Emerging markets investment specialist Dromeus Capital has announced the launch of a €200 mln investment fund focusing on Greek real estate.
The vehicle will target undervalued office properties in prime locations in central Athens, where prices in general have dropped over 40% since their pre-crisis peak and yields have increased by over 225 basis points (bps) to 8.5% since the onset of the financial crisis.
The fund is the second Greek-focused vehicle to be launched by Dromeus. The first, Dromeus Greek Advantage, has returned an annualised 15.17% since its launch in October 2012.
The fund is aiming to acquire 30-40 properties at a price range of €2-10 mln.
'The Greek economy is showing signs of recovery and Greek real estate has a highly asymmetric risk-return proposition,' commented Achilles Risvas, co-founder and CEO of Dromeus. 'For the first time since 2003, Greece has a balanced current account and the economy has moved out of a deflationary period. While reforms have been progressing slowly they are having an impact. The stronger economic fundamentals are also being supported by tailwinds from the tourism sector which has beaten expectations in recent years.'
The company hopes to capitalise on a number of distressed sellers currently being forced to offload assets. They include Greek banks which are required to reduce their non-performing exposures; distressed corporates with limited access to funding and the Greek government as part of its €50 bn privatisation programme.
'Greek banks are holding a wealth of repossessed assets and are being forced to sell at the wrong time, for the wrong reasons and at an advantageous price for buyers,' added Risvas. 'A lack of credit and the imposition of capital controls for banks has led to activity in the real estate market plummeting. However, as the Greek economy improves, activity should increase which should drive up prices again.'
Read PropertyEU's article about Greek banks' fire sales in the May issue of the magazine.
