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22ndannualcapital

Attractiveness of Athens real estate market

Athens is the 5th most attractive European city for property investors according to PriceWaterHouseCooper which has released its 2015 Emerging Trends in Real Estate survey, compiled together with the Urban Land Institute.

It is, according to the authors, an ‘astonishing zoom up the league’. In just one year Athens has shot up 23 places in the rankings – the most significant improvement of all European cities.

Similarly other countries hit hard by the European debt crisis have seen significant gains. Dublin is in 2nd place and the Portuguese capital of Lisbon rose 17 places to 9th place in the index. Madrid is in 3rd place having jumped 16 places. The index is topped by Berlin that knocked Munich from the top spot.

Traditionally attractive property markets such as London remained stable although there is some concern that some assets may be overpriced.

Effectively the financial distress in the crisis-hit countries has created opportunities in their property markets for investors.

“Dublin’s ranking and Athens’s rise highlight the opportunistic streak that runs through Europe. In the first three quarters of 2014, private equity funds raised €12 billion for distressed and opportunistic investments alone,” the authors write under the heading ‘Opportunity Knocks’.

As investors see recovery taking hold, they are viewing such property markets with renewed interest. However the authors note that in the case of Athens, the gains may be reversible.

“With Greece finally pulling out of recession after six years of misery, international money is eyeing the market, and locals are very upbeat about an upturn. However, it is early days and some of the bigger real estate fish think it too small a pond for them,” the report states.

Nevertheless, according to the survey, Athens is beginning to attract a ‘few trailblazing investors’ who see ‘an opportunity for high-yield initiatives.’

The survey notes several major investments that have taken place in the wake of the Greek crisis such as the purchase by Invel of, “a two-thirds stake in Pangaea, the property-holding subsidiary of National Bank of Greece, for €653 million, partnered by US hedge fund York Capital Management. Pangaea owns 269 properties across the country, mostly leased to the bank and the Greek state.”

The survey also notes major privatizations that went ahead by the Hellenic Republic Asset Development Fund such as the sale of the Astir Palace resort for 400 million euros to a fund run by AGC Equity Partners, and the sale of the site of the former airport in Hellinikon to a group of investors led by local property company Lambda Development for €915 million. Chinese investor Fosun and Abu Dhabi-based Al Maabar are partnering Lambda.

However it should be noted that the opposition party SYRIZA, which has opposed Greece’s privatization program, has pledged to scrutinize these and other major privatization deals should it come to power following the January 25th elections.