Significant benefits, both short term and long term, are expected to have an investment grade guarantee for the property market in Greece. According to industry leaders, this will be a very positive development, since after almost 14 years the Greek real estate market will return to the “elite” investment destinations and it will become easier to attract foreign investment groups and funds.

“Today there is an objective problem with the implementation of investments by a number of institutional investors, as there are rules prohibiting the placement of funds in countries that do not have an investment level. In other words, even if there was an opportunity for investment and they were willing to take the corresponding risk, such investment would be stopped by the investment committee of the respective group, precisely because it is not allowed to invest in countries without a positive positive decision. credit rating,” explains “K” Mr. Thassos Kotzanastasis, executive member of ULI’s global steering committee and CEO of international real estate investment management company 8G Group.

Automatic investment grade means that the Greek real estate market will return to the radar of large institutional investors and community groups with a long-term investment horizon. This development is contrary to the speculative actions of some of the institutions located in Greece, with a purely short-term perspective, aimed at making quick profits and exiting the country.

However, as Mr. Kotzanastasis warns, new investments from large foreign funds should not be expected, at least not immediately. “During this period, there is considerable uncertainty at the international level and investors are showing restraint. Some of them are looking for investment opportunities in the form of distressed assets,” he emphasizes. That is, they aim to identify real estate and other forms of investment that sell for less than their fair value precisely because of the pressures created by high financial costs. For example, the commercial real estate market in the US and Europe needs tens of billions of euros in refinancing of existing loans, presenting a significant opportunity for those with the necessary liquidity.

An important obstacle is the lack of green buildings, which have now monopolized the interest of foreign real estate institutions.

Another problem that has always existed in the Greek real estate market and is an obstacle to attracting large investment groups, is that it is a small and “shallow” market, in which it is difficult to achieve economies of scale that provide maximum returns. for investment. According to the information, a few weeks ago, the heads of one of the largest US investment banks were in Greece and studied the possibility of placing a significant amount of capital, about 1 billion euros, for a period of 3-4 years. Their target was the logistics market. But when it became clear that it would be very difficult to secure such a volume of real estate precisely because of the small size of the market, they were left without work.

Another key point is that all foreign investors in this area are looking for properties with environmental characteristics in the context of the ESG policies they follow. These are properties that are still rare on the Greek market, representing a very small minority in relation to the total. Thus, the “reservoir” of possible investment objects is even more limited. “There are not many buildings in Greece that meet the ESG criteria, which will make them obsolete unless significant investments are made in their energy and functional upgrades in the coming years. This trend has begun to show itself abroad, as investors prefer to buy existing facilities and renovate them, rather than engage in new construction,” says Mr. Kotyanastasis at K. As he explains, refurbishment is certainly a more sustainable solution, as it limits the carbon footprint and the burden on the environment in general.

However, investment grade is expected to lead to lower borrowing costs, which will have a direct positive impact on the market. Greek banks will be able to borrow at a lower cost and therefore they will be able to finance projects and investments at a lower interest rate than today. Financing costs are a burning issue for investors in the market, both real estate developers and REITs (Real Estate Investment Trusts), who are encouraged to grow their portfolio amid significant cost increases.

Recall that, according to the forecasts of foreign and domestic institutional investors who took part in the latest annual study Emerging Trends in Real Estate, which is conducted by PwC on behalf of the Urban Land Institute (ULI), real estate prospects The Attica real estate market in 2023 is considered especially significant both from the point of view in terms of growth in value, and in terms of rent. As one survey participant, a real estate investment fund manager, stated, “Due to the prolonged recession, there is still a lack of modern building stock. There has been some new construction of office buildings and shopping malls over the past 10 years, but investment opportunities still exist.”

However, in the long term, as long as the Greek economy continues to improve and grow, it goes without saying that the Greek real estate market will be an investment “target” for many investors. A recent report released by UBS on investment funds that manage family assets or small investor funds (family offices) said that real estate sales are expected this year as part of their investment policy adjustment. However, over the next five years, 33% of these investors predict an increase in investment in real estate, which currently makes up 13% of family office portfolios internationally.