Valuable assets, illiquid shares

Greece has modern office buildings, commercial properties, logistics facilities and tourism infrastructure that attract international investor interest. However, the listed real estate market continues to struggle to convert this interest into meaningful investments by institutional investors.

This was the main conclusion of a webinar co-hosted by the European Public Real Estate Association (EPRA) and RED – Real Estate & Development Magazine, featuring Anna Apostolidou, CEO of BriQ Properties; Dimitris Papoulis, CEO of Trade Estates; and Tasos Kazinos, CEO of Trastor.

A €2.3 Billion Market with Just 20% Free Float

The total market capitalisation of Greece’s listed real estate sector is estimated at approximately €2.3 billion, while the free float stands at around 20%, significantly below the levels observed in Europe’s larger markets.

This means that the value of shares genuinely available for trading is limited to approximately €460 million.

For an international investment fund managing €5 billion in assets, even a €50 million investment would represent almost 11% of the Greek market’s total free float.

This limited market depth creates significant constraints on both the acquisition and disposal of positions, increasing the risk for institutional investors.

The Vicious Cycle of Discounts

Limited liquidity is directly linked to the discounts at which several Greek Real Estate Investment Companies (REICs) trade relative to their net asset value (NAV).

When a company trades at a discount of 25% or 30%, raising additional capital through share issuance becomes more difficult, as such transactions may dilute the value attributable to existing shareholders.

This creates a vicious cycle: low liquidity puts pressure on valuations, depressed valuations constrain capital increases, and limited access to financing hampers growth.

At the same time, concentrated share ownership and limited representation in international stock market indices further restrict the accessibility of Greek companies to large investment portfolios.

Consolidation: The Solution Goes Beyond Mergers

The creation of larger corporate entities through mergers and acquisitions could act as a catalyst for restructuring the market.

However, merging two companies with low free floats does not automatically create a more investable business. A combination of corporate consolidation, a broader shareholder base and the attraction of new institutional investors is required.

Potential strategies include mergers between companies with complementary portfolios, property contributions in exchange for shares, the sale of stakes held by major shareholders, and partnerships with international investment funds.

Equally important is the development of specialised investment platforms focused on logistics, commercial real estate, offices and hospitality.

By way of illustration, increasing the free float from 20% to 50%, while keeping market capitalisation unchanged, would raise the value of shares available for trading from €460 million to €1.15 billion, without adding any new properties to the portfolio.

From Property Value to Shareholder Value

The next challenge concerns capital structure, dividend policy and the generation of recurring cash flows. International investors are not simply looking for larger portfolios, but for companies with predictable revenues, controlled leverage and the ability to create value for shareholders.

The collaboration between EPRA and RED highlighted this structural weakness within the European context, establishing a channel of communication between Greek companies and the international investment community.

The key objective is no longer simply to increase the number of high-quality properties in Greece, but to develop larger, stronger and more liquid listed real estate companies.

Otherwise, international capital will continue to invest in Greek real estate assets, but not necessarily in shares of Greek real estate companies.