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Economy & Real Estate Report
Holiday Home and Hospitality Markets
Greece 2017
Greek Economy
Overview
A 4.2% of GDP, General Government Primary Surplus
has been achieved, far exceeding the target of 0.5%
set for 2016
The performance of the Greek increase in taxation on consumption For H1 2017, all the major economic
Economy throughout 2016 and the rise in energy prices. indices maintained a positive course.
remained almost neutral, implying Primary surplus was 15.7% higher
the end of the country’s crisis. A 4.2% of GDP, General during the same period last year
2017 is expected to be a year Government Primary Surplus has (H1 2017: €1.936mil), exceeding
of solid growth. The delay in been achieved, far exceeding the target set by the 3rd MoU for this
finalizing the second assessment the target of 0.5% set for 2016. year (€431mil.). Unemployment rate
of the 3rd MoU was a hindrance to Moreover, for the first time further decreased to 21.2% (June
the growth of the Greek economy in recent years, the General 2017), maintaining its momentum
in 2016, mitigating the projected Government balance had a positive over the last three years. In this
level of growth for 2017. margin, marking a €1.3bil. surplus climate, the domestic banking sector
or 0.7% of GDP. Greece’s test exit returned to positive results, while the
In 2016, GDP recorded a - 0.2 % to the markets in July 2017 with restructuring of their NPL’s portfolio
growth. For 2017 and 2018, the the issuance of a 5-year bond was is expected to facilitate gradual
economy is expected to experience another step towards the end of normalization of business access to
positive growth rates of 2.1% and the crisis and the return to stability, bank lending, giving new impetus to
2.5% respectively. Following the managing to raise €3bil. with a the country’s real economy.
positive performance of the previous 4,375% coupon and an interest
years, unemployment rates further rate of 4,625%. The Greek Economy still has many
declined to 23.6% in 2016 from open issues to face in order for
24.5% in 2015 and 26.5% in Despite the unfavorable economic growth to accelerate
2014. The projections for 2017 and circumstances occurring both locally including the debt relief and the
2018 refer to a further decline to and internationally (BREXIT, ongoing lifting of capital controls. For that,
22.8% and 21.6% respectively. The refugee crisis and terrorist activity), it is imperative to maintain a stable
Consumer Prices Index reached 0.0% the Greek economy, driven mainly political and economic climate
in 2016 for the first time after 3 by the tourism performance, kept a so that the Greek Economy can
years of deflation, mainly due to the steady course throughout the year. maintain a strong growth.
2
Greek Economy
3
Greek Economy
Tourism
For Greek International Tourist Arrivals and Tourism Receipts
Tourism to
further grow
over the
coming years,
it is imperative
to continue
attracting
large scale
investments
Despite the difficult conditions held back as a result of: Travel & Tourism investments
prevailing in 2016, Greek Tourism • Increase in taxation reached €3.2bil. or 15.7% of
continued its upward course over • Ongoing refugee crisis total investments made in the
the last years. Having maintained • BREXIT country, including among many
its dynamics at a very high level, • Increase in last minute the privatization of the 14 regional
tourism gave a great boost to the bookings airports, the privatization of Astir
Greek economy, both in terms of • Shorter vacation period Palace etc. As the culmination
profitability and employment. of these efforts, Greece reached
Preliminary data for H12017 are the 24th position in the Travel
For five years in a row, arrivals more encouraging; International & Tourism Competitive Index,
recorded a positive growth arrivals showed a +6.6% increase published by the World Economic
rate (+ 4.8%), reaching 24.8 compared to the respective period Forum for 2016, seven positions
million visitors, excluding cruise last year while tourist receipts ahead compared to 2015.
passengers, while expectations bounced back strongly, recording
for 2017 speak of further growth. a 7.1% increase, paving the way For Greek Tourism to continue
Tourism receipts on the other hand for a new record year for tourism growing over the coming years, it
indicated a slowdown (-6.8%), in Greece. is imperative to continue attracting
reaching €12.8bil. Greek large scale investments. A €3.5bil
tourism’s main markets for 2016 In recent years, Greece has been investment per year is necessary
were Germany, UK, France, USA consistently investing in tourism, for the industry to be able to take a
and Italy, accounting for 39.4% exploiting its strategic advantages step further.
of total arrivals, 47.8% of total in order to further improve its
overnight stays and 50.3% of total attractiveness for foreign travellers.
tourist receipts. More specifically, for 2016 and
according to WTTC (World Travel
Tourism revenues in 2016 were & Tourism Council), Greece
4
Greek Real Estate Market
Building Activity
Building activity showed signs cumulatively since 2007, there and the high number of construction
of decline for another year, has been a decrease of 84.1%. projects announced to begin in the
confirming the sector’s struggle The stabilization of the number of upcoming years, are expected to
since the beginning of the financial issued building permits per year boost the country’s building activity,
crisis in Greece in 2008. More close to 13,000 in the last three giving life to an industry which was
specifically, in 2016 12,641 years (2014: 13,434, 2015: once characterized as the “steam
building permits were issued, the 13,350, 2016: 12,641) is showing engine” of the Greek economy.
lowest number achieved over the that the sector has reached the Provisional data for H12017
last ten years. Compared to 2015 bottom and a grow period is already show a 13.1% increase
(13,350 permits issued), building expected. The settlement of the in issued permits compared to the
activity declined by 5.3%, while Banks’ non-performing loans (NPL’s) respective period in 2016.
Market Watch
The real estate industry showed was also observed in the logistics Average Prime
signs of stabilization during sector, with return ranging between Yields per Sector
2016, albeit with a low volume 10.5-11.5%. Nonetheless, the
of transactions. No significant overall activity recorded was very
developments in the office and low. The industry is expected to
retail sector took place due to move upwards in the future, mainly
diminished demand and low due to COSCO’s intense activity
liquidity as a result of the limited at the Piraeus port and to the
access to bank lending. Also, in construction of the Logistics Center
an effort to reduce operational in Thriassio Pedio by the Goldair-
costs, many companies tried to ETVA consortium.
renegotiate their existing rents
or searched for a new space by For H1 2017, the commercial
achieving a combination of size, and the office sector maintained
location and inveteracy which, in a steady course without recording
return, increased the supply stock any significant changes. The the domestic real estate market.
in old age commercial spaces logistics sector confirmed its The ability to record transactions
(retail, office). increased dynamics and growth as will help normalize market prices,
there was a strong demand from improve the quality of service
Office space yield ranged between retail, e-commerce and 3PL’s. provided by professionals as well
8-9%, due to the limited supply of as allow private and institutional
class-A office spaces. In the retail The real estate sector in Greece investors to keep track of the
sector, yield ranged between 7-8%, still faces many structural problems market and identify opportunities
with an increase being recorded including increased bureaucracy, where they can be found.
in high commercial streets and multiplicity of laws and lack of
shopping malls. The market is transparency. The Property Transfer
expected to grow further as a Registry, recently launched by
result of large commercial chains the Ministry of Finance, consists
entering the Greek market. Stability in a very important progress for
5
Greek Real Estate Market
Domestic Residential Market
Key markets of Attica Basin displayed remarkable
stability during this difficult economic climate
The residential property sector onwards. In addition, a very debilitating position in which the
continued its downward trend important step toward further industry has been put in during
in 2016, with property prices improvement is the equation of tax these years.
recording an overall fall of 2.1%, assessed values with commercial
marking the eighth consecutive year values. However, this measure is Nevertheless, key markets of Attica
of recession in the sector, with little not expected to be implemented Basin, such as the Northern and
auspicious prospect of growth. A before 1/1/2018, although it Southern suburbs, as well as the
further decline was recorded in was a prerequisite for the second historic center of Athens (Plaka,
Q22017 (-1.2%) which is expected evaluation of the 3rd MoU. Kolonaki) maintained their prices
to continue for the rest of the year. in 2016 demostrating remarkable
The two major urban centres of The housing market in Greece stability during this difficult
the country, Athens & Thessaloniki, became a ‘buyers’ market over economic climate, while some
suffered the most during the crisis the crisis years, with increased individual markets even recorded
years, where, the overall decline in tax on real estate coupled with a small increase in demand. More
prices exceeded 40%. the downfall in household income specifically, the southern suburbs
and the rising unemployment rate, attracted many buyers from the
Nevertheless, the price correction leading to many homeowners Middle East, Israel and especially
over the past two years is incentivized to put their property Turkey, where, due to the political
declining, indicating a stabilization for sale, increasing real estate turmoil which prevailed in the
of the housing market, which, stock, the majority of which being country, saw in Athens as closest
coupled with the forthcoming old constructions. At the same time, and safest destination in securing
regulation of the banks’ red loans the number of transactions declined and diversifying their capital. The
(NPL’s), leaves a small margin significantly, recording a 72% fall ‘Golden Visa’ scheme is expected to
of expected growth from 2018 since 2008 and demonstrating the further assist the market’s recovery.
Greek Residential Prices Rate
Source: Bank of Greece
6
Holiday Home Market
Overview
The holiday home market is expected to continue
growing rapidly over the coming years
The Greek holiday home market The holiday home market grew With the positive momentum
remains the most dynamic part of greatly in recent years. 2016 was created by the stable economy and
the domestic real estate market a milestone year for the Greek the ever-increasing dynamics of
in the years of the crisis and one holiday home market as the signs tourism, the holiday home market
of the most promising sectors of of recovery were clearly positive, is expected to continue growing
the Greek economy along with both in terms of transaction as well rapidly over the coming years.
Tourism. as of new development.
Supply
Holiday home capacity in Greece terms of asking prices and quality of include the construction of holiday
remained almost unchanged in construction. homes within their premises,
recent years due to limited building increasing and renewing the
activity as well as the small number The majority of holiday homes existing stock in tourist resorts with
of transactions. in Greece are private houses, over 3,000 properties over the next
as holiday homes in residential 5 years.
The Greek holiday home remains complexes have only recently
faithful to the style and form found developed in the last few years. Already, luxury hotel resorts
in each region, without sparing However, due to the development provide the option of buying a
any comforts and amenities, while boom of tourism in recent years, holiday home within their premises,
remaining competitive with holiday a great number of complex tourist contributing to the improvement of
homes in neighboring areas in resort projects in the pipeline, will holiday home stock.
Demand
The dynamics of the holiday home Due to the tension prevailing in golden visa and a clear preference
market in Greece remained high in the Middle East, buyers from these for Athens; out of a total of 2,014
2016 with tourism being a decisive countries saw the opportunity of residence permits issued by the end
factor in maintain a positive further diversifying their investment of September 2017, 850 regarded
momentum. portfolio by taking advantage Chinese nationals. Estimates show
of the high returns offered in that, since the beginning of the
Apart from markets that Greece the Greek holiday home sector, ‘Golden Visa’ scheme in mid-2013,
traditionally attracts (UK, showing particular interest for the a total of €1.1bil. has been invested
Italy, France, Germany, and Athenian Riviera as well as for high in the Greek real estate sector.
Scandinavia) whose preference lies end tourist destinations.
mostly in the Cyclades, the Ionian
Sea and Crete, a keen interest was The interest from the Chinese
recently recorded by investors from market remained high, with buyers
the Middle East and Turkey. primarily interested in obtaining the
7
Holiday Home Market
Prices - Transactions
destinations in the Mediterranean Greece, net capital inflows from
The positive (Nice: 4.2%, Ibiza: 3.8%,), while abroad for the real estate market
other regions in Greece also had in Greece for H12017 show an
impact of good performance with an average increase of 63.4% compared to the
of 4.5% respective period in 2016.
tourism
performance in The positive market climate
was eloquently represented by
Despite the overall positive climate
in the holiday home sector, however,
certain areas inflows of foreign capital for the
purchase of real estate going
the total number of purchases is still
much lower than in the pre-crisis
favored in many up 45.3% (€270mil.) compared
to 2015 (€186mil.). In fact, the
years and the real potential of the
market. The most popular Greek
cases the local actual amount is estimated to be
even higher as a large number of
destinations such as Mykonos,
Santorini, Paros and Corfu recorded
holiday home transactions were made outside
the Greek banking system. The
an upward trend, which is expected
to continue in 2017.
market signs for 2017 are more than
encouraging as, according to the
latest figures from the Bank of
Holiday home prices remained
almost stable in 2016. The positive
impact of tourism performance in
certain areas favored the local
holiday home market.
In 2016 holiday home yields in
Greece increased for a second
year in a row, a trend which
continued into 2017. More
specifically, according to Algean
Property’s latest report “Yields
Report 2017: High End Holiday
Homes in the Mediterranean“,
yields in popular destinations
such as Mykonos recorded 8.4%
while Santorini and Paros reached
6.4%, being far above competitive
Outlook
The positive performance of tourism for property purchases in Greece political stability the last two years,
and its ever-increasing prospects increased significantly, while a further increase in the number of
have had an auspicious impact on preliminary data show a further transaction and building activity is
the holiday home market. increase being recorded for 2017. expected in the coming years.
In 2016, investment climate shifted, Greatly assisted by the economy’s
as the amount of foreign capital positive performance and the
8
Hospitality Market
Overview
The outperformance of tourism was a decisive factor for
the industry’s further development, attracting the interest
of investors and hotel management companies
In 2016 the hospitality sector kept management companies. 2016 which, along with the
a steady upwards pace recording ongoing developments that began
positive numbers in occupancy, The continued growth of Greek over the last few years, paved the
revenues and quality of services tourism as well as the ever- way for a new era of growth for
provided. increasing rate of international the hospitality sector in Greece.
arrivals in the country led to overall
The outperformance of tourism was improvements within the industry.
a decisive factor for the industry’s
further development, attracting A series of new developments
the interest of investors and hotel and acquisitions took place within
Supply
In 2016, according to the latest
data from Greek Hotel Chamber, the Allocation of Hotel Beds per Category in Greece
hotel capacity in Greece amounted
to 9,730 hotel units, with 407,146
rooms and 788,553 beds.
The biggest increase was recorded
in the upper category hotel units,
hence the increase in the number +6.2%
of total rooms and beds. More y-o-y
specifically, in the 5-star category,
there was a +6.2% growth or 8,538
beds in only one year.
Despite the increase in new 5-star
and 4-star units in recent years
(+ 5.6% and 5.1%, respectively
only for 2016), there is still space
for further development, since only The ever increasing number of upgrading of the country’s hotel
4.6% of the country’s hotel capacity foreign visitors each year as well capacity imperative.
or 17.4% of the beds’ capacity is as the growing need for high-end
listed in the upper class category. services, makes the need for further
9
Hospitality Market
Perspectives – Key Performance
The hospitality sector recorded
Hotel Units: Key Performance Indicators, 2016
positive growth in all key
performance indicators in 2016.
The average occupancy rate
ranged between 55%-65% on
an annual basis while seasonal
numbers reached over 70%.
Average daily rate (ADR) ranged
between €90-€180. Revenues
per available room (ReVPAR)
amounted to €50-€160, recording
a significant increase compared
to last year, especially in resorts
(+9.6% ytd). Total income
averaged close to €20,000 per
available room. The visitors’
satisfaction index (GRI Index) Greece: Hospitality Sector – Performance
increased to 85.4%, higher than
its immediate competitors in the Annually Occupancy Rate 55% - 65%
Mediterranean (82.6%), and
confirming the country’s aptitude Average Duration of Stay 6.7 days
for quality in services.
Expenditure per Overnight Stay € 67
Seasonality was the main setback
for Greek tourism. Improvement
Average Daily Rate (ADR) € 90 - € 180
was evident, especially in Q4
2016, international arrivals
Revenue per Available Room (RevPAR) € 50 - € 160
recording significant growth
(Dodecanese +26.7%, Crete
+33.3%, Ionian Islands +38.7%, Total Income per Available Room up to € 20,000
Cyclades +43.8% and Kalamata
+46.0). Preliminary results for EBITDA Multiplier 10x - 15x
2017 show further improvement
compared to last year. However, GRI Visitor Satisfaction Index 85.4%
we still have a long way to go.
In an effort to further stimulate the Beach, Religious, Cultural, City parties in the hospitality sector is
market, the Ministry of Tourism Break, Sports, Medical, MICE). essential for this road map to have
presented a strategic plan for the However, a concerted effort and immediate and tangible results.
development of individual tourism systematic promotion of alternative
categories (Thematic Sun and forms of tourism from all concerned
10Hospitality Market
Transactions - Investments
In 2016 there was intense activity in Koutras for €30mil. and the purchase overnight stay fee varying
terms of new hotel unit developments of Athena Ledra Hotel from Hines for from €0.5 to €4/overnight
and acquisition of existing ones. €33mil. Furthermore, Dolphin Capital stay depending on the hotel
Investors announced their agreement category, thus increasing their
The hospitality sector is one of the with Kenzer International Holdings operating costs.
most dynamic investment sectors in Limited to build the 5 star hotel
Greece, offering very high returns. complex “One & Only Kea Island“ in Moreover, the high borrowing of
Athens offers one of the highest hotel Kea. The total cost of the investment hotel businesses is a drawback
yields in Europe (8.0%) compared is estimated at €150mil. to potential acquisition. More
to major European capitals such as specifically, out of €7.6bil, the total
London (5.5%), Paris (5.5%), Rome Despite the strong activity, the lending of the tourist enterprises,
(6.25%) and Madrid (6.25%). obstacles future investors are facing €2bil. are non-performing
remain significant. exposures (NPEs).
During 2016, a number of
acquisitions, relaunching and More specifically: A special purpose vehicle was
redevelopments were carried out • In 2015, VAT on accommodation created by Grivalia REIT (Grivalia
upgrading the hospitality sector in services increased by 100%, Hospitality) aiming to invest in
Greece. The positive course in the reaching 13% from 6.5%, the domestic and international
hotel industry continued in 2017 • VAT in the wider hospitality hospitality industry. The company
with a large number of acquisitions sector increased from 13% to has signed a binding pre-agreement
and management takeovers taking 23% and then to 24%. to acquire 80% of Nafsika S.A., to
place. The cases that stood out in • High corporate taxation (29%) commercially exploit “Asteria“ Resort
the first half of 2017 concerned the • From 1/1/2018, all hotel in Glyfada in the Athenian Riviera,
purchase of Capsis Rhodes by Nikos units will be charged with an which was in operation until 1990.
2016 Milestones
Project Seller Investor Type of Investment Amount
National Bank of Greece Jermyn Street Real
Astir Vouliagmenis Acquisition € 444 mil.
(NBG) & HRADF (TAIPED) Estate Fund IV LP
Miraggio Thermal Spa Resort - Med Sea Health S.A. Hospitality Development € 120 mil.
Corfu Chandris & Ikos Resorts &
Chandris Group SANI Group Acquisition € 110 mil.
Dassia Chandris
Plot in Kassiopi, Corfu HRADF (TAIPED) NCH Capital Acquisition € 100 mil.
Leto Hotel, Mykonos HRADF (TAIPED) Douzoglou Group Acquisition € 17 mil.
Imperial Athens Hotel Grecotel Wyndham Group Hotel Management -
Dogus Group -
Hilton Athens Alpha Bank Acquisition € 142 mil.
TEMES S.A.
Outlook
The significant progress of the of the sector’s growth, creating new developments took place.
hospitality sector during 2016 positive expectations for its further Furthermore, many more projects
was the result of the exceptional development. are in the pipeline in the coming
course of Greek tourism in recent years, certifying the investor’s trust
years. Its positive growth in key Despite the challenging economic in the ever increasing prospects of
performance indices throughout environment in 2016, a great Greek tourism.
the year came as a confirmation number of acquisitions and
11Market Snapshot
Economy
Macroeconomic Data
Economic Indicators 2009 2010 2011 2012 2013 2014 2015 2016 2017f 2018f
Population (mil.) 11.2 11.2 11.1 11.0 11.0 10.9 10.8 10.7 10.7 10.7
GDP Growth (%) (3.1) (4.9) (7.1) (7.0) (3.9) 0.7 (0.2) (0.2) 2.1 2.5
Inflation (%) 1.3 4.7 3.3 1.5 (0.9) (1.4) (1.3) 0.0 1.2 1.1
Unemployment Rate (%) 9.6 12.7 17.9 24.4 27.5 26.5 24.5 23.6 22.8 21.6
FDI (net inflows in mil. €) 1,753.8 249.2 822.3 1,354.3 2,122.1 2,022.5 1,143.0 2,819.5
Spreads (10 year bond) 238.7 950.9 3,313.4 1,058.4 649.0 906.0 771.0 710.0 514.0*
Athens Stock Exchange 2,196.2 1,413.9 680.4 907.9 1,162.7 826.2 631.4 643.6 744.0*
Sources: Eurostat, European Commission, IMF, OECD, Bank of Greece, Alpha Bank
*Reference Date: 27/10/17
Real Estate
Market Trends
Price Demand Supply
Residential Market ↘ → →
Holiday Home Market → ↗ ↗
Hospitality Market → ↗ ↗
12Our Latest Reports
Yields Report 2017:
High End Holiday Homes in the Mediterranean
FLASH REAL ESTATE REPORT 2016
To uris m Trends , Ho liday Ho me
& Ho s pitality Markets
1
George Eliades Konstantinos Sideris
Managing Partner of Algean Group Senior Analyst
Skype: george.elias.eliades Skype: ksideris.algeanproperty
george.eliades@algeangroup.com konstantinos.sideris@algeanproperty.com
Fani Dritsa Giannikos Giannakos
Senior Property Advisor Property Advisor
Skype: fdritsa.algeanproperty Skype: ggiannakos.algeanproperty
fani.dritsa@algeanproperty.com giannikos.giannakos@algeanproperty.com
Athens London
78,Kifisias Avenue, Marousi 19,Portland Place
15125, Athens, Greece W1B1PX, London, UK
T : +30 210 6833 304 T : +44 (0)20 3608 6917
www.algeanproperty.com welcome@algeanproperty.com
Sources: Bank of Greece, European Commission, International Monetary Fund (IMF), Eurostat, Hellenic Statistical Authority (ELSTAT),
OECD, Association of Greek Tourism Enterprises (SETE), Hellenic Chamber of Hotels, Foundation for Economic & Industrial Research
(IOBE), Global Review, Ministry of Finance, Ministry of Economy, Development and Tourism, Hellenic Republic Asset Development Fund,
CBRE, GBR, HotelCompset Database and Algean Property Research.
This report has been produced by Algean Property for general information purposes only and nothing contained in the material constitutes a
recommendation for the purchase or sale of any property, any project or investments related thereto. Information on this report is not intended
to provide investment, financial, legal, accounting, medical or tax advice and should not be relied upon in that regard. The intention of this
report is not a complete description of the markets or developments to which it refers. Although the report uses information obtained from
sources that Algean Property considers reliable, Algean Property does not guarantee their accuracy and any such information may be incom-
plete or condensed and Algean Property is under no obligation to issue a correction or clarification should this be the case. Any information
of special interest should be obtained through independent verification. Views are subject to change without notice on the basis of additional
or new research, new facts or developments. All expressions of opinion herein are subject to change without notice. Algean Property accepts
no responsibility or liability for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. The
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