Greece’s construction industry recovering, according to Deloitte survey

A recent survey in the Deloitte’s Global M&A Construction Monitor shows a recovery of Greece’s domestic construction industry, as well as rising demand for residential and commercial real estate.

According to the survey, the top two global trends are the construction companies’ focus on opportunities presented by local markets and their attempt to increase their profit margins, using diversification strategies.

The study identifies significant trends and developments in global and regional construction industries, based on available data on mergers and acquisitions, market prospects and the views of local experts.

Recovery of the construction sector in Greece by 2022

The Greek construction industry is expected to recover in the period 2018-2022, with an estimated compound annual growth rate of 4.7 pct from -2.4% in the period 2013-2017.

Total construction projects, valued at 25 million dollars or more, are projected to reach 67 billion euros, of which 47.5 pct of projects are already under preparation and execution as of November 2018.

The housing market had remained stagnant during the recession in Greece due to limited liquidity and high supply of homes. In the last two years, the demand for residential real estate has increased, mainly due to the impact of short-term leases (eg Air-bnb), the Golden Visa programme and the introduction of new agents (Russia and China), coupled with the lack of of new construction during the decade-long recession. As a result, home prices rose 1.6 pct in 2018, according to the Bank of Greece, while accelerating by 4 pct in the first quarter of 2019. This trend is expected to be further strengthened, among others, due to the boom in the Greek tourism industry.

The local commercial real estate market saw signs of recovery in 2017 and 2018, mainly due to renewed leasing and investment in higher-end property. The market recovery is expected to continue and shift to the exploitation of the secondary real estate stock. As noted in the survey, “significant changes have recently taken place in the industry, including the merger of Eurobank Ergasias-Grivalia Properties and the sale of NBG Pangea. Greek real estate companies, international and national investment funds, are actively involved in acquiring prime assets in top locations across the country. The financial crisis may have delayed the development of the country’s infrastructure for several years, but this seems to be changing rapidly. Proof of this is the fact that several privatizations, concessions and public-private partnerships (PPPs) have been announced or are in the early stages of bidding in various sectors such as motorways, airports, school buildings, ports and marinas.”