Rare supply and high demand for grade A offices in prime locations
Greece’s recovery should pick up speed in 2017, supported by a robust tourism sector and a mildly improving labour market. However, the pace of growth will remain subdued given the severity of the recession and concerns that persist around the sustainability of the country’s debt load.
The office sector in general has been flat with low transaction volumes. Rents in prime office locations have been stable ranging between €96 and €228/m²/year with incentives including prolonged escalation periods and rent free periods.In greater Athens the total stock for Grade A and B office accounts for 1.8 m. m² mostly concentrated in the North and in the wider CBD area. The consecutive fall in rental values since the credit crunch in 2008 led to Grade A and Grade B office accommodation in prime locations becoming more affordable. The outcome of this created little supply and high demand for Grade A and B offices in the city of Athens, especially in prime locations, while on the other hand there is large supply and no demand for Grade C and D office space.
Investment in hotels boosted the Greek market
Investment more than doubled in 2016 reaching €976.5 m., 90% of which were invested during the fourth quarter. Hotels accounted for more than 80% of the capital invested during 2016 exceeding €812.5 m. Prime yields remained between 7.5% and 9% with only a few transactions recorded during this period in that range.
The market has been affected by the lack of suitable products, but some interesting trends were initiated in 2016 including refurbishment works, restructuration of old buildings and new constructions.
The two major Real Estate Investment Companies invested a total of €45 m. in the domestic market during 2016: NBG Pangaea invested €14.3 m. for the acquisition of 8 properties while Grivalia acquired five properties in excess of €31.3 m.