Greece's real estate market has been hit with the first shocks resulting from the pandemic as real estate investment company Intercontinental International (ICI) pulled the plug on a deal to buy a property in central Athens. The company, controlled by the Halikias family, had submitted the highest bid for the property six months ago in a sale held by Piraeus Bank.
Located at 13 Tsakalof street, Kolonaki, it has a total area of 1,300 sq.m., which accommodates a bakery-pastry shop on the ground floor. However, as announced late Friday, it was finally canceled due to the negative climate created in the economy by the pandemic.
ICI had offered a price of 5.9 million euros, according to sources, and moved to reduce the price, citing the impact of the pandemic. The seller, however, refused to budge on the price, and the deal was canceled, with Piraeus Bank expected to re-launch the tender possibly later this year.
The real estate company had made known its intention to clinch a price cut from the start of the month, as it pointed out in an analysis on the prospects of the real estate market this year, that it has already adjusted lower all prices offered on real estate it was seeking to buy.
According to the company's management, "the financial impact of the pandemic, which cannot yet be estimated with certainty, leads us to proceed with any new investments with particular care" Company officials expect a significant reduction in hotel valuations, while the value of stores and offices will also be adjusted downwards. Assessments of assets must be updated by all real estate investment companies when they publish earnings figures.
The company's investment plan, amounting to 40 million euros for 2020, has now been revised, mainly in terms of when it will be implemented, with a significant delay expected due to the new conditions that have arisen.
The fact that about 60 percent of company revenues come from Alpha Bank, has shielded ICI's revenues up to a point. More particularly, rental income from shops and businesses hit by the pandemic does not exceed 14.4 percent of all rental income. Respectively, from the government measure dictating a 40 percent cut for March and April, the company is not expected to lose more than 0.75 percent of total annual turnover.
At the same time, its interest payments are being subsidized 100 percent for the period from April 1 to the end of June, due to the EU's NSRF programs, in a benefit translating into 79,000 euros.
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