The first wave aftermath - Q3 & Q4 expectations in Greece Real Estate
Observing the market over the past few months, we are encouraged to believe that the Greek Real Estate will not be following the traditional exchange market cycle of fear and greed.
If we have a look at every single trading chart on the 12th of March below:
We will be shockingly noticing similar patterns of fear/panic and eventually capitulation, followed by hope and optimism trends. This was not the case for Real Estate, because real estate assets are considered a value preservation investments, especially in cases like Greece where the market had already faced a -56% price reduction since the bubble of the 2000-2008 period. However, a decent pullback is expected for the next couple of quarters amid market adaptation to the new normal and SB, SME repositioning that will be taking place, expected to up to -20%.
Expectations past a potential 2nd wave – 2021-2024
According to estimates by Oxford Economics, if Greece makes the most of those funds, it will outperform the eurozone with annual growth exceeding 3.5% in 2021-24. Like other countries, Greece should use the grants and cheap loans from the fund from 2021 onward to strengthen its medical system further, for other investments and for covering the social costs of the pandemic and the resulting rise in unemployment in the next few years. Ideally, Greece would also use part of the money to cut corporate taxes and make the country more attractive for inward investment. Given the correlation of GDP to Housing Price Indices, this is a typical paradigm of “buying the dip”, where property would have seen a short term bearish capitulation followed by a rapid relief rally and in particular asset classes and locations we may also see all-time highs i.e. residential development, new trend appealing commercial and logistics.
As a conclusion....
On the one hand taking a step back and practicing risk management is highly recommended, especially the last 3 months, but on the other constantly keeping a hawk eye in the market and assessing fresh opportunities positioning ourselves in the driver’s seat for the new season, is what distinguishes a smart real estate developer from the typical fearful market players.
We, at Estia Group believe that now the time has come to pick up the pace and invest in the land of opportunity and expand, invest in Greece, invest smartly.