Greece

GreeceAlthough it is a relatively small country with 10.8 million inhabitants, Greece has a strategic position at the crossroads of the eastern Mediterranean, Middle East and South Eastern Europe; an important and fast developing market in a region of over 160 million people. Its membership of the European Union and inclusion in the Eurozone also creates opportunities in the market.

Since late 2009, the Greek economy has been hit by a severe economic and financial crisis resulting in the Greek government requesting loans from EU institutions, a substantial debt write-off, stringent austerity measures and political instability. The taxation and the commercial leases law has been significantly recently amended to facilitate investment and business operation.

Greece with more than 15,000 kilometres of coastline, 190,000 beaches, and 6,000 islands and islets is one of the top tourism destinations in the world.

The Olympic Games of 2004 marked a milestone in the transformation of modern Greece. The first proper shopping centres have been developed and investment product of international standards has been increasingly offered to the market. Athens is not only the capital of the country but also the financial and commercial centre of Greece. More than one third of the population of Greece lives in Athens, a city with exceptionally strong tourism. According to official statistics the population of the Attica region is 3.8 million people, however the true population is estimated to be around 4 to 4.5 million.

ECONOMIC SUMMARY
ECONOMIC INDICATORS*20152016F2017F2018F2019F
GDP growth -0.3-1.20.01.12.0
Private Consumption Growth 0.3-1.20.11.01.7
Industrial production0.91.31.01.52.0
Investment 0.9-8.9-4.7-0.54.6
Unemployment rate (%) 25.124.724.623.822.4
Inflation -1.7-0.10.81.51.8
US$/€ (average) 1.11.11.11.11.1
Interest rates Short Term (%) 0.0-0.3-0.3-0.20.2
Interest rates 10-year (%) 9.79.29.08.98.5

NOTE: *annual % growth rate unless otherwise indicated. E estimate F forecast
Source: Oxford Economics Ltd. and Consensus Economics Inc

Economic & Political Breakdown
Population10.8 million (2015)
GDPUS$ 194.8 billion (2015)
Public sector balance-7.2% of GDP (2015)
Public sector debt176.9% of GDP (2015)
Current account balance-0.1% of GDP (2015)
ParliamentSyriza and Independent Greeks
PresidentProkopis Pavlopoulos
Prime MinisterAlexis Tsipras
RETAIL SALES GROWTH:
% CHANGE ON PREVIOUS YEAR
GREECE20152016F2017F2018F2019F
Retail Volume-1.4-2.1-0.60.61.4
Retail Value-2.9-1.40.42.33.3
Source: Oxford Economics Ltd. and Consensus Economics Inc and FOUNDATION FOR ECONOMIC & INDUSTRIAL RESEARCH

According to the latest announcements of the FOUNDATION FOR ECONOMIC & INDUSTRIAL RESEARCH:
During the first ten months of 2015, the index of retail trade volume kept falling, at a faster pace than in the corresponding period of 2014 (-1.4% from -0.3%). Turnover decreased in 6 out of the 8 subsectors of Retail Trade, at an accelerating pace in most of them. In particular, the sub-sectors with the strongest contraction include Department Stores (-4.2%, against -4.5% in 2014), Furniture and Electrical Appliances (-4.2%, against -1.2%) and Food – Beverages – Tobacco (-4.1%, against -3.6%). Automotive fuels (-1.8%, against +1.9%) and Pharmaceutical Products – Cosmetics (-1.2%, against -1.9%) came next. Turnover increased only in Clothing – Footwear (+7.3% in both pe-riods) and Books – Stationery – Other Goods (+6.3%, against +8.2% in 2014) ]

LARGEST CITIES
CITYPOPULATION
Athens3,089,698
Thessaloniki788,952
Patras213,984
Hrakelio185,180
Larisa144,651
Volos120,733
Ioannina89,061
Hania82,551
Τrikala61,653
Source: Hellenic Statistical Authority Census 2001

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Athens: 37.983716, 23.729310
Thessaloniki: 40.639350, 22.944606
Patras: 38.246640, 21.734574
Larisa: 39.639022, 22.419125
Volos: 39.362190, 22.942159
Hania: 35.391699, 23.906062
Ioannina: 39.665029, 20.853747

MAJOR DOMESTIC FOOD RETAILERS

Sklavenitis, AB VassilopoulosMetro cash & Carry, Proton, Veropoulos, Marinopoulos, Market In, My Market

MAJOR INTERNATIONAL FOOD RETAILERS

Lidl, Makro, CarrefourLidl, Carrefour, Carrefour Express, ΑΒ Βασιλόπουλος-Delhaize Group

MAJOR DOMESTIC NON-FOOD RETAILERS

Folli Follie Group, Elmec Sport, Jumbo, Attica Department Stores, Notos Group, Lemonis Group, BSB, Attrativo, Vardas Public, Plaisio

INTERNATIONAL RETAILERS IN COUNTRY

Ikea, Inditex Group (Zara, Bershka, Pull & Bear Etc), Mango, Koton, H&M, Footlocker, Promod, Sfera, Benetton, Sephora, Nike, Adidas, Marks& Spencer, Jysk, Leroy merlin, Praktikerr, English Home

FOOD & BEVERAGE OPERATORS

McDonalds, Wagamama, Hard Rock Café, Starbucks, Goody’s, Flocafe, TGI Fridays, Everest, Haagen Dazs, Mikel, Grigoris, Venetis, Apollonion, Horiatiko, Simply Burger

TYPICAL HOURS
monday-fridaysaturdaysunday
09.00-21.0009.00-20.00closed

From Monday to Friday shops may operate until 21:00, and on Saturdays until 20:00. During these hours shop owners may operate their business as they please. Shops are closed on Sundays. Most local traders’ associations define common shopping hours for the region, usually: Monday and Wednesday: 09:00-14:00 Tuesday, Thursday and Friday: 09:00-14:00 & 17:00-20:00 Saturday: 09:00-14:00. Usually most shops follow this schedule, with the exception of big stores and malls which operate during the whole permitted time by law.

Until the late 1980s, the Greek market place comprised small shops in busy commercial sections within the cities, suburbs and towns. Unlike most European countries, there were not many large-scale shopping and entertainment centres in the market. Shopping centres arrived relatively late in Greece and there are still not many. The total shopping centre stock in Greece is approximately 6006,000125sqm (January 20164 ). Greece has one of the lowest provisions of shopping centre space per thousand population in Europe.

Shopping Centre development activity is currently non existing and closely related to economic recovery. There are though very important projects in the pipeline which are expected to change the retail scene, the most important of which is the waterfront Hellinikon Project which is a pioneering development for Athens. The development aims to attract new international strategic alliances. The dominant feature of the development will be the creation of a metropolitan park of 2,000,000 m2 of sports areas, cultural and educational facilities, residential uses (Marina Tower, seafront town), the marina development with shops and entertainment facilities, shopping centres and a business park. focused on Athens and Thessaloniki due to the fact that they are more densely populated areas with significant infrastructure development. Typical traits of the Greek consumer are the use of cars for shopping needs and the tendency to combine shopping with dining and entertainment. The mild climate makes the Greek consumer prone to spending a significant portion of income on dining and entertainment. This is attributed to numerous restaurants and nightclubs that remain open until 04:00 in the morningearly morning hours.

Greece enjoyed an active retail scene until it was impacted seriously during 2010 as a result of the economic recession. The Greek consumer sector has come under immense pressure as retailers have seen their turnover shrink considerably in last four six years. Food and beverage is the most dynamic and high growth sector in the Greek manufacturingmarket with many local bakery chains expanding dynamically. Tourism provides a seasonal boost to retail and food and drink sales.

Following recent economic environment, retailers are keeping stores in only the most reliable and well established trading locations. International and some national operators are looking to take advantage of subdued market conditions to acquire prime space. This is particularly evident in the best streets of Athens and other main cities, with tenants securing favourable terms but landlords trying to keep rental levels as high as possible. Fashion retailers are looking for lower rents and demand for smaller units, especially for bars and coffee shops, has been growing.The availability of bigger units has increased due to a lack of occupier demand, suitable retailers for such large units already having a presence in the area. An increase in the supply in prime locations is likely in the coming months due to changes in the banking sector (M&As).Rent prices have already been corrected and there might be further correction in the coming months, especially in secondary areas.three years of increased vacancy rates and supply, even in the most sought after locations, in the last two years, Greece has seen the retail market recovering with increased turnover for retailers, reduced vacancy rates and picking up of rents in the top prime high street locations. At the same time, vacancy is increasing in secondary locations and along main axis as a result of store closures and bank mergers.

Shopping centers have shown more resistance to the economic conditions. Following to the recent announcement of Lamda development owning three of the most successful shopping centres in Greece, the positive trend that started in mid-2013 continues and despite the adverse economic environment in all three Shopping Centers EBIDA posted a remarkable increase of 7,8% compared to last year, while average occupancy of the Shopping Centres exceeds 99%, and demand for retail spaces is still strong.

and the drop in their sales is less compared to the drop in high streets.Developers are reluctant to proceed with new investments ,due to the great level of uncertainty of the Greek economy, and there are no projects in the pipeline till 2015.There is little in the way of retail warehouse and factory outlet provision in the Greek market, so there are potential opportunities for real estate players willing to diversify into new retail formats. Indeed, while from a low base there is now an increasing acceptance of new retail formats. There are only a handful of retail parks, although the ones in existence have proved to be quite popular with consumers. Typically they are located in more peripheral areas as land here is not only cheaper but more available. The development of the sector will be aided by improved infrastructure projects allowing ease of access. In Athens a typical retail warehouse cluster is to be found near the international airport with an IKEA store, factory outlet store, Kotsovolos and Leroy Merlin DIY and a l McArthurGlen Designers Outlet ,in Spata, in a 10 minutes’ drive time distance from the airport. In Thessaloniki the retail park format is represented by Florida I, comprising four retail and leisure boxes.

McArthurGlen opened Greece’s first true Designer Outlet in 2011. The centre is located 30 minutes’ drive from the centre of Athens, near the international airport.

McArthurGlen Designer Outlet Athens has 21,000sq.m of retail and provided a welcome boost to the Greek fashion market.
E-commerce has developed rapidly in Greece, but compared to elsewhere in Europe, it is still relatively low. The latest data available from E-commerce Europe, shows that Greek E-commerce sales reached €3.9bn in 2014, which means there has been 20.4% e-commerce growth in 2014. Hellenic Statistical Authority (Q1 2013) showed that some 27% of internet users shopped online., an increase of 28.3% on 2010, while for the corresponding period of 2009-2010 the increase was lower at 13.6 %. The average annual rate of change for purchases over the internet for the five-year period 2007- 2011 was 16.4%.Although it is possible to enter the Greek retail market directly, a lot of brands have chosen to enter through franchise.

There are no restrictions on foreign companies either buying or renting property in Greece. Only acquisition of ownership of real estate in designated areas close to the Greek border is subject to prior approval by state authorities.

It is generally believed that the Greek lease structure is tenant friendly. Tenants can terminate leases for no reason, provided it is at least one three years from the start of the lease. Termination must be by written notice and becomes effective three months after the date of the notice. Due to the current economic conditions rental values have declined and there is a trend towards amendments to leases giving rent reductions.

TOP SHOPPING CENTERS BY SIZE
NAMECITYSIZE (GLA SQM) YEAR OPENED
The Mall AthensAthens58,5002005
Mediterranean CosmosThessaloniki46,0002005
Golden HallAthens41,0002008
Smart Park Athens36.0002011
One SalonicaThessaloniki30,0002004
AvenueAthens22,0002007
Metro MallAthens22,0002010
Designer Outlet McArthrur Glenn Athens21,0002011
VSMAthens21,0002000
Athens HeartAthens20,0002008
River WestAthens20,0002011

New Entrants to the Market

English HomeWomen’s secretJysk3ΙΝΑZadig & Voltaire
Tiger

KEY FEATURES OF LEASE
ITEMCOMMENT
Lease TermsAccording to the Law published on February 28th, 2014, on the Greek Government Gazette, commercial leases falling within the scope of Presidential Decree 34/1995, which are concluded after February 28th, 2014, shall have a minimum term of three (3) years, even if they were concluded for a shorter, or indefinite, period. It should be clarified that the provisions of the new law do not affect the twelve-year, or the potential longer contractually agreed term of a commercial lease that has been concluded, extended or renewed (either implicitly or explicitly) before the enactment of the new Law (i.e. before February 28th, 2014). The average rent for retail leases is 5 or 10 years. According to new law 4242/2014 voted 28th February 2014 leases classified as commercial leases under respective law, the term can be agreed subject between the two parties, with minimum duration 3 years.
Rental PaymentRents are typically payable monthly in advance. Turnover/percentage rents are increasingly seen ( both in shopping centres and high street locations) and common in specialist sectors such as factory outlets, super market stores etc. A security deposit of 2 months’ rent is generally paid. Even though premium payments were common practice in prime retail markets at times of rising rents and limited supply, it is now rarely met.
Rent ReviewIndexation is common practice and rents are reviewed annually according to CPI or CPI plus one percentage point capped.
Service Charges, Repairs and Insurance The common electricity, gas and water costs are normally recoverable from tenants under the service charge. The same applies for security, cleaning, landscaping, maintenance and centre/site management costs. Concerning total change or remodeling maintenance and taxes, they are non-recoverable. The management fee for service charges is usually based on a percentage of the service charge. The property management and facilities management costs are also normally recoverable from tenants. The market practice for administrating the marketing budget is through the service charge and under the landlord/landlord’s agent’s control, and the landlord’s contribution to the marketing budget is discretionary. Mall income (non-core income) is retained by the landlord as additional income. Costs related to sustainability are non-recoverable from tenants.A service charge is usually payable in multi-tenanted buildings and covers management fees, marketing, security, cleaning, landscaping, internal maintenance of common parts, servicing of elevators, water, heating, air conditioning. It excludes internal maintenance and insurance of rented accommodation and utility charges. The landlord is responsible for external /structural matters in shopping centres and the tenant for internal matters.
Property Taxes and other costs The tenant is customarily responsible for paying the stamp duty (3,6%) or VAT (24%). The tenant pays stamp duty 3.6% of rent on a monthly basis or VAT. The tenant is responsible for paying the service charge costs, electricity and water consumption, including municipal duties.The tenant also pays the municipality tax which is calculated according to the use and varies depending on municipality. It is demanded by the Municipality as part of the electricity bills, the tenants pay this for their units and invoices for common parts are in the main service charge recoverable.
Disposal of a LeaseSub-letting is usually possible under the terms of the lease, subject to landlord’s approval. Assignment rights are not normally barred in the lease but will also be subject to consent – which should not be unreasonably withheld. Early termination is only by break clause. The tenant has the right to break one three years after lease commencement with three months’ notice and one month penalty as Landlord compensation. It should be stressed however that the new law does not specify whether the aforesaid right for unilaterally terminating a commercial lease is afforded to the parties also during the legal minimum three-year term of a new commercial lease. In relation to re-instating of the premises at the end of the lease, it is usually comes down to negotiations between parties. All tenant improvements must be approved by the landlord. subject to the alteration covenant in the lease and the fact that approval should not be unreasonably withheld.
Valuation MethodsShops are valued on a 'zoning' basis. The retail zoning principle recognizes that the area at the front of the shop, adjacent to its primary window frontage (normally referred to as “Zone A”) is the most valuable in rental terms. The rate per square meter halves back through regular depths towards the rear of the ground floor, with “Zone B”, “Zone C”, “Zone D” and a “Remainder” zone, typically valued at A/12. Upper and lower sales floors are similarly valued as a proportion of the “Zone A” rate, with basement and/or first floor sales accommodation . For corner units, it is usual to add a small percentage to the value of the ground floor, the amount of which will depend on the degree of overall prominence.
LegislationPresidential Decree 34/1995 plus supplementary acts and law 4242/2014. Leases must be in writing and the lease document forms the standard documentation required.


Greece Contacts

Panagiotis Tsaousis

Head of Retail
Proprius,
154A, Sevastoupoleos street, Athens, 115 26, Greece
T +30 210 7480852
M +30 6973 340785
F +30 210 7485667

Sklavenitis, AB VassilopoulosMetro cash & Carry, Proton, Veropoulos, Marinopoulos, Market In, My Market