ATHENS (Reuters) - Dromeus Capital, an emerging markets hedge fund firm, plans to invest 200 million euros ($231.82 million) in Greek commercial real estate through the launch of a new fund, taking advantage of undervalued properties, executives told Reuters on Monday.
The new investment vehicle, the second Greece-focused fund launched by Dromeus, will seek to acquire office properties in prime central Athens locations which currently offer good investment opportunities for buyers.
Greek Advantage, Dromeus’ first fund launched in October 2012 has returned an annualized 15.2 percent since its launch.
“The Greek economy is showing signs of recovery and Greek real estate has a highly asymmetric risk-return proposition,” said Achilles Risvas, CEO of Dromeus.
Prices for prime office space are down about 40 percent from their peak before the country’s debt crisis and there are also distressed sellers who are forced to offload assets, meaning good value for investors, he said.
Based on central bank data, a protracted downturn in Greece’s residential property market slowed sharply in the first quarter of 2018, raising hopes that prices were starting to respond to a recovering economy.
In residential real estate, the cumulative fall since 2008, when the country’s protracted recession began, reached 42 percent.
“Greek banks are holding a wealth of repossessed assets and are being forced to sell at the wrong time, for the wrong reasons and at an advantageous price for buyers,” Risvas said.
According to Dromeus, yields on Greek office properties have risen to about 8.5 percent since the financial crisis and are now significantly higher than other peripheral European cities, including Sofia and Bucharest.
Prime office rents in Athens, currently at about 200 euros per square meter per year are among the lowest in Europe, below Belgrade and Lisbon.
The new fund aims to buy 30 to 40 properties at a range of 2 to 10 million euros. Dromeus sees a shortage of vacant prime office space, which can provide protection for rents and capital if the market falls further.
“We are no strangers to the Greek market. Our team on the ground and extensive local network of banks, insolvency practitioners and real estate agents gives us a competitive advantage,” Risvas said.
Earlier this year, another hedge fund firm, Brevan Howard, was looking to launch two new funds targeting commercial real estate and listed equities.
Reporting by George Georgiopoulos, editing by Louise Heavens