Boston, MA -- (SBWIRE) -- 02/18/2013 -- The Greece Q113 real estate report examines the commercial office, retail, industrial and construction segments alongside the construction sector in the context of the country's continuing economic struggles. With a focus on the principal cities of Athens, Piraeus and Thessaloniki, the report covers the rental market performance in terms of rates and yields. It also examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of the government led austerity on a long-stagnant market. Key complementary industry areas are also examined including the construction industry and business environment, key in analysing investor sentiment.

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While the Greek government has overcome a number of obstacles, with the pace of contraction having eased in 2012, we stress that a return to sustainable growth is predicated not just on successful economic reforms, but also on targeting policies at future growth industries and restoring confidence. The shortterm outlook for the real estate sector is not likely to restore investor confidence over the near term; the pipeline is glacial, demand-destruction is endemic and oversupply is rife. The risks for the real estate sector as a whole are therefore firmly weighted to the downside, with a slight silver lining coming in the form of high-end space, particularly in the retail and office segments. Greece's construction industry is expected to remain in recession for the sixth consecutive year in 2012, and we do not expect a recovery until 2014.

Key Points:

- The pace of economic contraction in Greece could finally start to ease, which would be supportive of our view that the depression will moderate in 2014 and the economy will return to growth. However, we expect this growth to be subdued, at least over the medium term. Moreover, while we still believe that Greece's decision to leave the eurozone is not clear cut, we warn that should this scenario materialise, the economy would be facing a double-digit contraction as the banking system collapses and private sector wealth is destroyed.
- Ongoing economic pressures, investors' caution and government austerity drive will act as the main impediments for recovery in the Greek commercial real estate sector.
- Our outlook for the Greek construction industry has turned more bearish, and we forecast a 10.6% y-o-y contraction in real terms in 2012, marking a third consecutive year of decline for the industry. Most infrastructure projects have EU funding and the government is looking to speed up infrastructure growth; however, as a way to buoy the recession-hit economy, we see little prospects for recovery in the sector anytime during our 10-year forecast period to 2021.

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