The warehousing property market is largely dependant on the economy and the purchasing power of the population. Until recently,
- According to the Hellenic Statistical Authority (ELSTAT), between 2007 and 2016,
the country’sGDP fell from €250 billion to €184 billion, or 26.5%.
- According to Trading Economics,
Greece’snational debt increased from 103% of GDP volume in 2006 to 179% in 2016.
- According to Eurostat, between 2008 and 2014, production was fell annually by an average of 5%.
- According to the IMF, the unemployment rate grew from 7.8% in 2008 to 27.5% in 2013.
- According to a study by diaNEOsis, Greek nationals living below the poverty line grew from 2.2% in 2009 to 17.1% in 2013.
All of this has had a negative effect on the warehousing property segment. As a result of the 2008 financial crisis, investors and tenants pulled out of the market. The demand for land to build warehouses faded and rental rates started to decline.
However, the market has stabilised since 2016, and
- The IMF anticipates 2.8% economic growth for 2017. The EU expects
Greece’s GDPto grow by about 2.2% annually between 2017 and 2019, while Trading Economics predicts a 1.2% growth by 2020.
- In summer 2017, Fitch upgraded its credit rating outlook for Greece from CCC to
B- (Positive),while Moody’supgraded it from Caa3 (Stable) to Caa2 (Positive).
- According to EU estimates, its national debt will fall from 180.8% of GDP in 2016 to 170.1% in 2019.
- In 2015, overall industrial production grew by 1% in 2015, and by 2.4% in 2016.
- The unemployment rate has fallen by 6 percentage points since 2013. The IMF predicts its further decline to 18.8% over the next three years, while Trading Economics expects it to decrease to 16.5%.
In view of this optimism, investors in the warehousing property market are starting to be more active in certain locations in Greece.
The main advantages of the Greek warehousing property market are its location and transport infrastructure. Located in Southeast Europe the country is the gateway between Africa and Asia. Greece has 46 airports, over 100 seaports and a vast network of motorways and railroads. Some experts believe the country may become a major node
In Athens, industrial warehousing zones are concentrated
On the outskirts of Thessaloniki, most warehouses are located in the industrial park of Sindos, near the port and European highways E75 and E79.
Major foreign players have been entering
- In 2016, Chinese shipping company COSCO acquired 51% of the Piraeus Port Authority for €280.5 million, with an option to increase its ownership share to 67% over the next five years.
- Italian rail operator Ferrovie dello Stato Italiane bought 100%
of the Greece’sTrainOSE for €45 million in 2016.
- In 2017, the Fraport Greece joint venture (73.4% of which is owned by the German Fraport AG and 26.6% — by the Greek Copelouzos Group) took over 14 Greek airports (including one of the largest of them, Thessaloniki International Airport "Macedonia").
- The Thessaloniki port is undergoing privatisation. In June 2016, Thessaloniki Port Authority named the consortium of Deutsche Invest Equity Partners, Belterra Investments and Terminal Link as the preferred bidder for the acquisition of 67% of the port operator for €232 million.
One of the biggest transactions so far in 2017 was Motor
Rental and yield rates
According to JLL estimates, warehouses in Greece are rented out at roughly the same rate as Bucharest, Warsaw, Lisbon, Prague and Rome. At the same time, warehouses in Greece have a yield that is almost double
However, the average warehousing property yield in Athens is declining. According to Cushman & Wakefield, it fell from 13% in 2013 to 11% in June 2017.
As the rental rate does not change, a decline in the yield indicates that warehouses are getting more expensive and the Athens industrial property market is becoming less risky.
The location of the property is critical, as always. If the warehouse has been constructed using modern technologies, is in a good location and has reliable tenants, the investment is good, considering the situation in Greece today. Firstly, the property has high yields, and secondly, warehouses are the retail of the future. Undoubtedly, warehouses will become more popular in Greece, and will appreciate like they have in Germany and other more developed markets.
Buying warehouses in this country for major players who have experience investing in Greece and want to diversify their portfolios with
Yulia Kozhevnikova, Tranio