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Greece Marketbeat Q1 2021

Nicky Simbouras • 5/17/2021

The IMF forecasts growth of 3.8% for the Greek economy in 2021 and 5% in 2022 below however the eurozone average of 4.4%. According to the latest announcement of Elstat the public debt, rose to €341 bill, an increase of €10 bill from the year before. An increase of 8.5% in exports for February 2021 the sixth consecutive month of export growth (excluding fuel) has been also reported by Elstat. The Consumer Price Index (CPI) fell by -1.6% Y-o-Y in March, completing yet another quarter of deflation. Industrial production was up by 4.4% Y-o-Y in February, following a revised increase of 3.5% in January. The increase was driven primarily by a 12.4% annual rise in the electricity supply index, as well as a 2.7% rise in manufacturing.  Recently, the Greek government announced its ambitious €57 bill recovery program – Greece 2.0 – promising to remake the Greek economy through investments in clean energy, digital transformation, education and social services. The program envisages 118 investments and 64 reforms, to boost competitiveness, exports and improve the business environment. 

Industrial Property Greece

 

The total contribution of the supply chain sector in Greece exceeds 9%, with 6.3% coming from third party services (3PL), according to data from Eurostat (fixed prices 2010), while the remaining 2.8% concerns in-house logistics. The industrial sector employs about 200 thousand employees and has higher productivity than the country average. The catalyst for the implementation of strategic goals is now digitization and integration of modern technologies in all the functions of the supply chain. The supply chain maintained high levels of efficiency during pandemic in all critical areas and especially in medicine and food.   
Occupier demand for logistics property in Greece continues to be particularly strong as e-commerce activity increases. The majority of occupier’s transactions are built to suit and concern newly built properties. While prime rents for large modern assets maintained their 2020 level, yields compressed by 20 bps compared to last quarter of 2020. The continual lack of available Grade A logistics stock has resulted investors to carry out forward purchase transactions. Given the allocation of real estate capital targeting the logistics sector, we anticipate further yield compression through the remaining of the year.  

Office Property Athens 


Occupiers are more active than last year in terms of relocation searches although there is still considerable uncertainty about future business development and ongoing discussions about the home office and its implications. The office letting market recorded a weak start with around 15,000 sqm take up recorded in Athens with the absence of larger deals of upwards of 3,000 sqm. Demand is expected to pick-up in the second half of the year (subject to the success of the vaccination program), and the year-end take-up result should at least be above the previous year (75,000 sqm) with Public authorities becoming more active in the market.  
 

Retail Property Greece


Greece has experienced rounds of lockdown and containment measures from early November and in practice is still in lockdown. Twelve months of the pandemic have led to a drop in rents of between 5% and 10% on the main high streets and this softening has been even greater on secondary streets and locations where tourism represents a key part of the local economy. The economic sentiment indicator index (ESI) in Greece rose to 96.9 points from 91.9 in February compared to Eurozone’s increase to 101 from 93.4 points same month. All sub-indices contributed to the rise of ESI in Greece as confidence in the sectors of industry (at -7.5 from -10.6 points), services (-18.2 from -22.6), retail trade improved (-1.3 from -10.1) and construction (-12.2 from -16.8 points). Consumer confidence also improved (to -39.5 from -46.2 points).  
Although less than pre pandemic levels certain level of letting has been maintained on prime high streets albeit at small size stores and few new entrants. Supermarket sales grew 1.9 % in the first quarter of 2021 compared with the corresponding period in 2020, as per Nielsen’s research. FMCGs grew 1.2 % in the three-month period, led by food/beverage (sales up 4.2 %), while personal care and household products fell 8.9 % and 7.4 %, respectively. Bazaar sales (clothing, electric appliances, books, tools, garden items, car equipment, home appliance, etc) grew 16.5 % in the first three months of the year.  

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