ARENCORES MAGAZINE Issue |No. 8 (Updated)
This issue of ARENCORES Magazine comes at a time of significant economic and societal disruption because of the pandemic crisis. Much has been written about how Covid-19 will reshape travel, tourism and retail in the island of Crete. Less has been said about what it will mean for the local real estate market. How the uncertainties associated with the pandemic will epitomize the excess that may lead to a deeper recession? How the local and foreign investors think about of what is still to come – namely a long period of falling property prices? At the moment, the extent to which this health crisis will affect the real estate market is unknown.
This issue of ARENCORES Magazine comes at a time of significant economic and societal disruption because of the pandemic crisis. Much has been written about how Covid-19 will reshape travel, tourism and retail in the island of Crete. Less has been said about what it will mean for the local real estate market.
How the uncertainties associated with the pandemic will epitomize the excess that may lead to a deeper recession? How the local and foreign investors think about of what is still to come – namely a long period of falling property prices? At the moment, the extent to which this health crisis will affect the real estate market is unknown.
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
Social distancing has directly altered the way people
live and interact. The pandemic and its associated effects
produced an unprecedented uncertainty for the
real estate sector.
the same way during the crisis. Properties with large human
density seem to have been the hardest hit: healthcare
facilities, shopping malls, tourism accommodation,
and student housing are among the most popular.
To respond to the current and urgent threat of COV-
ID-19, many real estate investors will centralize cash
management to focus on flexibility and change how
they make portfolio and capital expenditure decisions.
Some investors will feel an even greater sense of urgency
than before to proceed to the transformation of their
decision making, strategic approach and viable assets
identification.
Moreover, as the pandemic affects commercial real estate
it is crucial to establish new methods and prioritize
novel approaches that should protect the safety and
health of all employees, tenants, and other end users of
space such as hotel tenants.
By contrast industrial facilities and small offices have
faced lower impact. As of May 28, by one estimate, the
commercial real estate transactions had fallen 38 percent
or more and as much as 45 percent for tourism
real estate assets. It’s no surprise that in order to mitigate
the scale and severity of the virus - people avoid
crowds, universities postpone their activities on campus,
and retailers, restaurants, and hotels close their
doors. Thus, the economic viability of owning and operating
those properties becomes very doubtful.
The most intelligent real estate investors and property
managers are also trying to generate a reliable prognosis
about the future of the sector in the following years.
THE CHALLENGE BEHIND THE
CRISIS WE ARE FACING
For several years, real estate investments in Crete,
Greece have generated steady cash flow and returns
significantly above other sources of investments —
such as Direct equity, National Pension System (NPS)
or Bank fixed deposit (FD) —with only slightly more
risk. Since the virus outbreak, however, this reality has
changed, and real estate investors have been hit hard.
Property construction investors, owners, building contractors
and managers are struggling to mitigate health
risks for their employees and customers.
Many developers can’t acquire the necessary building
permits and they face project delays, bottlenecks, and
potentially reduction on the return of Investment rates.
Moreover, because of the lockdown, many real estate
assets owners and operators face drastically reduced
operating income, and almost all are worried about
how many tenants will manage to make their monthly
payments.
However, not all commercial properties are performing
THE CHALLENGE BEHIND THE
CRISIS WE ARE FACING
Commercial real estate owners and investors should
also keep one eye on a future that could be meaningfully
different to ensure their long-term profitability. The
demand for more physical space and more-intensive
operational requirements are likely to be among the
most dominated parameters for any future investment.
Consequently, these trends should also influence the
demand for hospitality properties and short-term leases.
ARENCORES CHANIA REAL
ESTATE MAGAZINE
32
Change language