The impact of the Covid-19 pandemic to the Greek and Cypriot Real Estate markets has started to become clearer in June. The recovery of both markets has been impressive for the last year, but it was mostly supported by foreign investment and the rapid growth of tourism, as domestic demand for housing and non-investment real estate remained limited. With tourism suffering a key blow and investment plans worldwide freezing, both market dynamics are stalling.
However, as the Bank of Greece points out, the effects are not the same for all real estate assets and the rates of medium and long-term recovery will vary depending on the category, location and special characteristics of the assets.
According to the data released, by the end of February the upward trends in RE prices continued, March marked the beginning of a new period, which is directly affected, among other things, by the rapid decline of the tourism industry, the suspension of investment activity and the uncertainty about the evolution and duration of the current crisis.
The abrupt stopping of real estate activities, the temporary suspension of the operation of mortgage offices and the reduction of rents do not allow the valuation of the full impact yet.
In Cyprus, The Central Bank released data according to which the real estate sector is experiencing a slowdown of the upward trend recorded in previous years. The slowdown in demand for real estate began in the second half of 2019 and specifically after the application of the stricter criteria for the Cyprus Investment Programme it continued during the first months of 2020 and worsened in March and April due to the pandemic. The restrictive measures also affected the construction activity as well as the expectations of the real estate market players.
According to the preliminary unpublished data from the Central Bank of Cyprus, increases in housing prices slowed down even further in the first quarter of 2020.
In this context, there are hundreds of hotels all over the country for sale, with negotiable prices due to the pandemic. Most of the transactions have been frozen until the market stabilizes and adapts to the new situation, depending on how big the financial blow will turn out to be.
Nevertheless, there are ongoing mega-projects, especially in popular holiday destinations such as Mykonos. Grivalia Hospitality and Frontisa Management are one step closer to the implementation of a €58m hospitality investment on Mykonos. The project is called “Project Blue” has already been included in the Strategic Investments. According to the plan, a 5-star hotel facility with spa infrastructure with a total capacity of 340 beds, will be developed in plot of about 100 square km, in the area of Ano Mera, about 400 meters away from Kalo Livadi beach.
Another hospitality investment on Mykonos got the green light by the Central Council of Urban Issues and Disputes. The project has a budget of €40 m. The complex of furnished villas and a five-star hotel will be developed in an area of 53.4 square km at the location Kastellakia near the coastal settlement of Platy Gialos.
Despite the pandemic, the office building market has had some transactions in June. Trastor REIC announced the acquisition of two prime, grade-A office buildings located atAmarousiou – Chalandriou Str. in Maroussi. The company acquired a stand-alone office building with total surface area of 21,412 sq.m. that consists of office areas and underground ancillary and parking areas. Additionally, Trastor acquired a stand-alone office building with total surface area of 4,185 sq.m. that consists of office areas and underground ancillary and parking areas located at 29, Amarousiou-Chalandriou Str. The acquisition price for this property is €7.2m.The seller of both properties is AVAX S.A., one of the largest construction groups in Greece that will lease the two properties and remain as tenant. The transaction was financed by funds raised from the issuance of common bond loans.
On another note, Intercontinental International REIC decided not to proceed with the acquisition of an independent commercial property on 13 Tsakalov Street. According to the announcement, “regarding the successful bidding in a public tender organized by Piraeus Real Estate SE for the acquisition of an independent commercial property on 13 Tsakalov Street informs its shareholders and the public that in view of the negative climate created in the economy, due to the pandemic of SARS COVID-19 and after relevant discussions with the tender organiser, it will not proceed with a contract for the acquisition of the above property”.
As the foreign buyers’ is frozen during the pandemic, the residential RE market has been ina slow-down since March. There has been some interest though for holiday homes.
The former basketball player of Olympiakos (next season to play in CSKA Moscow) Nikolas Milutinov has purchased two properties in Peloponnese for €1.5 m. The properties are located in Costa Navarino, Messinia. The purchase ensures the golden visa for the player, which is given to those foreigners who make an investment of over 250,000 EUR.
Investment in land to develop logistics centers is still active as well. In this context, BriQ Properties announced that it purchased two adjacent plots with a total area of 57,529 sqm located in Aspropyrgos, Attica.The total price for the purchase of the two plots amounted to €3,456,000.The company will develop a modern storage and distribution centre in the specific area.