Commercial real estate in Greece: Investments reached 1.65 billion euros in 2022

Investments in commercial real estate in the Greek market reached a record 1.65 billion euros in 2022, marking a 40% increase compared to 2021. This results from the data processed by Cushman & Wakefield Proprius, pointing out that this development this happened despite a slowdown in European markets and a decrease in trading volume in most of them.

It is noted that the survey does not include the acquisition of a majority stake in the Sani/Ikos group by the international investment fund of Singapore GIC, as well as the agreement for the purchase of the skyline real estate portfolio from the Dimand-Premia Properties joint venture.

By category

The hotel market gathered the largest volume of transactions, with 36 recorded transactions worth €620 million, with the office market following with €410 million in 46 transactions. Core+ office space investments garnered the highest transaction volume at 51%, followed by value added and opportunistic investments.

The shops and shopping centers sector comes a close third, attracting €327m across 32 transactions, recording a 200% year-on-year increase over 2021.

The logistics & industrial real estate sector attracted investments of approximately €100 million, while approximately the same amount was invested in land purchases for the purpose of development.

Domestic AEAAPs continue to invest significant funds, in the commercial real estate market in 2022, investing almost €400 million mainly in the hospitality sectors, in privileged offices and in the acquisition of land for development, while €380 million concerns the inflow of purely foreign capital, at levels lower than expected in the context of adverse global economic circumstances.

The trends for 2023

According to Cushman & Wakefield Proprius head Niki Sympoura, most of the trends summarized below that began in the post-pandemic environment of 2022 are set to continue in 2023, with an eye, of course, on the upcoming national elections and the political risk that contain, in view of a possible unstable political setting. Specifically, these trends are summarized in the following ten points:

1. A large percentage of transactions concern domestic players. The Greek commercial real estate market consistently attracts strong interest from domestic individuals and institutional investors.

2. High percentage of accumulated savings directly or indirectly affected the real estate market. With the gradual return to normalcy a significant number of buyers increased their consumption of goods and services and investment in existing or new properties.

3. The retail market is recovering. After a long period of recession in the store space, the interest of investors and development companies is returning to the space, while an increase in sales and traffic is recorded in central markets and a shift towards leisure and the experimental shopping process.

4. ESG (Environmental, Social and Governance) criteria and sustainable developments are at the heart of user and investor strategy, while they are now a strategic tool for attracting investments, customers and staff. Investors aim to certify their properties according to LEED, BREEAM, as well as other internationally recognized grading and benchmarking systems.

5. Interest in Logistics will continue to be strong from domestic and international investors. We expect this trend to continue in 2023 due to continued high demand and low supply while a lack of product will continue to drive investors into the land market.

6. Major private development projects are expected to reshape markets. The interest is focused on the progress of the large development projects with a focus on the ‘Greek’ which are expected to influence and redefine the markets of offices and shops.

7. Turning to alternative investments. The intense competition between real estate investment companies leads companies to search for alternative categories of real estate, which ensure higher returns such as serviced apartments, school complexes, student residences, senior living, etc.

8. The hotel market remains in focus due to the significant increase in tourism. Given the popularity of tourism in Greece, the tourism industry will continue to be in focus.

9. Inflated construction costs, skilled labor shortages and rising construction wages will be closely watched during 2023. Developers may need to explore alternative avenues of cost reduction with a further focus on cost control, risk assessment and process improvement.

10. Within 2023, users are expected to move into the space they will be asked to use in the following years. In 2022, offices take-up of more than 100,000 sq m, up 25% from last year. This trend is expected to continue in 2023, with the bet now focused on the percentage of users who will be willing to agree to office leases with future delivery, according to their requirements, and simultaneous commitment with a closed lease period (pre let).