PRINT THIS STORY:

CHANGE TEXT SIZE:

GREECE OPENS UP FOR MODERN RETAIL DEVELOPMENT

By Susan Thorne

Aegean Park, Greece’s first large-scale enclosed retail center, is scheduled to open in 2003.

As shopping centers proliferate along the boundaries of Europe in countries such as Poland and Turkey and in Scandinavia, there remains a significant gap on the Continent where the North American-style mall hasn’t penetrated: Greece. But, with two regional shopping centers under development, that is about to change.

Greece’s first large-scale enclosed retail center will be located in the southwest Athens port district of Piraeus, where the three-level, 60,000-square-meter (645,840-square-foot) Aegean Park is scheduled for 2003. The developer is Sonae-Charagionis, a joint venture of the Athens-based Charagionis Group with the Portuguese firm Sonae Imobiliaria, a developer of high-quality malls in Portugal. Aegean Park will have 164 satellite shops and 12 anchors including a hypermarket, plus a 2,000-square-meter multiplex cinema, and will be themed around the golden age of cruise ships such as the Queen Mary. With its strong entertainment element, the mall is targeting the family market, said Yannis Galanakis, spokesman for Charagionis S.A., who sees an advantage in being first in the market.

The second shopping center will be to the northeast of Athens’ city center, near the new international airport and on a new circular highway being constructed around the capital city. Sydney, Australia-based Lend Lease has teamed up with Greek firm Helliniki Technodomiki to form a partnership called REDS (Real Estate Development Services) to create an as-yet-unnamed mall with 80,000 square meters of gross leasable area on a greenfield site in the Cambas region. Ground breaking is anticipated for late this year, with an opening sometime in 2004.

REDS marketing director Dimitra Pallis said the drawing power of Lend Lease (which developed England’s highly successful Bluewater) and the strategically located site will give the center a strong start even though it might not be open in time for the 2004 Olympic Games in Athens.

That not one but two malls should be planned within a short space of time is testimony to Greece’s improved economy and business conditions in the last two years. Foreign retail developers have until recently generally bypassed the small country of 10 million, and retail has remained largely traditional.

“It’s not an easy market, and the types of problems are different from those encountered elsewhere,” explained Yannis Perrotis, managing director of the Athens branch of London-based Lambert Smith Hampton, an international property consultancy. Financing for real estate ventures has historically been difficult to secure in Greece; taxation is heavy, and the legal system has some tricky peculiarities. For example, property owners sometimes sell a parcel of land to one buyer even though they have already signed a preliminary agreement with another purchaser. Town planning typically divides land into small areas so that assembling a site large enough for a mall means dealing with multiple owners. (Aegean Park is being constructed on a former industrial site, which avoids this problem.) Challenges like these have scared off some international companies, Perrotis said.

“They come, they look, then they sniff ... and leave,” he said.

To date, the largest shopping center-like developments in Greece are Carrefour’s four hypermarkets with adjacent in-line retailers. Village Road Show, the Australian entertainment company, has a center called Village Park in Athens consisting of a multiscreen cinema, some retail and a food court, but it is reportedly for sale. Domestic retail developers are few and are discouraged by the same problems that inhibit foreign parties.

But Greece’s entry into the European Community (EC) on Jan. 1 has been a catalyst for change, bringing greater economic stability and an improved environment for investment. As a condition of joining the EC, Greece was required to bring its inflation under control, so interest rates have dropped to 7% to 8%, compared with the highs of 30% seen in the early 1990s. Banks have become more favorably disposed to lending for property development, “and their criteria are based on business rather than political or personal considerations,” Perrotis said. “The Greek market is on a steady course to becoming more rational.”

The new economic climate is attracting foreign retailers and developers, such as Alpenbau (an Austrian construction company) and Praktica (a German-based home goods superstore retailer), among others. And, as Greece emerges from the long post-1980s period of economic stagnation, improved confidence can be seen in high rates of return on real estate investment, particularly in and around Athens, and this is expected to continue for the next few years, encouraging further foreign participation.

Many people have made substantial gains on the stock exchange and put the proceeds in real estate, said Marios Kyriacou, a senior partner with KPMG Athens, financial consultants. As for shoppers, he said the Greeks have stronger purchasing power than is usually acknowledged. Surveys typically show Greece as having significantly less per capita disposable income than other European countries, but Kyriacou said this is exaggerated.

“In practice, because of large-scale tax evasion, there is more money around than you might think,” he said.

Athens is the obvious target for retail development because nearly half of Greece’s population (around 4.5 million people) is concentrated in the capital city area. Residents of the traffic-choked capital will be able to get to malls more readily with the construction of the ring road and a new subway line, which is opening in stages.

Galanakis said the city will eventually be able to support three regional malls — one in Piraeus, the REDS Cambas project in the eastern portion and perhaps one more in the northern section. Elsewhere in Greece, he said there is potential for further shopping center development in Thessalonika, a city with attractive consumer spending levels (Sonae-Charagionis is investigating sites there); Larissa; Patras; and, on a smaller scale, Heraklion on the island of Crete, center of a large winter tourist influx.

The younger generation of Greeks, many of them educated abroad, are in tune with the fashions and tastes of the United States and the rest of Europe, and respond strongly to international retailers; cosmetics superstore Sephora, for one, has opened a number of outlets in Greece.

The 2004 Olympic Games, scheduled to be held in Greece, are expected to give the country a higher profile, though their effects on retail sales will be temporary. But the improvements being made to infrastructure such as highways in preparation for the games will only help shopping center development, Pallis noted.

“Greece will never be a vast market, but it has a scale that justifies a presence [on the part of international players],” Perrotis said. “Those who enter wisely will benefit.”

Kyriacou strikes an even more hopeful note.

“Where Europe is now experiencing 1% annual growth in GDP and anticipating 2% next year, Greece is planning on 5%” he said. “There is optimism and a lot of activity.”

 

© 2008 ICSC. All rights reserved. | Terms and Conditions | Privacy Policy | Contact ICSC | ICSC Home |