Greece Real Estate Report Q4 2012

Publisher Name :
Date: 31-Oct-2012
No. of pages: 54

The Greece Real Estate report examines the commercial office, retail, industrial and construction
segments alongside the construction sector in the context of the country's continuing economic struggles.
With a focus on the principal cities of Athens, Piraeus and Thessaloniki, the report covers the rental
market performance in terms of rates and yields over the past 18 months and examines how best to
maximise returns in the commercial real estate market, while minimising investment risk and exploring
the impact of the government led austerity on a long-stagnant market. Key complementary industry areas
are also examined including the construction industry and business environment, key in analysing
investor sentiment.
While the Greek government has overcome a number of obstacles, and the pace of contraction continues
to ease in 2012, we stress that a return to sustainable growth is predicated not just on successful economic
reforms but also on targeting policies at future growth industries and restoring confidence. The short-term
outlook for the real estate sector is not likely to restore investor confidence any time soon: the pipeline is
glacial, demand-destruction is endemic and oversupply is rife. The risks for the real estate sector as a
whole are therefore firmly weighted to the downside, with a slight silver lining coming in the form of
high-end space, particularly in the retail and office segments. Greece's construction industry is expected
to remain in recession for the sixth consecutive year in 2012, and we do not expect a recovery until 2015.
Key Points:
The pace of economic contraction in Greece could finally start to ease, which would be
supportive of our view that the depression will moderate in 2013. That is not to say, however,
that the depression is coming to an end. We still see another down year in 2013 and expect
growth to remain very subdued over the foreseeable future. Moreover, while we still believe that
Greece leaving the eurozone is not a one way bet, we warn that should this scenario materialise,
the economy would be facing a double-digit contraction as the banking system collapses and
private sector wealth is destroyed.
Ongoing economic pressures, investors' caution and government austerity drive will act as the
main impediments for recovery in the Greek construction industry. Our core scenario envisages
a sixth consecutive year of contraction in the industry in 2012 and little prospects for a recovery
until 2015. However, there a handful of infrastructure projects - mainly coming from EU
funding - that could offer some upside risks to our outlook.
The privatisation of Greek energy and infrastructure assets is proceeding at full-speed, with the
government planning to re-launch the entire process over the coming weeks. This is the third
time in two years that the venture will have been launched, although this time the government
has thrown its weight behind the process, making another false start unlikely. We believe there
will be significant efficiency gains for the Greek energy and transport networks, following the
liberalisation of the sectors which will pay dividends for wider economic activity in the coming
years. Some existing privately run assets create a positive precedent (COSCO in Piraeus Port,
the Athens International Airport for instance); this, combined with increased investor interest in
assets, suggests that if the privatisations proceed as planned, momentum will be gained quickly.

Greece Real Estate Report Q4 2012

Executive Summary. 5
SWOT Analysis ... 7
Greece Real Estate/Construction SWOT.... 7
Greece Political SWOT 7
Greece Economic SWOT... 8
Greece Business Environment SWOT ... 8
Real Estate Market Overview. 9
Market Analysis - Office .. 12
Supply And Demand... 12
Rents And Yields ... 12
Table: Historic Rents - 2011-2012 (EUR per m2/month).. 13
Table: Net Yield, 2011-2012 (%) ... 13
Table: Terms of Rental Contract/Leases - H112 .... 13
Industry Forecast Scenario.. 14
Table: Forecast Rents - (EUR per m2/month)... 14
Table: Forecast Net Yield, 2008-2016 (%) ... 14
Market Analysis - Retail.. 15
Supply And Demand... 15
Rents And Yields ... 15
Table: Historic Rents - 2011-2012 (EUR per m2/month).. 16
Table: Net Yield, 2011-2012 (%) ... 16
Table: Terms of Rental Contract/Leases - H112 .... 16
Industry Forecast Scenario.. 17
Table: Forecast Rents - (EUR per m2/month)... 17
Table: Forecast Net Yield, 2008-2016 (%) ... 17
Market Analysis - Industrial . 18
Rents And Yields ... 18
Table: Historic Rents - 2011-2012 (EUR per m2/month).. 18
Table: Net Yield, 2011-2012 (%) ... 18
Table: Terms of Rental Contract/Leases - H112 .... 19
Industry Forecast Scenario.. 19
Table: Forecast Rents - (EUR per m2/month)... 19
Table: Forecast Net Yield, 2008-2016 (%) ... 19
Forecast Scenarios 20
Infrastructure Report . 20
Table: Greece Construction And Infrastructure Industry Data, 2008-2016 20
Table: Greece Construction And Infrastructure Industry Data, 2013-2021 21
Macroeconomic Outlook. 24
Table: Greece - Economic Activity 26
Real Estate Risk/Reward Ratings .. 27
Real Estate/Construction Risk/Reward Ratings . 27
Table: Central and Eastern Europe Real Estate Risk/Reward Ratings .. 27
Greece's Business Environment 27
Table: BMI Business And Operation Risk Ratings.. 28
Institutions .. 29
Table: BMI Legal Framework Rating. 29
Infrastructure... 31
Table: Labour Force Quality.... 33
Market Orientation .... 34
Table: Emerging Europe, Annual FDI Inflows .. 35
Table: Trade And Investment Ratings . 36
Operational Risk... 37
Competitive Landscape .. 38
Company Monitor .. 41
Babis Vovos International Construction .. 41
LAMDA Development 42
PASAL Real Estate Development... 43
Demographic Data . 44
Table: Greece's Population By Age Group, 1990-2020 ('000).... 45
Table: Greece's Population By Age Group, 1990-2020 (% of total) . 46
Table: Greece's Key Population Ratios, 1990-2020 47
Table: Greece's Rural And Urban Population, 1990-2020 .... 47
BMI Methodology... 48
How We Generate Our Industry Forecasts ... 48
Construction Industry 49
Bank Lending... 50
Real Estate/Construction Business Environment Rating... 50
Table: Weighting Of Indicators. 51
Sources .. 53Table: Historic Rents - - (EUR per m/month)
Table: Net Yield, - (%)
Table: Terms of Rental Contract/Leases - H
Table: Forecast Rents - (EUR per m/month)
Table: Forecast Net Yield, - (%)
Table: Historic Rents - - (EUR per m/month)
Table: Net Yield, - (%)
Table: Terms of Rental Contract/Leases - H
Table: Forecast Rents - (EUR per m/month)
Table: Forecast Net Yield, - (%)
Table: Historic Rents - - (EUR per m/month)
Table: Net Yield, - (%)
Table: Terms of Rental Contract/Leases - H
Table: Forecast Rents - (EUR per m/month)
Table: Forecast Net Yield, - (%)
Table: Greece Construction And Infrastructure Industry Data, -
Table: Greece Construction And Infrastructure Industry Data, -
Table: Greece - Economic Activity
Table: Central and Eastern Europe Real Estate Risk/Reward Ratings
Table: BMI Business And Operation Risk Ratings
Table: BMI Legal Framework Rating
Table: Labour Force Quality
Table: Emerging Europe, Annual FDI Inflows
Table: Trade And Investment Ratings
Table: Greece's Population By Age Group, - (')
Table: Greece's Population By Age Group, - (% of total)
Table: Greece's Key Population Ratios, -
Table: Greece's Rural And Urban Population, -
Table: Weighting Of Indicators

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