RE-DEFINING
REAL ESTATE MARKET
THE GREEK
Commercial Real Estate Market Report 2013
E79
THESSALONIKI
ALEXANDROUPOLI
IGOUMENITSA
PATRAS
ΤRIPOLI
LAMIA
ΑTHENS
E79
CRETE
RHODES
ΚAVALA
VOLOS
KORINTHOS
KALAMATA
C...
03Executive Summary
After five consecutive years of recession, in 2013 there was a steady improvement
in two of the three ...
04
Greek Real Estate
Market Overview
During the last 15 years, the Greek real estate market went through a full property
c...
05
Greek Real Estate
Market Overview
After 2008 capital values of real estate, bonds and stocks fell dramatically and
reac...
06
Macroeconomic
Outlook
The year 2013 shows a steady improvement of the main macroeconomic indicators
of Greece. This is ...
07
Macroeconomic
Outlook
GDP
CPI
Unemployment
Trade Balance
Disposable Income
2014 Forecast 2015 Forecast
Current Trade Ba...
08 Office Market
The Office Market in Athens since 2008 has witnessed an average fall in capital and
rental values of betw...
Athens Office Market 2014 Forecast
Grade A
Grade B
Rents Yields Demand Supply
City Centre
West Athens
Kifissias Av.
Sygrou...
10 Retail Market
The growing disposable income up to 2008 led to an increase in retail spending
which consequently pushed ...
11Retail Market
High Street Retail Space (sq.m.)
6
50,000
40,000
30,000
20,000
10,000
0
0,000
Glyfada Kifissia Ermou Stadi...
12 Retail Market
Athens High Street Retail Market 2014 Forecast
Prime
Secondary
Rents Yields Demand Supply
Occupancy by Se...
13Shopping Centres
Shopping Centres in Greece appeared after 1990 and are typically multi-storey
buildings of 3 retail flo...
14 Logistics
Athens Logistics Market 2014 Forecast
Prime
Secondary
Rents Yields Demand Supply
2 2Rents in 2013 varied from...
15Infrastructure
Road Network
Ports
New Projects
The continuous upgrade of the E79 international road network will link At...
16 Hotels & Leisure
In 2012 Greek Tourism contributed to GDP
by 16.4% and to employment by 18.3%. The
Association of Greek...
17Hotels & Leisure
Since the crisis started in 2008, while arrivals increased steadily to 18 mil. a year,
tourism receipts...
18 Hotels & Leisure
The annual Revenue per Available Room (RevPAR) in a 5* Hotel is estimated to
exceed 30,000 from 2013 o...
19
Opportunities in the
Greek R.E. Market
Refurbishment
&
Re-Development
Grade A Office
@ discount
Prime Logistics
@ disco...
Deloitte Athens Headquarters
21
The past years the legislative framework of the taxation of real estate ownership in Greece has significantly
changed. ...
22
EU Schengen States
Non - EU Schengen States
Schengen candidate States
Non - EU Schengen States
Acquisition of Residence...
Thomas Ziogas
Business Development Manager
t.ziogas@naihellas.gr
Eleni Makri
Research
e.makri@naihellas.gr
Tim Hughes
Agen...
4, Nikitara & Psaron str.
152 32 Chalandri
Athens, Greece
tel +30 210 6811760
fax +30 210 6811722
www.naiglobal.com
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NAI Hellas Market Report_March 2014_for email

Published on: Mar 3, 2016
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Transcripts - NAI Hellas Market Report_March 2014_for email

  • 1. RE-DEFINING REAL ESTATE MARKET THE GREEK Commercial Real Estate Market Report 2013
  • 2. E79 THESSALONIKI ALEXANDROUPOLI IGOUMENITSA PATRAS ΤRIPOLI LAMIA ΑTHENS E79 CRETE RHODES ΚAVALA VOLOS KORINTHOS KALAMATA CHANIA HERACLION IOANNINA PREVEZA Capital: Athens Official Language: Greek Currency: Euro (€) Population: 10,815,197 (2011 Cencus) GDP (2012):193.7 bil € AIRPORTS PORTS NATIONAL ROADS UNDER CONSTRUCTION EUROPEAN ROAD
  • 3. 03Executive Summary After five consecutive years of recession, in 2013 there was a steady improvement in two of the three main macroeconomic indicators for Greece, while the rise in unemployment showed signs of slowing: Similarly Real Estate values, having closely followed the financial market since 2008, decreased on average (all sectors) by c. 55%. The close of 2013 showed stabilization in rental and capital values and a new normal being created. Towards the end of 2013, the office, retail and hotels & leisure sectors seemed the most likely candidates for recovery. In the Athens office market, rents and yields for Grade A offices remained at 2012 levels, ranging from 12€ to 20€/ per month and from 8.25% to 11% respectively. Kifissias Avenue and Athens City Centre are still the most popular office locations. Demand for Grade A quality accommodation is increasing as is the supply of Grade B accommodation. Likewise, in the retail market, rents and yields for prime locations in Athens 2remained steady compared to 2012 (ranging from 60€ to 140€/m /month for Ermou Street, Kifissia, Glyfada & Kolonaki) and 20€ to 50€ for other retail markets, with yields ranging between 7.25% to 8% respectively. Established prime retail locations continue to be favored and enjoy low vacancy rates. Shopping centres have been comparatively less affected by the credit crunch and on the whole perform better in terms of rental values and vacancy rates. A notable trend in the retail market has involved a large number of small retail units converting into F&B establishments. In hotels & leisure, the rapid increase in tourist arrivals since 2004, led to an increase in hotel units by an average of 20% during the last 10 years. Greece is still a favored tourist destination, showing in H1 of 2013 an increase of tourism receipts by 15.4%. In 2013, RevPAR is estimated to exceed 30,000€ for 5* hotels and 20,000€ for 4* hotels, while the ADR is estimated to reach 150€ for 5* hotels and 90€ for 4* hotels. In the logistics sector, a decrease of demand is noted, which resulted in a 2decrease of rents and softening of yields (which ranged from 3€ to 4€/m and 10.5%-11.5% respectively) for Grade A logistics in prime locations. 2014 is expected to be a year of correction in capital and rental values. A new normal is being created in the market and that has already started to show. Opportunities are on offer for investors who buy now, at discount, and benefit from the gradual increase of capital and rental values. 2m GDP CPI Unemployment rate
  • 4. 04 Greek Real Estate Market Overview During the last 15 years, the Greek real estate market went through a full property cycle. Following closely the financial market, it fell dramatically in the beginning of 2000, only to start rising in 2001 and reached a peak in 2007. The boom period was a result of historically low interest rates, aggressive bank lending, a rise in income rates and high public spending on infrastructure due to the Olympic Games of 2004. High LTV ratios and relaxation of lending terms led to high construction and development rates. Commercial buildings in Greece increased in capital value by almost 40% while rents grew over 20%. After the credit crunch of 2008, Greek real estate experienced a severe downturn characterized by falling market values. Market uncertainty, rising unemployment, reduced income and rising taxes were the main reasons that resulted in falling capital values and low rents; limited demand and minimum project financing also led to frozen development and construction. Rental values are estimated to have fallen by more than 30% in all sectors while capital values became increasingly uncertain. It is estimated that the average decrease of real estate (all sectors) capital values since 2008 has been c. 55%. Due to the prolonged economic recession, oversupply of commercial space increased considerably offering the opportunity for tenants to negotiate better terms. The Real Estate industry appears to be less volatile than the other markets, where the logistics industry has higher yields than the office market which has in turn higher yields than the retail market. Until 2009 the 10 year Greek Government bond was considered to be a risk free investment, yet from 2010 the yield to maturity grew significantly, indicating the economic uncertainty in the country. The dividend yield of the FTSE/ATHEX Large Cap (top performing companies in the Athens Stock Exchange) was considerably lower than the All Risks Yield (ARY) of the property industry, demonstrating the low returns in the stock market. On the whole, where the government bond's risk tripled and the return from the stock market fell by 3% in the 5 year period after the crisis, the investment yield in real estate increased only by 2% in all sectors to reflect risk. Property has historically proven to be a stable investment. Greek Investment Markets’ Yields post 2008 credit crunch Comparison 2008 2009 2010 2011 2012 2013 25% 20% 15% 10% 5% 0% 10Y Gov. Bond Yield to maturity ARY - Grade A Offices Kifissias Av. ARY - Prime Retail Ermou Str. FTSE/ATHEX Large CAP Divident Yield ARY - Prime Grade A Logistics Aspropyrgos Area Source: European Central Bank, Hellenic Exchanges Group, NAI Hellas
  • 5. 05 Greek Real Estate Market Overview After 2008 capital values of real estate, bonds and stocks fell dramatically and reached a bottom in 2011/2012. Capital values of stocks fell more than all other markets while capital values of bonds during 2010-2012 fell less than capital values of grade A offices and prime retail. On the whole real estate capital values followed a similar trend as the values of stocks and bonds. However, bonds' and stocks' capital values appear to be growing since 2011, while property capital values follow with a slower rate. The year 2013 shows that the increase in capital values of bonds and stocks continues while real estate values stabilize. Capital values in 2013 appear to be at a turning point given also the change in macroeconomic indices. Taiped I Taiped II Pangaia REIC Fairfax Praktiker Dolphino Capital City Gate Cosmote Headquarters Asteras Vouliagmenis Ermou 19 Q4 Q4 Q4 Q3 Q4 Q3 Q3 Q1 Q4 Q3 Project Name Period Type Vendor Buyer Price Office Portfolio Office Portfolio 66% capital share 41.2% capital share 4 DYI Stores Office Building Mall Office Building Long term Hotel Concession Retail Shop Greek State Greek State National Bank of Greece Eurobank Properties REIC Rockspring BNP Bank APN DIMAND Greek State & National Bank of Greece Greek State Pangaia REIC Eurobank Properties REIC Invel Fairfax Financial Holdings LTD Eurobank Properties REIC Dolphino Capital Marinopoulos Group Pangaia REIC Jermyn Street Real Estate Fund IV LP Pangaia REIC Major Transactions for 2013 115 mil € 145 mil € 653 mil € 146 mil € 50 mil € 10.3 mil € 6 mil € 120 mil € 493 mil € 5.9 mil € As the real estate market began to stabilize in 2013, the last quarters of the year presented a number of noteworthy transactions: Greek Investment Markets’ Capital Values Comparison (2007=100) 2007 2009 2010 2011 2012 2013 120 100 80 60 40 20 0 OTE Stock Price Office Grade A Kifissias Av. Prime Retail Ermou Str. Prime Grade A Logistics Aspropyrgos Area 10 year Gov. Bond 2008 Source: European Central Bank, Hellenic Exchanges Group, NAI Hellas Source: NAI Hellas
  • 6. 06 Macroeconomic Outlook The year 2013 shows a steady improvement of the main macroeconomic indicators of Greece. This is reflected in the Economic Sentiment Indicator which continues to rise from 80.0 units in 2012 to 91.2 units in 2013, the highest in the last five years. CDP (% change) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014F 8% 6% 4% 2% 0% -2% -4% -6% -8% The expected 2013 contraction of the GDP is c. 3.5%, lower than the 2012 expectation (-6.4%). GDP is expected to rise by 0.6% in 2014 and by 2.9% in 2015. In total the GDP for the period 2007-2013 shrank by c. 27%. Source: Eurostat, processed by NAI Hellas Inflation (CPI) in 2011 was 3.1%, in 2012 was 1.00% and is expected to fall by 0.8% in 2013 and by 0.4% in 2014. The Uniformed CPI in October 2013 reached a record low of -1.9% (12 month change). Inflation Rate (% change) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014F 5% 4% 3% 2% 1% 0% -1% -2% Source: Eurostat, processed by NAI Hellas The unemployment rate reached a high of 27% in 2013 and is expected to remain at this level in 2014. Unemployment Rate (% change) 2003 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014F 25% 20% 15% 10% 5% 0% 30% 2004 Source: Hellenic Statistical Authority, processed by NAI Hellas Net disposable income fell in 2013 by 6.7% since 2011 and is expected to fall by 4.8% in 2013 as an outcome of stringent austerity measures that resulted in a decline in salaries and social benefits while is estimated to rise by 0.63% in 2014. Disposable Income (% change) 2003 2004 2005 2006 2007 2008 2010 2011 2012 2013E 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% -12% 2014F2009 Source: Hellenic Statistical Authority, processed by NAI Hellas
  • 7. 07 Macroeconomic Outlook GDP CPI Unemployment Trade Balance Disposable Income 2014 Forecast 2015 Forecast Current Trade Balance showed a surplus of 1.5 bil.€ in 2013 compared to a 2.8 bil.€ deficit in 2012 as a result of improved performance in the food and drinks industry, tourism and the non-metallic minerals industry. Trade Balance (bil. €) 5 0 -5 -10 -15 -20 -25 -30 -35 2003 2004 2005 2006 2007 2008 2010 2011 2012 2013E 2014F2009 Source: Bank of Greece, processed by NAI Hellas Source: NAI Hellas The Automobile industry was one of the sectors in Greece that was hit by the 2008 recession. According to the Hellenic Association of Automobile Merchants & Importers, in 2013 the number of new car licences rose by 0.4% since 2012. Merchants and Importers are optimistic that the car market will slowly pick up and is forecasted to further rise by 5% in 2014. After a deficit in the Budget of 2.8 bil. € in 2012 the Greek Government achieved a surplus of 0.6 bil.€ for 2013 and the forecast for 2014 is nearly 2.9 bil.€. 4 3 2 1 0 -1 -2 -3 -4 2012 2013E 2014F Government Budget (bil. €) Source: Hellenic Republic Ministry of Finance, processed by NAI Hellas Source: Hellenic Association of Automobile Merchants & Importers, processed by NAI Hellas New Car Licences 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 2003 2004 2005 2006 2007 2008 2010 2011 2012 2013E 2014F2009 20% 10% 0% -10% -20% -30% -40% -50% -4.2% -12.6% -6.9% -0.8% -4.5% -4.5% -17.5% -35.8% -31.0% -40.1% 0.4% 5.0%
  • 8. 08 Office Market The Office Market in Athens since 2008 has witnessed an average fall in capital and rental values of between 40% and 50% respectively. Occupiers' priority has shifted to downsizing in space and achieving more affordable rents. The Athenian Office Market is characterized by a large supply of Grade C or even D offices and a much lesser offer of Grade A and B accommodation. This specificity drives vacancy rates of offices to an average range of 3% to 6% for Grade A and from 5% to 10% for Grade B, much lower than the EU average. On the other hand, vacancy rates for Grade C or D offices range between 20% to 30% while the stock of ageing buildings continues to rise. Athens Office Market Athens Centre (C) Athens West (W) Athens North (N) Athens South (S) City Centre Alexandras Av. Patision Av. Piraeus Av. Vas. Sofias Av. Ampelokipi National Rd Petrou Rali Iera Odos Thivon Av. Athinon Av. Kifissias Av. Mesogeion Av. National Rd Attiki Odos Sygrou Av. Faliron Vouliagmenis Av. Poseidonos Av. Piraeus W C N S Source: NAI Hellas 30 25 € 20 € 15 € 10 € 5 € 0 € € 2003 2004 2005 2006 2007 2008 2010 2011 2012 20132009 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 8.50% 8.25% 7.50% 7.25% 7.00% 6.50% 7.00% 7.50% 8.00% 8.25% 8.25% Rent ( /sq.m./month)€ Yield Grade A Office Market - Historic Overview
  • 9. Athens Office Market 2014 Forecast Grade A Grade B Rents Yields Demand Supply City Centre West Athens Kifissias Av. Sygrou Av. Vouliagmenis Av. 50% 15% 6% 19% 10% Office stock Allocation per Area (Grades A & B) 09Office Market Rental values and yields for Grade A office buildings in Athens in 2013 remained at 2012 levels. Athens City Centre is still expected to achieve higher rents than other locations followed by Kifissias Av. (North Athens) which is the second preferred office market in Athens. On the whole, vacancy rates for Grade B buildings remain higher than Grade A as demand for good quality accommodation is ongoing. Athens CBD Athens West Kifissias Av. Mesogeion Av. National Rd Sygrou Av. Faliron Surroundings Vouliagmenis Av. South Athens 8.25% 11.00% 8.25% 8.50% 9.00% 3% n/a 3% 2% 0% 20.00 12.00 € 15.00 € 14.00 € 12.00 € € Grade A Prime Rent Prime Yield Vacancy Rate 9.50% 11.00% 9.50% 9.50% 10.00% 16% n/a 3% 5% 6% 12.00 7.00 € 10.00 € 10.00 € 9.00 € € Grade B Rent Yield Vacancy Rate Source: NAI Hellas Source: NAI Hellas, on-site inspections
  • 10. 10 Retail Market The growing disposable income up to 2008 led to an increase in retail spending which consequently pushed retail rental values significantly higher especially in prime locations such as Ermou, Kifissia and Glyfada. Post 2008, a reduction in disposable income, credit availability and unemployment reduced consumer activity. The average reduction in 2013 retail sales has been lower than 35% since 2008. According to the National Confederation of Hellenic Commerce the percentage of stores that closed down in the city centre of Athens in March 2012 was 29% higher than August 2011 and 27% higher in Piraeus. Athens Kifissia Piraeus Glyfada Pagrati Chalandri Peristeri Aegaleo Ermou Str. Stadiou Str. Patission Str. Source: NAI Hellas 2003 2004 2005 2006 2007 2008 2010 2011 2012 20132009 8% 7% 6% 5% 4% 3% 2% 1% 0% Rent ( /sq.m./month)€ Yield Grade A Office Market - Historic Overview 300 € 250 € 200 € 150 € 100 € 50 € - € 350 € 6.50% 6.50% 6.50% 6.00% 5.00% 5.00% 5.75% 6.25% 6.75% 7.25% 7.25%
  • 11. 11Retail Market High Street Retail Space (sq.m.) 6 50,000 40,000 30,000 20,000 10,000 0 0,000 Glyfada Kifissia Ermou Stadiou Patission Pagrati Aegaleo Piraeus Peristeri Kolonaki Chalandri 25% 20% 15% 10% 5% 0% 16% 9% 3% 17% 19% 22% 14% 9% 10% 20% 6% Retail space sq.m. Vacant space sq.m. Vacancy rate Source: NAI Hellas on-site inspections Retail rents in 2013 remained stable at 2012 levels while yields in prime locations reached 7.50%. Throughout the years of the recession, established prime retail locations continued to be favored and have enjoyed comparatively lower vacancy rates whereas secondary locations have suffered high vacancy rates and falling rental values. New conditions in the market created an opportunity for big retailers to consolidate their market positions, reduce occupational costs through negotiation and continue their expansion program. The Food and Beverage sector has grown significantly as the new trend in the retail market is to convert small retail units into bars, cafes, and restaurants. Athens High Street Retail Market 2013 Outlook Rents Yields Prime PrimeSecondary Secondary Glyfada Kifissia Ermou Stadiou Patission Pagrati Aegaleo Piraeus Peristeri Kolonaki Chalandri 60 -80 70€-100€ 90€-140€ 80€-100€ 20€-30€ 25€-50€ 30€-40€ 25€-35€ 30€-50€ 60€-110€ 30€-75€ € € 30€-50€ 30€-50€ 45€-70€ 50€ 8€-15€ 8€-15€ 15€-20€ 10€-15€ 10€-15€ 25€-50€ 15€-25€ 7.25% - 8.00% 8.00% - 9.00% Source: NAI Hellas
  • 12. 12 Retail Market Athens High Street Retail Market 2014 Forecast Prime Secondary Rents Yields Demand Supply Occupancy by Sector Kifissia Ermou Stadiou Patission Pagrati Aegaleo Piraeus Peristeri Kolonaki Chalandri Glyfada Food & Beverage Clothing & Footwear Household Goods Books/Electronics/Toys/Mobile Supermarket/Grocery/Butcher Cosmetics Cars/Moto/Heavy Equip. Services Vacant Other Source: NAI Hellas on-site inspections
  • 13. 13Shopping Centres Shopping Centres in Greece appeared after 1990 and are typically multi-storey buildings of 3 retail floors where normally one or more large anchor tenants generate footfall. In Athens, Shopping Centres (Malls) followed the same trend whereas bigger outlets commonly known as Retail Boxes or Retail Parks consist of a single large floor space and are found in outer Athens. Shopping Centres compared to High Street retail were less affected by the credit crunch and on the whole performed better than high street retail, with lower vacancy rates, higher footfall and more stable rates. The average leasable space per 1,000 inhabitants (for the greater Athens area) 2remains less than 100m /1,000 persons compared to the EU-27 average of 2246m /1,000 persons. Shopping Centers - Key Figures Maintenance (pa) Property Management (% of GPI pa) Allowance of risk of rental loss Useful Life No. of parking spaces requirred No. of storeys Fitout Specification Building Costs (excl. site improvements) Ancillary building costs 2 4 - 6 € / m 2 - 4% > 5% 50 years 2 guide: 1 space for 15-20 m of sales area multi-storey, 2 - 3 retail floors average to high 2 1,000 - 1,500 € / m GEA 7 - 15% of building costs Source: International Council of Shopping Centers (ICSC), processed by NAI Hellas Name Location Athens Heart Avenue Golden Hall Metro Mall River West The Mall Athens Village Shopping & More McArthurGlen Designer Outlet Malls Tavros Kifissias Av., Maroussi Kifissias Av., Maroussi Agios Dimitrios Kifissos Av., Tavros Maroussi Thivon Av., Rentis Spata Total sqm of retail space 2 272,500 m approx. Name Location Airport Retail Rark Jumbo Media Markt Leroy Merlin Smart Park IKEA Boxes Attica Rd Pireos Str. Spata Kifissos Av. Tavros Total sqm of retail space 2 175,000 m approx. Source: NAI Hellas 2Mall - Anchor Tenant (2,000m +) 2Mall > 100 m 2Mall < 100 m 2Box (min. 5,000 m ) Athens Shopping Centres Rents Yields 11 -15 35€-60€ 50€-90€ 8€-16€ € € 7 -13 2%-7% % % Turnover Rent 8.25 -9.00 8.50%-9.50% % % Source: NAI Hellas Athens Shopping Centres Market 2014 Forecast Malls Boxes Rents Yields Demand Supply Athens Malls’ Vacancy Rate Occupancy Rate Vacancy Rate Athens Boxes’ Vacancy Rate Source: NAI Hellas
  • 14. 14 Logistics Athens Logistics Market 2014 Forecast Prime Secondary Rents Yields Demand Supply 2 2Rents in 2013 varied from 3€/m /month to 4 /m /month for the best quality buildings, while yields ranged from 10.50% to 11.50% depending on the location. It is estimated that for 2014 rents and yields for prime logistics will remain constant as the market appears to be stabilizing. Supply of logistics space is not expected to increase as no new development plans are on the way, while existing stock is ageing. Demand for prime logistics is expected to increase due to the new development of the freight center in Thriassio (Athens West). € Investment and development interest for logistics from international players remained low in 2013, with very few transactions to report and low business activity. The market remains owner occupied and demand for logistics during 2013 decreased. Supply of newly constructed logistics buildings was very limited in 2012 and 2013, as developers only look to pre-let or pre-sell before commencing any new development. Falling demand created an opportunity for occupiers to bargain rents on Grade A logistics buildings in prime locations. 2003 2004 2005 2006 2007 2008 2010 2011 2012 20132009 Rent ( /sq.m./month)€ Yield Prime Logistics Market - Historic Overview 6 € 5 € 4 € 3 € 2 € 1 € 0 € 7 € 12% 10% 8% 6% 4% 2% 0% 8.50% 7.00% 8.00% 9.00% 9.00% 9.50% 10.50% 10.75% 9.50% 9.50% 9.00% Source: NAI Hellas Athens North (1) Metamorfosi Kifissia Krioneri Agios Stefanos Attica Logistics Market Athens East (2) Koropi Spata Airport (El. Venizelos) Peania Athens West (3) Aspropyrgos Magoula Elefsina Inofita & Schimatari (4) Koropi Spata Airport (El. Venizelos) Peania Elefsina Magoula Aspropyrgos Metamorfosi Kifissia 13 Inofita Schimatari 4 Ag. Stefanos Krioneri 2
  • 15. 15Infrastructure Road Network Ports New Projects The continuous upgrade of the E79 international road network will link Athens with the rest of Central Europe. The construction of IONIA ODOS highway will connect the whole of Western Greece linking also three ports (Patra, Astakos, Igoumenitsa) and three airports (Araxos, Preveza, Ioannina). It will run from Antirrio and end on Egnatia Odos highway, which connects the whole of North Greece and E79. It also connects the industrial centres of Western Europe with Eastern Europe and acts as the main road axis for transportation in the Balkans and SE Europe. Due to Greece's extensive coastline, there are several commercial ports located strategically in the country; in Attika (Piraeus, Rafina, Lavrio), Crete (Heraklion, Chania), Western Greece (Kalamata, Patra, Korinthos, Astakos, Igoumenitsa) and Northern Greece (Volos, Thessaloniki, Kavala, Alexandroupoli). Cosco Pacific Ltd which is already exploiting Pier II of the Piraeus container terminal has announced an additional 230 mil € investment in the port of Piraeus until 2015 including: - the construction and exploitation of Pier III - the upgrade with new machinery of Pier II and East Pier III plus installation of Super- post Paramax cranes - the construction of a Petroleum Pier The capacity of Piers II & III will increase from 3.7 mil TEU to 6.2 mil TEU. Piraeus is becoming a bigger trade gateway and the Southern Europe entry point serving the Balkans and the Black Sea. Railways The new freight centre (Athens West) of TRAINOSE (subsidiary of the Hellenic Railways Organization) in Thriassio is expected to complete by the end of 2015. The 257 mil € investment includes sorting stations, container management stations, terminals, customs office and warehouses. TRAINOSE and the Piraeus Port Authority have reached an agreement for the construction of two railway stations in the port of Piraeus; one for container transportation and one for car transportation. The 17 kilometer railway route will link Piraeus Port with the Thriassio freight centre and the national railway network where 1.7 mil TEU per annum are estimated to be transported to SE Europe via the national railway network. Cosco and Hewlett-Packard along with other SE Asian companies have reached an agreement for a logistics centre in the modern freight centre in Triassio. To ease the process of the previous mentioned plans, the Greek Government is preparing to sell 49% of the publicly owned TRAINOSE in order to privatize the company. The strategic location of the new freight centre in Thriassio in terms of road network, rail linkage and access to Greece's biggest port has raised an international investment appetite for the area. Piraeus Container Terminal (in TEUs) 2002 2003 2004 Total % change 2005 2006 2007 2009 2011 201220102008 1,404,939 n/a 1,605,135 14.2% 1,541,563 -4% 1,394,512 -9.5% 1,403,408 0.6% 1,373,138 -2.2% 433,582 -68.4% 664,895 53.3% 513,319 -22.8% 490,904 -4.4% 625,914 27.5% Source: Piraeus Port Authority SA, edited by NAI Hellas
  • 16. 16 Hotels & Leisure In 2012 Greek Tourism contributed to GDP by 16.4% and to employment by 18.3%. The Association of Greek Tourism Enterprises reported that income from tourism in the year reached 10.4 bil € coming from 16.9 mil visitors. Greece holds a market share in Europe of 2.9% and 1.5% globally, offering 9,670 hotels spread around the country. Traditionally 80% of visitors to Greece are for holiday; on the contrary only 6.8% travel to Greece on business. The number of tourists arriving in Greece has been growing rapidly since the 2004 Olympic Games of Athens and it is estimated that c.5% more tourists visited Greece in 2013 compared to 2012. International Tourist Arrivals 2000-2012 Year Arrivals 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014F 12,378,282 13,019,202 12,556,494 12,468,411 11,735,556 14,388,182 15,226,241 16,165,265 15,938,806 14,914,537 15,007,493 16,427,247 16,946,543 17,500,000 18,500,000 % change n/a 5.2% -3.6% -0.7% -5.9% 22.6% 5.8% 6.2% -1.4% -6.4% 0.6% 9.5% 3.2% 3.3% 5.7% Tourism Receipts according to travel purpose in 2011 Holiday Academic Visiting Family Business Reasons Other Reasons The continuing increase in the number of foreign visitors to Greece created a need for more hotel accommodation. Therefore, the number of hotel units in Greece has been growing since 2004; it is worth noting that between 2000-2012 the number of hotel units in Greece increased by almost 20%. All Type Hotel Evolution (Δ% change 2000-2012) 30% 25% 20% 15% 10% 5% 0% No. of Hotels No. of Rooms No. of Beds Source: Hellenic Statistical Authority, processed by NAI Hellas Source: The Association of Greek Tourism Enterprises, processed by NAI Hellas Source: Hellenic Chamber of Hotels, processed by NAI Hellas Evolution in Hotel Numbers by Category 2000-2012 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2003 2004 2005 2006 2007 2008 2010 2011 20122009 5* No. Hotels 1* No. Hotels2* No. Hotels4* No. Hotels 3* No. Hotels Source: Hellenic Chamber of Hotels, processed by NAI Hellas
  • 17. 17Hotels & Leisure Since the crisis started in 2008, while arrivals increased steadily to 18 mil. a year, tourism receipts published have remained stable at around 10 mil. €, suggesting people are spending less and stay less time. The 2008 recession had an effect on tourism, as shown in the graphs below. The years 2009 and 2010 were the most difficult for the Tourism Industry in Greece. However the market appears to be recovering and Tourism Receipts increased in 2012 by 3.2% compared to 2011 according to the World Tourism Organization (UNTWO), which further continued in 2013. Travel balance for the period Jan-May 2013 presented a surplus of 306 mil. € compared to the same period in 2012 according to the Bank of Greece which mainly comes from an increase in tourism receipts of 15.4% in H1 of 2013. The average occupancy of hotels in Greece before the recession ranged from 45% to 50%. After 2009 occupancy fell as low as 34% in 2012. In 2013 however, occupancy reached almost 40% and is expected to increase further in 2014. Occupancy Rates of Greek Hotels 60% 50% 40% 30% 20% 10% 0% Greek Tourism Receipts 2000-2012 (bil.€) 14 12 10 8 6 4 2 0 2005 2006 2007 2008 2010 2011 201220092000 2001 2002 2003 2004 Source: The Association of Greek Tourism Enterprises, processed by NAI Hellas Non-Residents’ Overnight Stay in Greece - All Type Hotels (mil.) 160 155 150 145 140 135 130 125 165 2005 2006 2007 2008 2010 2011 20122009 Source: The Association of Greek Tourism Enterprises, processed by NAI Hellas Greek Tourism Ranking based on International Tourism Receipts 2007-2012 2012 2011 2010 2009 2008 2007 23 19 21 15 12 12 Year Country Ranking World Country Ranking Europe 11 9 10 8 8 8 Source: World Tourism Organization, processed by NAI Hellas Source: Hellenic Chamber of Hotels, processed by NAI Hellas
  • 18. 18 Hotels & Leisure The annual Revenue per Available Room (RevPAR) in a 5* Hotel is estimated to exceed 30,000 from 2013 onwards and over 20,000 for a 4* Hotel room.€ € Change in RevPAR of Greek Hotels 2008 2009 2010 2011 2013E 2014F2012 35,000 25,000 € 20,000 € 15,000 € 10,000 € 5,000 € 0 € € 30,000 € RevPAR 5* Hotels RevPAR 4* Hotels Source: NAI Hellas 2008 2009 2010 2011 2013E 2014F2012 1 160 € 140 € 120 € 100 € 80 € 60 € 40 € 20 € 0 € 80 € RevPAR 5* Hotels RevPAR 4* Hotels ADR of Greek Hotels Moreover, the Average Daily Rate (ADR) of a 5* Hotel room in 2013 is estimated to reach 150€ while for a 4* Hotel room the rate is estimated to exceed 90€. Source: NAI Hellas Lastly, the implied EBITDA multiplier for a 5* Hotel is estimated to increase to 10.5 in 2013 compared to 9 in the years 2010, 2011 and 2012. Likewise, the implied EBITDA multiplier for a 4* Hotel is estimated to reach 10 in 2013 compared to 8 in the years 2010, 2011 and 2012. 2008 2009 2010 2011 2013E 2014F2012 1 11.0 10.5 10.0 9.5 9.0 8.5 8.0 7.5 7.0 1.5 5* Hotels 4* Hotels EBITDA multiplier in Greek Hotels Source: NAI Hellas
  • 19. 19 Opportunities in the Greek R.E. Market Refurbishment & Re-Development Grade A Office @ discount Prime Logistics @ discount Prime Retail @ discount Investment Opportunities Hotels & Leisure 2014 is the year of stabilization in capital and rental values. INVESTMENTRECOVERY GROWTH Growth will emerge as a result of the new base of values established. The investment opportunity lies in buying property at current low prices and benefiting from the rise in capital and rental values to come with recovery.
  • 20. Deloitte Athens Headquarters
  • 21. 21 The past years the legislative framework of the taxation of real estate ownership in Greece has significantly changed. As from 1.1.2014 onwards new types of taxes are applicable both for the acquisition of real property and its ownership. Investing in real estate in Greece requires careful design and planning from the very beginning. Different rules apply for individual and corporate investors, while the scope of the investment (whether short term or long term) merit different approach in the design phase. The following paragraphs aim to outline the main tax aspects of real property acquisition and ownership in Greece and to provide the potential investors with an overview of the key points of the applicable legislation. The taxation of real estate in Greece Upon acquisition of real property located in Greece, the potential investor will be liable for the payment of either Real Estate Transfer Tax at 3% (for land and “old” buildings on the higher of the tax value of the property or the value depicted in the notarial deed) or Value Added Tax at 23% (for the supply of “new” buildings). If the investor is an individual Greek tax resident, he should also consider the imputed income provisions that require the taxpayer to be able to prove that he has the funds available to acquire the property in question. Acquisition of the real property A Greek tax resident individual owner selling real property is subject to a 15% tax on the capital gain derived from the sale. Certain exceptions apply for low capital gains or for real estate held for a long period of time. The same tax applies if the object of the sale is a company, whose value significantly comprises from real estate (>50%). For corporate owners, the gain from the sale of real property is deemed as business income and is subject to the prevailing 26% Corporate Income Tax rate. The change of ownership due to a donation or inheritance is subject to the special donation or inheritance tax imposed under Greek law. Disposal of real property For further information please contact: Thomas Leventis, Tax Partner [direct: +30 210 6781262 / tleventis@deloitte.gr] Kostas Roumpis, Tax Manager [direct: +30 210 6781272 / kroumpis@deloitte.gr] Taxes on the ownership of real property may be divided in two main categories: -Taxation of rental income -Capital ownership taxes For individuals, the annual rental income up to €12,000 is taxed at 11% and any income above €12,000 at 33%. For corporate investors, the rental income is deemed as business income, taxed at the prevailing 26% rate. It is also noted that commercial leases are either subject to 23% VAT (if such an election is made and allowed) or to 3.6% stamp tax. Residential leases are exempt from both VAT and stamp tax. The Capital ownership tax is comprised by the Main Tax and the Supplementary Tax. The Main Tax is computed on a per property basis, whereas the Supplementary Tax is computed on the total tax value of the property held. The Main Tax is computed taking into account a variety of factors (such as the address of the property, its use, the floor and the total surface) and the Supplementary Tax for individuals range from 0.1% for total property value of €300,000 to 1% for total property value exceeding €1MN. For corporate owners, the tax is 0.5% on the total value of the property which is not self-used by the owner. Finally, it is underlined that for individual Greek tax resident owners, imputed income is also computed for the real property self-used. In addition, there is a special property tax (the so called “off-shore” tax) which applies to corporate owners. Several exemptions apply, the most usual being based on disclosure of the ultimate individual owner. Ownership of real property Transfer of real estate Investor Value Added Tax Real Estate Transfer Tax Real Property exploitation Income tax on rental income Stamp tax or VAT for commercial leases Annual Real Property Tax
  • 22. 22 EU Schengen States Non - EU Schengen States Schengen candidate States Non - EU Schengen States Acquisition of Residence Permits through Real Estate Ownership The application of articles 16 (B) and 20 (B) of the Greek Immigration and Social Integration Code Guide to Residence Permits for Real Estate investors in Greece [Article 20 of the Greek Immigration and Social Integration Code (“Immigration Code”)] The Greek State introduced a procedure for granting five year renewable residence permits to citizens of non EU member States who invest in real estate in Greece, the value of which is at least 250,000€. Third country citizens that either personally or through a legal entity: - Own Real Estate property of 250,000€ value; - Have a time-sharing contract of 250,000€ minimum value; - Have a 10 year at minimum lease of hotel accomodation or furnished tourist accomodations (houses) in tourist accomodation complexes of 250,000€ minimum value; Can obtain a five year renewable residence permit for them as well as their spouse and children. minimum Residence permit allows access to the 26 Schengen member states for 3 months every 6 months. Schengen Area as of 1/7/2013 For further information please contact: Spyros Alexandris, Partner [direct: +30 210 3318170 / salexandris@bahagram.com] Residence permit is valid for 5 years but can be renewed for the same duration as long as the real estate property remains in the ownership of the applicant or the said leases are active. As per article 16 (B) of the Immigration Code, a strategic investor, (who invests from 3 mil.€ to 100 mil.€ depending on the type of investment) can be granted up to 10 residence permits for individuals key to the investment who may be escorted by their family members. Such residence permits shall have a 10 year renewable duration.
  • 23. Thomas Ziogas Business Development Manager t.ziogas@naihellas.gr Eleni Makri Research e.makri@naihellas.gr Tim Hughes Agency t.hughes@naihellas.gr George Smalis Valuation g.smalis@naihellas.gr NAI Hellas/AVENT S.A. is a full service commercial real estate brokerage and consultancy firm, member of NAI Global the world's largest network of independent commercial real estate service providers. Our Services Contacts Disclaimer All data contained in this report has been compiled by NAI Hellas/AVENT S.A. and is published for general information purposes only. While every effort has been made to ensure the accuracy of the data and other material contained in this report, NAI Hellas/AVENT S.A. does not accept any liability (whether in contract, tort or otherwise) to any person for any loss or damage suffered as a result of any errors or omissions. The information, opinions and forecasts set out in the report should not be relied upon to replace professional advice on specific matters, and no responsibility for loss occasioned to any person acting, or refraining from acting, as a result of any material in this publication can be accepted by NAI Hellas/AVENT S.A. © NAI Hellas/AVENT S.A. March 2014 Sale & purchase Rentals Investment sales & advisory Valuation of fixed assets Landlord & Tenant Representation Development Appraisals Feasibility Studies Planning and land use advice Market research Expert witness Corporate Real Estate Services Public Private Partnerships (PPP)/Private Finance Initiative (PFI) Due Diligence Asset Management Value Preservation & Enhancement Property Finance Hotel & Leisure
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