loans left behind by the country’s ten year economic crisis.

Many of the properties are not generating revenues and are tying up capital that lenders could be using to generate more business. A large number also require extensive maintenance work, costing the banks even more, sources say.

Most of the homes ended up with banks after an unsuccessful foreclosure auction though numbers could start dropping.

Forced real estate auctions held by banks and debt management companies are set to resume this month after being frozen due to the pandemic.

Some 2,500 properties expected to go under the hammer by the end of the year, bank officials say.

Online auctions had been put on hold by the Greek government in a bid to protect vulnerable borrowers, while new bankruptcy regulations where voted on earlier this year by parliament, introducing changes, such as providing a second chance for those in financial strife.

Improving outlook for 2021

With market conditions improving, lenders are carefully working on strategic plans to maximize revenues from the properties. With more than half of the 7,000 assets they hold being residential housing, the outlook is good.

The latest data shows that strong demand for homes in Greece pushed prices up 4.6 percent in the second quarter of the years, in an upward trend expected to continue in 2021 and 2022.

Economists forecast that price hikes could be in line, or a bit less, than expansion in GDP growth that is tipped grow by about 6 percent for the year.

Alpha Bank in hunt for investor

In order to maximize the value of its property portfolio and subsidiary Alpha Astika Akinita, Alpha Bank has started looking for a strategic partner.

Through its Skyline Project, the lender said that it is looking for an investor that will take a majority stake in a joint venture that will own the assets.

Alpha Bank’s real estate assets are estimated to be worth some 800 million euros and the deal with the strategic investor is scheduled to wind up in the first half of the year.

Piraeus Bank, the country’s largest lender, is also believed to be looking to sell a large chunk of its property portfolio to a strategic investor.