2011 bowed Greece good bye after a year of historical investment volumes lows, slow-down in leasing activity in office premises while retailers witnessed a decrease in rents of 25-30%. While many would agree that 2012 will not be much different, with proper adjustments we can change our approach towards the market and doing so, creating opportunities. To this Ana Vukovic, Managing Director of Colliers International comments “Even though Greece is set to witness a recession as the country gets to grips with austerity planning, some opportunities could be found in prime office locations with lease renegotiations, shopping centers and retail parks and last if the privatization of state-controlled assets goes though, the market is finally ought to take a breath.”

LEASE RENEGOTIATIONS KEY PLAYER IN OFFICE MARKET
A fall in supply of new office premises in Athens and a slow-down in leasing activity were key trends during 2011 mainly due to the decline of GDP and high economic uncertainty. Regarding the upcoming year, it will be dominated by strong sub-leasing activity and lease renegotiations, with Kifisias Avenue and Athens CBD expected to be the focus of most sub-lease activity in the market. Vacancy rates should remain stable for prime office locations as demand is concentrated in these areas creating stable prime rents. Whereas in secondary sub-markets vacancy and rents are expected to reflect a further drop of approximately 25%. Katerina Dimou, Senior consultant Investment Services adds “Landlords, especially those with properties in the main submarkets of Athens are offering incentives in the form of rent free periods and fit out contributions in order to secure tenants.”

SHOPPING CENTERS AND RETAIL PARKS IN SPOTLIGHT
According to market data, up to 30% of middle and small store owners have their properties available to lease and as it is estimated this percentage is going to rise to 35% within the next few months of 2012 as demand will focus on mainly large stores in central locations such as Shopping Centres and Retail Parks which have become the preferred format of foreign and local retailers. Although large retail chains will continue their expansion in both Athens market and in other major Greek cities, this may not keep pace with new supply. Dimitris Voutsas, Director Retail Services adds “As for Retailers, they shall be demanding ‘turn key’ deliver conditions on new properties and will be paying only turnover rent. Rents are expected to continue the negative trend of 25-30% decrease as 2011.”

PROMISING OUTLOOK THE PRIVATIZATION OF STATE-CONTROLLED ASSETS
Investment volumes dropped to historical lows in 2011 as the recession affected the investment market harder than the rest of the economy while the majority of investors were on a standby mode waiting for investment product to become distressed. The following years will see the privatization of state-controlled assets which should finally regenerate the investment environment and mobilise the market. We may also see the disposal of assets from Greek banks as they conform to conditions of their IMF bail-out package. Finally, yields will see an additional increase at least of 0.25% to 0.5% in 2012 mainly due to new taxes being enforced on real estate assets and the pessimistic forecast regarding the Greek economy.

In conclusion Spyros Raptis, Manager Valuation Services states “The real estate market is estimated to stabilize by early 2013 given the expected stabilization of the economy as projected by the relevant organizations, services and institutes (IMF, CBG etc). The decreasing consumer power by the latest measures, the further reduction of public expenses and the temporary outcomes of the restructuring is expected to be partially compensated by the recapitalization of the banks and the gradual increase of liquidity. Moreover their combination with the acceleration of the NSRF, the commence of projects of strategic importance and the formation of stable frameworks, will stimulate market sentiment, the entrepreneurship indicators, the real economy and hence the real estate market”