Concerns over NPL property market

The foreign investment groups that have positioned themselves in the Greek bad-loan management market are about to increase their asset sale rate, including real estate properties used as collateral for loans. However, among servicers and realty professionals alike there is concern over the success of this venture, as besides the time lost due to the pandemic, the property market features have also changed.

For instance, according to Values surveyors Chief Executive Panagiotis Merekoulias, the coronavirus has created major problems to the course of the retrieval of real estate owned (REO) properties, as the it has effectively frozen transactions as well as online auctions. It has also brought additional difficulties as residential properties have become less attractive due to the considerable drop in the appeal of short-term rentals, while large offices will be hard to sell due to the shift of users to more quality solutions and modern infrastructures.

Data presented by Merekoulias this week at the Prodexpo 2020 forum showed that 59% of REOs concern residential properties, 36% are offices and the rest are industrial buildings.

Banks have to continue the process of clearing out their stock of nonperforming loans. Alpha Real Estate Management & Investments Director General Ioannis Ganos said at the moment banks have bad loans worth 65 billion euros in their portfolios.

At the same time, Greece’s four systemic banks have accumulated properties worth a total of €5.6 billion, of which €3.7 billion concern confiscated assets and REOs. Piraeus Bank has €1.8 billion euros of such properties, Alpha has €800 million, Eurobank €600 million and National €500 million.

Ganos added that throughout 2019 Greek banks performed 23,000 auctions with only about a quarter of them (5,600) being successful. He went on to estimate that rate will grow in the future.

At least the value of the new generation of bad loans, created due to the pandemic, will not be as big as the €10-15 billion originally feared, noted Giorgos Georgakopoulos, chief executive officer at Intrum Hellas, adding that the measures taken have assisted the smooth transition to normality.