Yields on prime commercial property in Athens were up this year due to pessimism over the Greek economy. The prospect of banks selling assets further depressed real estate values, according to Colliers International.
The best office properties in the capital saw yields of 8 per cent in 2012, compared to 6.9 per cent in 2009. Prime shopping malls provide yields of 8.5 per cent, as opposed to 6.3 per cent last year. Income-producing properties provide yields which move in the opposite direction of property values.
The Greek economic crisis is causing the local commercial real estate owners to close stores and businesses which is creating opportunities for investors. The country has pledged to raise €50 billion from state assets by 2020 to meet conditions tied to the 240 billion euros in foreign aid which has been pledged over the past two years. Half of this amount is in real estate holdings.
Office vacancy rates in prime areas have doubled to 16 per cent in 2012, and rents have dropped to approximately 21 euros per square metre a month. At peak times, occupiers were paying 21 euros per square metre per month. Prime retail rents have also fallen, according to Colliers. They are now sitting at about 150 euros per square metre per month, which is very different from the 280 euros per square metre that landlords could command in 2006 and 2007.
In comparison, commercial property yields in London were flat for the 12 months to June of 2012 at 5.25 per cent, according to Jones Lang LaSalle. In the West End of the city, prime the yields for properties valued at below £1million came in at four per cent.
Colliers is predicting that commercial property yields will stabilize in 2013 as Greece reduces its debt. Once the government introduces legislation to make investing in state property easier, the climate will be even better for potential investors.
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