As described in our November 2017 journal entry, ‘Kyle Bass: Investors to Pour Billions into Greek Economy’, the institutional investors have been waiting for a change of government before they invest. Today, following general elections, the new government was sworn in replacing the radical left government that governed the country from January 2015. It was a matter of hours before we were contacted by a multi-billion USD European fund announcing that they just launched an investment fund for Greece, confirming our prediction.
At Fractal we have been assuring investors that the rising real estate prices in Greece are just the beginning. The thousands of apartments purchased by foreigners over the last few years, driving prices up, are insignificant compared to a) the future demand from hundreds of thousands of Greek buyers once the economy picks up and their purchase power increases – important to note that Athens is a city of 5 million residents – and b) the imminent large-scale investments from institutional investors who are now confident of a strong and sustainable recovery.
A more stable government will mean a perception of lower risk by the institutional investors, meaning they will accept lower yields and therefore investments that last month were considered high risk will now be enticing, so we should expect big movements over the next two years.