Funds and groups targeting local shopping center market

Property investment groups, funds and development companies are positioning themselves in the local market ahead of the anticipated recovery of the shopping center sector, as this period is likely to determine the future winners.

On the one side are the investors, who estimate that values are set to grow and are keen to buy as soon as possible, and on the other are the owners/managers of the existing malls, who expect even higher returns from their investments.

Shopping centers constitute particularly attractive properties, as the Greek market offers great scope for their growth, given the low penetration of such properties in proportion to the population, and their resistance to pressure from the economic crisis and the major drop in households’ purchasing power.

Therefore investment groups are now looking forward to much greater yields when the economy and private consumption recover, which is generating positive expectations for the new malls currently being planned and close to obtaining their license.

US group BlackRock recently secured – via Greek special-purpose company Artume – the signing of the presidential degree for the town planning clearance of the plot at Academia Platonos, west of Athens city center, where it plans to construct a 55,000-square meter shopping center, investing over 300 million euros including the purchase of the land.

Since US investment group Varde Partners purchased a 31.7 percent stake in Lamda Development subsidiary Lamda Malls last year, the Greek company has been eyeing the creation of a 1.5-billion-euro portfolio by the end of 2019, but so far its efforts to acquire any existing malls has proved unsuccessful.

“The completion of the bailout program in August, the decline in Greek bond yields and the expectation of a more favorable settlement regarding the national debt are creating a macroeconomic framework that is much more positive than six months ago,” says Yiannis Moraitis, managing director at REDS, which in the coming months will complete the expansion of Smart Park at Spata, north of Athens, adding 16,500 sq.m. to the existing 36,500 sq.m. Despite being wooed by US group Hines, it has no intention to sell the mall. Hines has agreed to complete the half-finished mall by Babis Vovos at Votanikos. No investor has been found yet for Pasal Development’s Athens Heart mall at Tavros.