Greece’s debt repayment depends on state-owned real estate sales, according to a Bloomberg report.
“When the Greek government swapped land with a Byzantine monastery on a mountainous northern peninsula, the furor in 2008 over the price contributed to the defeat of Prime Minister Kostas Karamanlis a year later”, says the news agency.
However, Finance Minister George Papaconstantinou aims to do a better job raising funds from property sales, estimated at about EUR300bn, equivalent to the national debt.
“First, he’ll need to figure out what assets are in government hands, before competing with other debt-laden European countries for investors”, says Bloomberg.
Frances Hudson, an equity strategist at Standard Life Investments said that the supply and demand dynamic for Greece isn’t good right now. He would rather buy commercial real estate in Paris or Stockholm that would offer more predictable returns, he added.
The European Union and International Monetary Fund, as well as some German and Greek politicians insist that Greece has to sell or lease casinos, golf courses, airports and even islands to repay the sovereign debt and avoid default. The European Union said in a December report that “sizable proceeds could be generated this way”, according to Bloomberg.
The total value of Greece’s real estate holdings is estimated at EUR200bn to EUR300bn by analysts at banks, including Alpha SA and EFG Eurobank SA.
“I wish it was EUR300bn, or 280, 250, or EUE200bn,” Papaconstantinou, told parliament on Jan. 14. “The fact is we just don’t know.”
“The Greek government really needs to employ a professional private-sector adviser to help them with the inventory and ensure the valuations and sales are carried out with the greatest transparency,” said Grant Fitzner, head of research at Jones Lang LaSalle Inc., the world’s second-largest commercial property broker, according to Bloomberg.
Greece will face competition from debt-burdened governments across Europe, particularly in the south, to find investors for its real estate, says Bloomberg.
“Before it was impossible for Greece to sell state land or property as the public perceived it as evil and politicians didn’t have the courage to do it,” said Yannis Perrotis, managing director of CB Richard Ellis in Athens. “Now things are very different. People accept there have to be sacrifices.”
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