Strong investment interest for the new Agency for primary residences
The new agency will be acquiring properties of households that are facing difficulties meeting their liabilities as well as SME properties.
Strong interest is expected to be expressed by investment schemes in view of the forthcoming announcement for the establishment of the Agency for the acquisition and re-leasing of houses that will be available through the proceeds of the new bankruptcy law.
Consulting companies to the Greek Government that are preparing the relevant contract, have already considered that the scheme that will take over the management of the assets has ensured the viability of the project. Since, it is estimated that the Agency will receive more than 20.000 homes, not only of vulnerable households but also of small and medium entrepreneurs who do not want to face another problem, namely the search for another home in a different part of the city, which leads beyond the purely financial, an additional social as a large part of their social life is overturned, from school and friends of family children, to the support of elderly relatives.
"We have to look how the new institutional framework will be implemented," Mr. Stathis Potamitis, Partner at Potamitis-Vekris lawfirm, told eRED. "It would be difficult to estimate how will this framework be adopred. Some developments are surprisingly positive. The new platform will comprise data from Tiresias, the banking sector, taxisner and the funds in Greece, and this is extremely intersting. The disadvantage though is that these information will not be used in depth."
The new Bankruptcy Law allows those who apply on the platform of the Special Secretariat for Private Debt and eventually go bankrupt to stay at home paying a rent according to their financial means and even if these are not enough then the state comes to fill in a kind of allowance the agreed rent for a period of 12 years. At the end of this period the user can continue to repay his mortgage loan from where it was left before it went bankrupt.
"There is room for further improvement" Fotis Kourmousis, Secretary for Private Debt, told eRED. "When you are launching a new framework, having taken in mind a 2015 BlackRock's report that comprises data from 2014 and nothing more than this, seems like a sale with none be able to utilise any kindof available data. Since 2018 nobody knew the total sum of private debt and the exposed lenders. There are no available data to estimate the Greek private debt."
Regarding the viability of the investment in the new Agency, the potential suitors will have received a guaranteed rent from the users and the state subsidy which is equivalent - if securitized - to a bond coupon. In addition to the stable return, the investment scheme will also have expectations from the increase of the value of the apartments for rent. The number of beneficiaries to be included in the provisions remains to be known, so that the prospective suitors can calculate whether the yield of this bond meets their investment profile, as well as what risk they will be called upon to take into account the dynamics of the Greek real estate market. conditions that will prevail in the international capital markets in view of the apparent reduction of the quantitative easing of the central banks.
The solution of this "exercise" and the number of properties that the Greek banks will "sell" to the Agency, will describe the profile of the investment scheme, which may belong to the category of already licensed servicers, or to companies holding private equity funds. ), who have experience in real estate management. After all, the Greek market does not have enough depth for an investor to risk a return of less than 4%, while this institution opens a new chapter in the Greek real estate market, that of building a house for rent. An "experience" that for many reasons, the Greek REICs diligently avoids.