Greek Real Εstate Μarket Οutlook

February 2020

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According to a PWC report, between 2014 and 2018, 35 infrastructure projects were completed totaling €8.3bnThe infrastructure pipeline, i.e. projects in progress or prepared but not yet funded, amounts to 88 projects with a budget of € 25bnNew Kasteli Airport in Crete. Ariadne Airport Group, a consortium made up of Greek construction firm GEK Terna and India’s GMR Airports Limited (GAL), will undertake the construction and operation of Crete’s highly-an-ticipated Kastelli Airport, a 517-million-euro project for a period of 35 years.Piraeus and Thessaloniki Port privatisations and new investment plans under deployment, Thriasio railway line upgrade, together with other major railway projects that are also underway, will enhance freight connections with neighboring countriesPrivatization of 14 regional airports, with German FRAPORT winning the bid for the 40-year concession to operate, manage, develop and maintain the facilities, with an expected total investment in excess of €3 billion

Hospitality The hospitality sector has been the main driver of investments in the real estate scenery, with 2019 being a solid year for the

industry as a result of the continuous upward growth of tourism and the overall qualitative upgrade of Greece’s tourist productGolden Visa Program offers a permanent residence permit (renewable every 5 years) to non-EU citizens when they buy property or invest in any sector of the Greek economy. Minimum amount of invested capital €250,000. Residence permit may extend to family members. Permit holders have invested more than €1 billion in Greek Real Estate under the program.Law 4002/2011 permitted investments in integrated tourist resorts, which include tourist residences that could be sold or leased and can comprise 30-60% of the total built area, depending on the building coefficient usedCumulatively for the period 2010-2019, the quota shares in terms of quality upgrade shisted immensely, with the number of 5-star hotel beds increasing by +75%.In 2017-2019, Greek hotels spent almost 3 billion on renovations alone (Institute for Tourism Research and Forecasting latest report), which shows the major shist in demand and supply, as it was actually realized.Apart from Greece ’s traditionall tourism markets (UK, Italy, France, Germany, and Scandinavia) there has been keen interest recently by investors from the US, Russia, the Middle East and Turkey.

Located at the crossroads for trade, transport and energy distribution between Asia, Africa and Europe. Greece combines a geostrategic location with a deep cultural heritage, a mild Mediterranean climate and unparalleled natural beauty. Offering competitive costs and a skilled and well-educated workforce, Greece is an ideal place for international businesses in a globalized economy.

Greece, an attractive destination for investment

Economyoverview

Real Estate Overview and

subsectors

Net Foreign Direct Investment inflows during 2019 reached 3,8bn euros (provisinal data)Within 2019, 85 M&As with a total value of €4.3 bn were completed, compared to 51 M&As of € 3.8 bn in 2018. That was a 67% increase of the total M&As number compared to 2018For a 7th year in a row, Greece broke its all time record in tourist arrivals attracting almost 36.8 million tourists in 2019 (provisional data)Greece is becoming a major transport hub for European markets following the successful privatization of ports, airports and railwaysThe direct contribution of travel and tourism stood at €16 billion in 2018, corresponding to a 20,6% of GDP (2018, WTTC) & 25.9% of employment (WTTC)

Real Estate has long been a pillar of growth for the Greek economy Lucrative investment opportunities are emerging as the sector goes through restructuring. Athens ranks in Top-5

EMEA markets for Office, Retail and Logistics rental yields (NAI Global 2017).Greek Real Estate assets are very competitively priced, offering the potential for a strong recovery and double-digit returns in the medium-term especially compared with other European countries that went through an adjustment program and exhibit economic similar macro performanceNew project developments, new strategic, infrastructure projects and record numbers in tourism brought about more investments in Greece’s Real Estate sector. To that, new reforms and significant legislative changes were introduced to ease up the business environment and make the market more lucrative to the interested investors.

LogisticsGreece stands at the crossroads of three continents offering high potential to logistics developmentAccording to the most recent logistics performance index by World Bank in 2018, Greece is ranked 42nd among 160 countries by achieving LPI Score 3.20According to a recent Savills report, the initial Yields for Grade A & B logistics are between the following levels: Grade A: 9.25–10.25%, Grade B: 10.75–11.75%Occupancy rates for Grade A logistics properties are as high as 95%Management concessions of Piraeus port to COSCO, Thessaloniki port to the Deutsche Invest- Terminal Link-Belterrra consortium, and TRAINOSE to Ferrovie Delo Stato, create new business opportunitiesDevelopment of new Logistics Centers in Thessaloniki (Str. Gonou) and Athens (Thriasio), as well 3/4 Party Logistics Parks throughout GreeceSmall to medium size warehouses (i.e. 500-2,500 sqm) are increasingly sought aster and considered more attractiveThere are several opportunities for investment in the Greek logistics sector, driven mostly by Freight Costs, Transport Infrastructure, Know-how and skilled labor. Under the new European Infrastructure Policy (TEN-T), more than €26 bn will be invested in European infrastructure, including railway, road, port, airport and multimodal infrastructure projects in Greece.

RetailHigh street shops and commercial centers that stood strong during the previous years, have now started to recoverFrom 2018 onwards, big business deals, extraordinary developments and a series of M&As resulted in a “stepping forward year” for retail commerce in GreeceAthens center exhibits signs of recovery, boosted by increased tourist arrivals, aster a considerable period of negative growth in pricesHigh quality retail space of various sizes, including shopping centers have been in the spotlight due to increased demand from fashion and food and beverage retailersIn part, due to the combination of public works aiming to upgrade the urban landscape in the centres of cities across Greece and also due to increased tourist numbers in many of them, vacant retail properties in prime areas within 2019, were far less common sight than in previous years, with retailers gradually becoming interested in broader areas than in the past. The centrally located Ermou street in Athens, has climbed Cushman & Wakefield’s global list of rents and is now ranking 14th. On a regional level (EUROPE, MIDDLE EAST & AFRICA) Ermou street ranks in the 18th position amongst the top 20 most expensive locations by cityGradual improvement in the Thessaloniki high street market with increased take up leading to lower vacancy rates and higher rental prices

Offices Notable price increases, both in office and the retail market, were seen within the first half of 2019. In

particular, prices of high-quality office space and shops, recorded growth rates of 2.2% and 4.2% respectively, compared to the second half of 2018 for the whole countryLocal REICs, global investment firms, family offices and private investors keep being strongly interested in prime office assets in AthensRental levels have stabilized and are expected to increase following the general economic recoveryInvestment activity is expected to record a historic volume. That derives from the fact that Greece is currently experiencing a large foreign interest for the establishment of intra-group service centres, (due to competitive real estate costs and the investment incentives for SSC’s). That will drive office demand in the country to a large extent, mainly at city locations like Athens and Thessaloniki and is expected to bear fruit more results within the next two years

Real Estate Completed projects + Recent FDI Deals Porto Heli Collection: A 347 hectare exclusive development in Argolida is reshaping the industry in this region Costa Navarino: set to invest €250 mil. in the creation of a second tourism accommodation enterprise at

Navarino Bay, by expanding to nearby Pylos with the construction of a five-star hotel, furnished villas with a 900-bed capacity and an 18-hole golf course among others.

Prodea Investments invests heavily in the Greek market and abroad Brevan Howard Asset Management LLP creates two new $500 million funds to invest exclusively in Greek

assets. McArthur Glen opened its first Mall in Greece US Hines continues its expansion in Greece, by acquiring the Cyan Group of Hotels, a local brand in Crete

operating 700 rooms in 3 hotels. The transaction is valued at 61mn EurosGrivalia Hospitality keeps investing in the Greek hospitality market, with its latest acquisition being a tourism asset in Mykonos valued at 46,5mn eurosRussian billionaire Dmitry Rybolovlev, is implementing a major makeover of the historic island of SkorpiosThe first Four Seasons in Athens opened its doors in 2019US Oaktree Capital is investing in Ikos Resorts together with the Greek hotel company Sani S.A. and is undertaking tourism investments throughout Greece with a €250 million investment plan

The rise of the Greek REICs (Real Estate Investment Companies) Law 4141/2013 reformed the legal framework of Real Estate Investment Companies (REICs), expanding their investment options (they

can also invest in residential property, tourist property, property under construction and land with building permit), with strong players demonstrating an international investment appeal.

Swedish Varde Partners acquires large stake in Greek Trastor Prodea Investments REIC (ex NBG PANGAEA). In 2019 INVEL Real Estate (Netherlands) II BV increased its stake in the company to 98%.

Cerved Group has completed the acquisition of the entire share capital of Eurobank Property Services S.A. from Eurobank Ergasias S.A. (in April 2019)

Intercontinental International REIC (ICI), affiliated with US Inter Continental Real Estate & Development Corporation, was established in Greece and invested in commercial assets

New players have joined or are expected to join the market: BriQ Properties, Ble Kedros, etc

New Real Estate projects under developmentFormer Athens airport development in Helliniko- The biggest Real Estate project in Europe with an estimated €8 billion investment budgetBriq Properties REIC announced in December 2019 that they acquired the 38-room Mr & Mrs White Corfu hotel for an amount of €3 million US Investment fund H.I.G. Capital invests in the Greek real estate developer DimandDevelopment of mega-logistics centers in Thriassio and Thessaloniki (Str. Gonou), and similar projects in other areasPrivatization of regional ports and marinas underwayNew concessions for land plots available for tourism development

Greek infrastructure development as Real Estate facilitator According to a PWC report, between 2014 and 2018, 35 infrastructure projects were

completed totaling €8.3bnThe infrastructure pipeline, i.e. projects in progress or prepared but not yet funded, amounts to 88 projects with a budget of € 25bnNew Kasteli Airport in Crete. Ariadne Airport Group, a consortium made up of Greek construction firm GEK Terna and India’s GMR Airports Limited (GAL), will undertake the construction and operation of Crete’s highly-an-ticipated Kastelli Airport, a 517-million-euro project for a period of 35 years.Piraeus and Thessaloniki Port privatisations and new investment plans under deployment, Thriasio railway line upgrade, together with other major railway projects that are also underway, will enhance freight connections with neighboring countriesPrivatization of 14 regional airports, with German FRAPORT winning the bid for the 40-year concession to operate, manage, develop and maintain the facilities, with an expected total investment in excess of €3 billion

Strategic Investments frameworkAbout 25 projects have been added to the Fast Track procedure for strategic investments to date. 11 of them come from the tourism sector with a total budget of 2,05 bn Euros. 12 more projects are in the pipeline, 9 of which are tourism investments budgeted at 1,5 bn Euros. It was only recently, that the competent inter-ministerial committee for strategic investments in Greece approved four additional tourism projects (including a shopping/recreation centre) budgeted at approx. 334 million euros

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