12th issue - May 2008
(28,000*)
Greek Economy & Markets
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New paths open in power sector Reforms lift prospects OTE deal clinched Property market promising
Facts & figures
The profile of the Greek economy
Latest Statistical Data Period
Value
Consumer Price Index (CPI)1
April 08/April 07
4.4
Harmonized Index of Consumer Prices (HICP)1
April 08/April 07
4.4
Producer Price Index in Industry1
March 08/March 07
9.9
Industrial Production Index (excluding construction)3
March 08/March 07
-5.4
February 08/February 07
-0.8
Gross Domestic Product (provisional data)1
Q4 2007
3.6
Unemployment Rate2
Q4 2007
8.1
2001
10,964.020
February 08/February 07
-0.5
Turnover Index in Retail Trade1
Population (2001 Census)4 Building Activity)3 1
Annual rate of Change, 2Rate, 3Periodical rate of change, 4Value
Greece’s April headline consumer inflation rate was steady at 4.4 percent on an annual basis. The industrial production index fell 5.4 percent , versus a 4.2 percent drop in the previous month. Data published by the National Statistics Service, the country’s statistics office, also showed a large turnaround in construction activity. The building activity index retreated 0.50 percent year-on-year in February from a 4.7 rise percent in January.
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12th issue - May 2008
Contents Cover Story Christos Folias Geographical position favors vital energy link Ioannis Agapitidis Is there a real estate bubble? Stelios Bouras New move made on energy chessboard Constantinos Filis Loose ends and solid prospects in South Stream deal
(page 14) (page 15) (pages 16-17) (pages 18-19)
Themes Economic growth resilient but inflation is ‘disturbing’ Turmoil in international financial markets has created a number of uncertainties; however, tax reforms, the investment incentives law and public private partnerships are among the factors helping fuel Greece’s economic growth. (pages 6-7) ECB calls for reforms, boost to competitiveness The ECB kept interest rates unchanged at its last Governing Council meeting and pointed out that growth in the eurozone remains resilient. Regarding the Greek economy, calls were made for measures that will help boost its competitiveness on an international level. (pages 8-9) TANEO eyes innovative opportunities abroad Fund managers who collaborate with TANEO have already invested in recycling, renewable energy and promising industrial material producers with strong export potential, its CEO Nikolas Haritakis told Greek Economy and Markets. (pages 10-11)
Greek Economy & Markets 08 A publication of the “Agora Ideon” forum.
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Greek Economy & Markets 08 is also distributed along with the International Herald Tribune (IHT) and Kathimerini English Edition newspapers in Greece, Cyprus and Albania. The content of the magazine does not involve the reporting or the editorial departments of the IHT.
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Real estate Real estate market weathers international subprime crisis
(pages 20) Colliers builds new Balkan links
(pages 21) Upside potential of property market remains strong
(pages 22) Foreign investors tune in to local property
(pages 23)
Themes After months of negotiations, Greece has agreed to sell part of its stake in OTE to Deutsche Telekom. The sale agreement will raise 442 million euros for the government and signal the entry of a major foreign investor into the country.
Gov’t strikes OTE deal with DT he Greek government has agreed to sell part of its stake in the Hellenic Telecommunications Organization (OTE) to Deutsche Telekom (DT) and will share management of the former state monopoly in one of the largest foreign investments to take place in Greece in recent years. Finance Minister Giorgos Alogoskoufis said the Greek state and DT would each control 25 percent plus one share of OTE while the German company could raise its holding. ‘The agreement with one of the largest and most reliable telecoms organizations in Europe and the world opens a new chapter not only for OTE but for the whole of the Greek economy,’ he said. ‘I believe that this is a groundbreaking agreement not only by Greek standards but on a European level as well.’ The German group agreed to pay 29.75 euros for each OTE share, about 45 percent above current prices, for 3 percent of the government’s holding in the company. The minister said each side would control five seats on OTE’s 10-member board. The day-to-day management will be the responsibility of the managing director, who will be proposed by Deutsche Telekom and approved by the Greek side. In March, DT had agreed to buy a 20 percent stake in OTE from Marfin Investment Group (MIG). Deutsche Telekom also said it would round
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off its stake by buying an additional 2 percent of OTE on the market. The two parties had been in negotiations since March, trying to hammer out details of the agreement which will see the telecom groups jointly covering the Southeast European telecoms market with both fixed and mobile telephony. The Greek authorities had for years been seeking a ‘strategic European investor’ for OTE, the largest telecom operator in the Balkans, with operations in Albania, Bulgaria, the Former Yugoslav Republic of Macedonia (FYROM) and Serbia. Deutsche Telekom, which generates more than half of its revenues abroad, has been pursuing acquisitions in mobile communications to boost growth and last year acquired France Telecom’s Dutch unit and US wireless company SunCom. OTE is one of Greece’s largest companies with a market capitalization of nearly 9 billion euros. Its shares are listed on the Athens bourse. Greece has been struggling to attract foreign investors since French lender Credit Agricole bought a majority stake in Emporiki Bank back in 2006. The OTE deal will also earn the government 442 million euros, which will go toward paying off the country’s large public debt. The sale will only come into effect after it is approved by Parliament, where the conservatives have a slim one-seat majority in the 300-member house. ‘The Greek government does not currently
intend to further reduce its stake in OTE,’ according to the ministry. Analysts described the news as positive, adding that time will be needed before the benefits materialize. ‘The agreement is positive given the generous premium that implies DT’s expectations for value creation from fat cutting, synergies and a better utilization of OTE’s assets. Nevertheless, we do not expect the transaction price to act as a reference, at least not before the market gets a taste of the new management’s intentions and how applicable they could be,’ said Proton Bank in a note. One of the downside risks analysts pointed out in the deal is the reaction from OTE’s powerful trade unions. OTE had recently moved ahead with a large headcount reduction in a bid to cuts costs but there is still believed to be more room for downsizing. Workers have already launched strike action and threatened to walk off the job again. The agreement will go into effect after its ratification by the Greek Parliament. Approval by the European Commission and national regulatory institutions in both Greece and Germany is also pending. Shares in OTE, however, have tumbled since the deal in what some analysts said was investor disappointment over the lack of a public offer being made by Deutsche Telekom. Stelios Bouras
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Economy Turmoil in international financial markets has created a number of uncertainties; however, tax reforms, the investment incentives law and public private partnerships are among the factors helping fuel Greece’s economic growth.
Economic growth resilient but inflation is ‘disturbing’ he ongoing turmoil in the international financial system has created serious uncertainties. It is reasonable to wonder what will be the effect on the world economy, and on the Greek economy in particular. It is also imperative to look for the appropriate responses at the economic policy level. However, in order to keep things in perspective, one should bear in mind that the current situation is not unprecedented. There have been numerous circumstances in economic history where euphoria and extreme optimism led to excess followed by uncertainty and fear. There are, however, certain aspects in the current situation that have made such reactions sharper. First and foremost is the critical role of macroeconomic imbalances that have characterized the world economy for the past few years. The large current account deficits in the USA, due to excess consumption not only of households but of the general government as well, are an obvious manifestation of these imbalances. These deficits reflect the large current account surpluses of China and of oilproducing countries in the Middle East. These are caused by excess savings. Specifically in China, these excess savings are due to an insufficient provision of social safety net mechanisms and the deficiencies of the domestic financial systems. These imbalances are further worsened by policies that artificially maintain the exchange rates of these countries at low levels. In short, for a number of years world growth has been heavily based on the American consumer. Secondly, the fact that we went through a decade of high liquidity is also very important. This was the result of low interest rates set by central banks and of heavy intervention in exchange rates by some countries. The third factor, until recently, was the prolonged period of low inflation. This was the result of the successful implementation of deflationary policies by the monetary authorities following the 1970s in conjunction with globalization, which initially had favorable effects. All these factors are linked to excessive borrowing on the part of US households but, even more importantly, to the excessive leverage of investors at the world level. As a result, the financial sector grew very fast, while supervisory and regulatory regimes did not adapt to these developments. The changes in traditional business practices followed by some banks is a fourth factor. Mainly in the Anglo-Saxon economies the practice of ‘origi-
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Plutarchos Sakellaris Chairman of the Council of Economic Advisers and Professor at Athens University of Economics and Business www.mnec.gr
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nating and holding loans’ has been substituted by ‘originating and distributing loans.’ According to this model, banks offer loans and afterward, through ‘securitization,’ they distribute the largest part of the credit risk attributed to these loans to many investors. This wider risk dispersion contributes to the more efficient operation of the financial system as a whole. However, this practice has led to a relaxation of lending criteria, as banks do not have a strong incentive to accurately evaluate the lending ability of the debtor — which in turn has adverse effects on the quality of the loan portfolio. At the same time, the incentives for further monitoring these loans have been dangerously weakened. Furthermore, investors tend to have limited information on debtors as they rely solely on the assessments of the international rating agencies. These assessments have proven to be wrong in many cases. A fifth factor is the cross-border use of composite and complex financial instruments. The complexity of these new instruments makes their valuation a very hard task. Thus, the difficulty of evaluating these products, in conjunction with the objective to achieve ever higher returns and lower risk aversion, has led investors to use them extensively without fully grasping the size of the risk they were undertaking. As a consequence, the operation of the market for these ‘exotic’ products was not smooth, especially regarding liquidity. When the turmoil began in the financial system and investors started to reassess their exposure in these markets, existing liquidity dissipated, causing them even further anxiety. After the summer of 2007, it became evident that nobody was in a position to know exactly how long the chain of investors in these complex financial products is, nor the true magnitude of exposure of different financial institutions. Therefore, the lack of transparency regarding the distribution of risk led to loss of trust between financial institutions, thus causing serious problems in the operation of the interbank lending market. A sixth factor is the executive compensation system in the financial sector, which encourages executives to undertake extreme risks. This system is structured in such a way that high rewards are obtained in periods of high profits while there is no ‘penalty’ when results are negative. Finally, it is important to note the role of inadequate supervision of the financial system. The relaxation of supervision or its total absence in some parts of the financial system has led banks to a type of ‘supervision arbitrage,’ i.e. to transfer part
of their activities away from the close control of authorities. As a result, part of their balance sheet is not regulated. More specifically, in order for banks to avoid regulations regarding capital adequacy, they used structured investment vehicles or conduits, which are not supervised and operate as quasi-banks. These vehicles led banks to undertake even higher risks, which were then widely dispersed around the world. These developments in the world financial markets have an impact on the real economy. The cyclical slowdown is accompanied by the sudden acceleration of inflation, as a consequence of steeply rising international prices of food, oil and other raw materials. It is a fact that the American economy is going through a difficult period and short-term prospects are becoming more and more pessimistic. In the European Union this turmoil is evident, but the real economy continues to grow, though at a pace lower than potential. According to the latest forecasts of the European Commission, eurozone growth this year will be 1.7 percent, down from 2.6 percent last year. Inflation in the eurozone is expected to accelerate to 2.6 percent this year from 2.1 percent last year. It is expected that the pressure on prices will subside toward the end of 2008. Eurozone economies are in a better shape compared to the 2001-2003 period when growth rates were very low. The fundamentals are much better, as much has been achieved in the implementation of structural policies enhancing growth, productivity and competitiveness as well as on fiscal policy. Therefore the eurozone is on much more solid ground to face this turmoil. Of course there will be some effects, but they are expected to be limited. Before turning to the Greek economy, I would like to mention the most significant initiatives undertaken by the European Union in order to tackle the problems in the financial system. Last September, the European Union’s ministers of economy and finance agreed on a road map to solve the main weaknesses of the financial system. These initiatives include: 1. Improving the transparency of markets, specifically regarding securitization and the out-of-balance sheet items of financial institutions; 2. Improving the rules and valuation methods of less liquid bank assets; 3. Strengthening the European Union’s supervisory framework for banks, and 4. Reviewing some structural issues in these markets. These include the role of rating agencies and the tools that facilitate the dispersion of risk attributed to bank loans. At the same time, the European Union is moving toward strengthening the supervisory framework through the review of the Lamfalussy process. Some aspects of this review are: 1. Measures for supervisory convergence at a European level, through the introduction in the statutes of national monitoring authorities of the obligation to cooperate with agencies in other European countries;
2. Instructions to strengthen the role of Level 3 supervisory committees of the Lamfalussy process, and 3. Measures for more efficient supervision of large cross-border banking groups. Special emphasis is placed on the need for cooperation between member states for the management and resolution of potential financial crises at the crossborder level. Turning to the Greek economy, I would like to underline that it has strong dynamism and resilience. The reforms implemented by the government have enhanced its growth potential and adaptability. The tax reform, the investment incentives law, public-private partnerships and the efficient management of EU funds have already boosted growth. At the same time, our banking sector seems to be solid, with satisfactory capital adequacy and conservative practices regarding risk management. Finally, the level of indebtedness of households and firms remains at comparatively low levels. Naturally, our economy is influenced by the turmoil. According to the latest forecasts of the Ministry of Economy and Finance, GDP growth will decelerate in 2008 and 2009 to a rate of 3.6 percent, down from 4 percent in 2007, and rebound to 3.8 percent in 2010. Despite this deceleration, the growth rate of the Greek economy is expected to be double that of the eurozone average. However, the developments in inflation are more
disturbing. The price index is expected to rise by 3.5 percent on average in 2008, up from 2.9 percent in 2007, mainly due to the jumps in the international prices of oil, food and other raw materials. The budget targets, on the other hand, are not affected, as nominal GDP rises faster than projected in the budget (by 7.2 percent compared to 7 percent). This is due to the fact that the deceleration of the growth rate is overcompensated by the acceleration of inflation. The target for a general government deficit of 1.6 percent of GDP this year is attainable. In parallel, caution is necessary to avoid entering a vicious circle of price-wage increases and lower competitiveness, as the impact on the real Greek economy will then be substantial. The world economy is in pain. The financial system, which is its circulatory system, is experiencing turmoil. The record high increases in the international prices of food, oil and other raw materials reveal that we have moved to a stage of globalization with negative side effects on our economies. In my view, these side effects are temporary but nonetheless need to be tackled immediately. In our case, in Greece, the best way to face the problems is by continuing to pursue fiscal consolidation and structural reform. Through these reforms the business environment will improve and private investment will keep on rising. These in turn will boost productivity, improve competitiveness and maintain growth, not only in the medium term but in the long term as well.
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Economy The ECB kept interest rates unchanged at its last Governing Council meeting and pointed out that growth in the eurozone remains resilient. Regarding the Greek economy, calls were made for measures that will help boost its competitiveness on an international level.
ECB calls for reforms, boost to competitiveness Papademos he European Central Bank’s (ECB) Governing Council meeting was held in Athens earlier this month, providing an opportunity for senior ECB board members to offer their views on the Greek economy. Along with ECB President JeanClaude Trichet, ECB Vice President Lucas Papademos and Bank of Greece Governor Nicholas Garganas spoke about how resilient the economies in Greece and the European Union are to a global economic slowdown. Papademos pointed out that Greece needs to work on boosting its competitiveness in a move that requires further structural reforms. Meanwhile, Garganas, who will be stepping from the top position as the country’s central bank soon, said that labor cost developments should take into account productivity growth as Greece struggles with one of the eurozone’s highest inflation rates.
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here have been a number of positive developments over the past few years. Greece has experienced robust economic growth and has made further progress toward fiscal consolidation and structural adjustment. On the negative side, the weak feature of the Greek economy has been the low degree of competitiveness, as measured by a variety of indicators. And the persistence of significant divergences in unit labor cost increases over a number of years has had adverse implications for the inflation increase, as well as for the country’s competitiveness position. The cumulative loss of competitiveness over several years is reflected in the widening of the current account deficit, which has reached very high levels as a percentage of GDP and may not be sustainable. So far, the negative impact on economic activity from the growing external imbalances has been partly or fully offset by the positive influence of various domestic factors that have stimulated economic activity. But the influence of these factors may decline over time and, were this to happen, the adverse effects of the external imbalances on activity and employment would be felt more. So what is important – and what I’m saying is very much in line with what was said earlier on by President Trichet and Governor Garganas – is the pursuit of policies that will strengthen competitiveness, which, as you suggested, first of all involves further structural reforms in order to
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Garganas think the challenge for Greece is to maximize the benefits of participation in a monetary union by making further progress along the path of reforms. It is for Greece particularly important to bring down the relatively high inflation rate in order to improve its competitive position. We have persistently had an inflation rate above that of the euro area average since we adopted the euro. And to achieve this objective it is particularly important to continue on a sustainable and credible path of fiscal consolidation and
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Lucas Papademos
foster higher productivity growth and strengthen competition in markets. Moderate labor cost increases are also necessary and are particularly important in helping to restore competitiveness over time. A combination of policies in labor and product markets, in order to strengthen competition, foster productivity growth and ensure wage moderation, should be pursued so as to increase competitiveness. I think this is the path to take in the years to come.
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to improve further fiscal performance by reducing further Greece’s high government debt ratio. And of course, and this is another issue on which my views are well known, in this country at any rate, I believe that public finance should have sufficient room for maneuver in order to better cope with expected substantial increases in age-related expenditure, because Greece is faced with one of the worst problems of an aging population, which will have serious consequences for both healthcare and pension system expenditure. And it is
Trichet
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conomic fundamentals of the euro area are sound, and incoming macroeconomic data continue to point to moderate but ongoing real GDP growth. However, the level of uncertainty resulting from the turmoil in financial markets remains unusually high and tensions still persist. Against this background, we emphasize that maintaining price stability in the medium term is our primary objective in accordance with our mandate. The firm anchoring of medium- to longer-term inflation expectations is of the highest priority. The Governing Council remains strongly committed to preventing second-round effects and the materialization of upside risks to price stability over the medium term. We believe that the current monetary policy stance will contribute to achieving our objective. The latest data and survey information on economic activity confirm previous expectations of moderate but ongoing growth in the first half of 2008. In particular, industrial production data for the first months of the year showed resilience, while economic sentiment generally continued to soften. Overall, the euro area economy has sound fundamentals and does not suffer from major imbalances. In line with available forecasts, both domestic and foreign demand are expected to support ongoing real GDP growth in the euro area in 2008, albeit to a lesser extent than during 2007. While moderating, growth in the world economy is expected to remain resilient, benefiting in particular from strong growth in emerging economies. This should continue to support euro area external demand. Meanwhile, investment growth in the euro area should provide ongoing support to economic activity, as capacity utilization remains solid and profitability in the non-financial corporate sector has been sustained. At the same time, employment and labor force participation have increased significantly and unemployment rates have fallen to levels
not seen for 25 years. This supports real disposable income and thus consumption growth, although purchasing power is being dampened by the impact of higher energy and food prices. The uncertainty surrounding this outlook for economic growth remains high, and downside risks prevail. In particular, risks relate to the potential for the financial market turbulence to have a more negative impact on the real economy than previously anticipated. Moreover, downside risks stem from the dampening impact on consumption and investment of further unanticipated increases in energy and food prices. Risks also arise from protectionist pressures and the possibility of disorderly developments owing to global imbalances. With regard to price developments, annual HICP inflation has remained above 3 percent for the past six months. According to Eurostat’s flash estimate, it was 3.3 percent in April 2008. This outturn confirms the ongoing strong shortterm upward pressure on inflation, resulting largely from sharp increases in energy and food prices at the global level in recent months. Looking ahead, on the basis of current futures prices for these commodities, the annual HICP inflation rate is likely to remain significantly above 2 percent in the coming months, moderating only gradually over the course of 2008. Accordingly, we are currently experiencing a rather protracted period of high annual rates of inflation. In order to ensure that current high inflation rates remain temporary, it is imperative that they do not become entrenched in longer-term expectations or lead to broadly based second-round effects in wage and pricesetting. For the time being, there is little evidence that the financial market turbulence seen since early August 2007 has strongly influenced the development of broad money and loans. Continued strong loan growth to non-financial corporations suggests that the availability of bank cred-
important of course, both in the public and private sectors, to attain moderate labor cost developments. I have been criticized for that because people believe that we suggest a wage freeze or a cut in wages – we do not. We suggest labor moderation; we suggest that labor cost developments should take into account productivity growth, labor market conditions and developments in competitor countries. This is a standard position of the Governing Council, if I may say so, Mr President, and
of the Bank of Greece all these years. Attention must also focus on other coming structural constraints on economic growth and job creation. There is an issue of fostering labor force participation and the strengthening of competition in product markets. Product markets are not functioning properly in Greece in many sectors, and this will help keep profit margins consistent with price stability. And an improvement in the functioning of labor markets is also very important, particularly in Greece.
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Claude Trichet
it to euro area firms has not been significantly impaired by the financial turmoil thus far. Further data and analysis will be required in order to obtain a more complete picture of the impact of the financial market developments on banks’ balance sheets, financing conditions and money and credit growth.
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Nicholas Garganas
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Economy Fund managers who collaborate with TANEO have already invested in recycling, renewable energy and promising industrial material producers with strong export potential, its CEO Nikolas Haritakis told Greek Economy and Markets.
TANEO eyes innovative opportunities abroad fter enlarging its investment spectrum and complying with EU regulations regarding risk capital, the TANEO fund is ready to co-finance more than 260 million euros worth of small and medium-sized businesses, says Haritakis. The CEO also said that he sees potential both for companies as well as for financial institutions like venture capital funds.
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Just before the end of last year, you announced and the media reported that the New Economy Development Fund SA (TANEO) was back in business. Have you progressed since then? NH: We can confidently say that we successfully managed to tackle all the obstacles we were facing at the beginning of 2007. We managed to extend our investment period up to the end of 2008, we enlarged the investment spectrum and we complied with the most recent EU regulation regarding risk capital. In addition to that, we collaborated with institutional and private investors in order to fully utilize our investment capacity. We are very proud to say that, currently, TANEO is ready to co-finance, along with other investors, the small and mediumsized enterprises (SMEs) market in Greece with more than 260 million euros. In addition to the three aggressive management teams already operating, seven new ones are in place to compete and collaborate in a promising venture capital market. We managed to accomplish all the tasks assigned by our shareholders and note holders long before the expiration of their approved time frame.
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What prompts an institutional or individual investor to invest in Greece’s venture capital market? NH: I will answer the question drawing on information from my experience in TANEO. When trying to attract co-financing for venture capital in Greece, we focus on certain issues that have proved quite persuasive and attractive for all the investors: first, our sovereign funding structure; second, our past experience with industrial market in Greece that allows us to call ourselves ‘efficiency experts’ — we know where to find opportunities and promising investments; third, our experience in working under the legal and tax structure framework existing in Greece (AKES). We have successful-
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ly explained to both international or domestic investors that the above legal structure, introduced by TANEO, is a financial vehicle that stands in a competitive position relative to all other similar schemes (SICAR, LPAs etc).
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As you mentioned earlier, close on 300 million euros have been channeled through TANEO into the Greek SMEs market. Is this market mature enough to absorb those resources? NH: Given the recent response of the market, I can safely say that it can absorb even more. For those who know or may foresee the potential of the Greek economic perspective, my previous statement is realistic. After the crisis in Silicon Valley, venture capitalists all around the world narrowed their perspective by competing on returns with financial wizards. Equity financing, even for high-growth companies, is completely different to stock exchange dealing or financial engineering. Our position strongly supports the idea that the abundance of real values in the Greek SMEs market is unexploited. Markets and companies with great potential are financially restricted and therefore bound to operate inefficiently. An efficiency expert may easily identify all those opportunities and provide cooperative leverage rather than a further squeeze for profits.
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You often refer to promising sectors that are not yet earmarked by the venture capitalists. How do you plan on exploiting these opportunities?
NH: The fund managers who collaborate with us have already invested, for example, in recycling, renewable energy, promising industrial material producers with strong export potential, boutique competitors for consumer products and brand names in upscale land property uses. Currently, some of them are scouting all the major academic institutions in the USA to evaluate innovative ventures capable of being realized in Greece. One of our new funds is expected to soon introduce an innovative financial instrument utilizing the recent legal framework on ‘societes anonymes’ that will highly benefit SMEs. Furthermore, and following our guidance, the fund managers are now investigating opportunities in agriculture, logistics, ceramics, small energy distribution networks, education, and are even investing in special purpose vehicles (SPVs) for legal as well as advisory companies. This is a non-exhaustive list and we remain open to ideas.
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How has the recent financial crisis affected venture capital activity? Following recent developments, we believe that the financial instability mainly benefits those quick-footed financial institutions that are highly involved in the ‘musical chairs’ environment that exists in the financial sector. Real values are always a safe harbor and secure investment choice. A reliable venture capitalist is constrained to invest in real values. In an environment such as the current one, his portfolio is strengthened rather than destabilized.
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How is TANEO structured? What are the milestones and the obligations of the management in terms of private investors and the Hellenic Republic? TANEO was established as a purely sovereign fund. In the process it managed to become a prototype structure by building a company creatively joining competitive and collaborative elements from the private and public sectors. Around 105 million euros out of the 150 million TANEO has under management come from private institutional investors. Taking into consideration that TANEO is a fund of funds, participating in up to 50 percent of new venture capital schemes, our structure successfully generated more than 300 million euros in investment resources for the Greek SMEs market, with only 45 million euros in initial public investment.
Even though our seed capital was contributed in the form of equity capital by the Greek government, we introduced the private characteristics and objectives upon cleverly signing a very critical management contract. In order to secure the non-public objectives, our private strategic investors asked Deutsche Bank (trustee) to control the common shares, while the Greek government agreed to participate as the preferred shareholder. Our trustee, as 100 percent rights controller, appoints the board, the executives and the management team and is responsible for monitoring our investment decisions in collaboration with one of the world’s leading investment advisers, Capital Dynamics. With the above-described structure, TANEO is bound to meet all milestones set and to operate in a highly competitive manner, with clear financial and investment objectives, under absolute transparency and complete independence. This prototype has succeeded, easily enough, in tackling all the critical issues that are under consideration for all sovereign funds today.
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Has the Alternative Market of the Athens Exchange (ATHEX) helped the venture capital industry or is it too soon to judge? NH: I'm glad you asked this question,
because it gives me a good opportunity to express my opinion on this new market. First of all, it is important to say that the responsible authorities, i.e. the board of ATHEX, as well as the Hellenic Capital Markets Commission (HCMC), managed the implementation of this delicate market in the most efficient way. It is indeed premature to judge the effectiveness of this market. As an optimist, I can claim that there is great potential both for companies as well as for financial institutions like venture capital funds. However, it is prudent to say that, first, although it is premature to evaluate the performance of this market, we should evaluate its benefits to the economy, not only as an alternative source of fund-raising, but mainly as an institution for the promotion of fast-moving companies.
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How do you monitor your funds’ progress? Do you participate in their management? NH: Internally, we use a sophisticated financial model to closely control our financial performance and cash flows. This model is based on the most recent reporting guidelines of the European Association of Venture Capital (EVCA). Regarding actual investment opportunities, we identify prospective ventures in order to
enhance our funds’ pipeline; at the same time, we freely allow the investment managers to decide on their own, according to their standards and criteria. Like any strategic investor with the largest participation, in most cases, we are members of the funds’ investment committees and our investment managers closely monitor and evaluate the realizations of our investments. However, and above all, the most important criterion in order to monitor the performance of the funds remains the contractually imposed returns-related management remuneration for the fund managers who collaborate with us.
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What’s next for TANEO? NH: In the very short term we need to finalize the remaining legal documents in relation to the establishment of the new venture capital funds, to organize the upcoming event of the 9th International Venture Capital Forum, which is now the largest venture capital event in the SE Europe, and to redesign our Web presence in order to reflect our mission statement, as a hub for entrepreneurs, financiers and innovators. Planning for the future, i.e. next year and forward, TANEO has proved that is always full of surprises.
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Facts & figures
PPC Renewables plans to build new photovoltaic park Public Power Corporation (PPC) said its renewable energy subsidiary is moving ahead with the permits required to build a photovoltaic plant at Megalopolis in the Peloponnese. Its subsidiary PPC Renewables (PPCR) plans to build a 50-meagwatt solar power plant, the second largest in Europe, in a 250-million-euro project expected to be completed in 2009. ‘The park will produce clean electrical energy from the sun covering the energy consumption of around
28,000
households (or 42 percent of the total) of the Arcadia prefecture,’ the company
said. It is expected to operate for 25 years and will contribute to job growth in the area. During the construction phase 150 people will be employed, while PPCR will then hire 30 staff members to operate the plant. Priority will be given to members of the local community.
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Cover
New paths for growing power sector
In a fast changing international environment, Greece is taking its place on the European energy map by hooking up with international pipelines transporting natural gas and petrol. The latest deal signed with Russia will ensure that the South Stream gas pipeline will cross through Greek territory, boosting the country’s role as an energy hub. Apart from playing a role on the country’s strategic position, senior government officials point out that these developments will help feed Greece’s own growing energy appetite. Experts, on the other hand, agree on the importance of the projects but also make mention of the fact that Greece is not alone in making these steps. Other countries in the region are making similar moves as energy issues become more pressing world wide. Soaring petrol prices and the need to increase the protection of the environment have become every day conversation topics which governments are well aware of. News that Public Power Corporation (PPC) is gradually moving ahead with a photovoltaic park in the Peloponnese is a positive step as it is estimated to cover the energy needs of 28,000 households. The project is considered to be Europe’s second largest solar energy plant.
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Cover Greece is hooking up with a growing number of international energy pipeline projects as it strengthens its position on the regional power map. At the same time, investments in renewable energy sources are expected to reach 10 billion euros by 2020.
Geographical position favors vital energy link urrently much is being written about Greece's emerging role as a major transit state for energy networks. The answer to the often asked question as to why Greece is developing into an energy hub lies in the country's response to the major challenge of energy security. Defining a sustainable and competitive energy security policy is a key priority of both the European Union and the Greek government. Greece's geographical position on the crossroads of East and West means that — with the correct strategic decisions and the appropriate political will — the country is well placed to contribute toward the strengthening of Europe’s energy security. This policy is characterized by diversity, in energy sources (renewable and clean fossil fuel), in energy transport, distribution and supply routes (new pipelines) and liquefied natural gas (LNG). While the Turkey-Greece-Italy Interconnector illustrates Greece's contribution in the promotion of new sources of gas supply, the involvement of Greece in the Russian Gazprom and Italian ENI project concerns the country's efforts to secure supplies of more traditional sources. It is envisaged that the 900-kilometer offshore section, which is planned to carry 31 billion cubic meters (bcm) of Russian gas annually, will start from Beregovaya on Russia’s Black Sea coast, from where it will run to Bulgaria. From there it expected to follow both a northwest route and a southwest route. The details of the exact routing will be clarified by studies to be carried out by ENI. However, agreements have already been completed by Russia with Serbia and Hungary. For the southwest route, plans are for the pipeline to cross through Greece via the Ionian Sea to southern Italy. An agreement between Greece and Russia for this, the South Stream Project, was signed in the presence of Prime Minister Costas Karamanlis and President Vladimir Putin in Moscow on March 29. This is a project which will secure supplies for European markets and is an example of Greece's role in energy security. Demand for gas is rising by around 3 percent a year against a backdrop of falling domestic production. Greece is taking a leading role in promoting the policy of diversification. In the context of Inogate, which is the international energy cooperation program between the European Union, the littoral states of the Black Sea and the Caspian and their neighboring countries, Greece developed the Turkey-GreeceItaly Interconnector that will supply the European markets with gas from Azerbaijan through Turkey and Greece and undersea to Italy. It is an extremely ambitious project which has been supported by the Trans-European Network program and has been categorized as an EU priority project. The Turkey-Greece section is already complete, with its operation successfully inaugurated by the prime ministers of the two countries at the end of 2007. Progress is being made on the Greece-Italy sections. It is an exciting project which will be transporting gas — about 11 bcm — and which should be complete by the first quarter of 2013.
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Christos Folias Minister of Development www.ypan.gr
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Greece also has one of the most important terminal stations in Europe for liquefied natural gas, in Revethousa near Athens. Works to upgrade and increase the capacity of this terminal were completed last year. Currently Greece imports LNG from Algeria but there is scope for imports from other countries. In March 2007, Greece, Bugaria and Russia signed the agreement for the Burgas-Alexandroupolis oil pipeline. The establishment of the International company was secured with the signing of the shareholders agreement in January 2008 in Sofia, with Development Minister Christos Folias signing on behalf of the Greek state, together with representatives from the companies concerned from the participating states. The realization and operation of the pipeline will ensure the flow of increasing amounts of oil to international markets, while significantly relieving the congestion of the Bosporus Strait and reducing the likelihood of any shipping accidents. Through the 279-kilometer-long oil pipeline with a total budget of 900-1,000 million euros and initial annual throughput of 35 million tons (with the potential extension to 50 million tons per annum), Greece has positioned itself firmly on the oil map. It should be noted that all the pipelines to run through Greece will be built according to the highest environmental standards, with the aim of constructing ‘green’ pipelines. Moreover, with these projects, Greece is establishing links in the region and is ascertaining its standing as a major energy player in the 21st century. With its participation in these ventures, Greece is clearly contributing toward Europe’s energy security. Cooperation between Turkey and countries in Southeast Europe is being strengthened and can only serve to consolidate ties which promote peace and economic and political stability. Developing energy security with its component of diversity also means exploiting the vast economic potential of new sources of energy. Energy security will be considerably enhanced when the EU meets its target, whereby 20 percent of its electricity consumption should be produced by renewables by 2020. The Greek government is confident that it can meet this target on schedule and is taking action aimed at creating the required prerequisites for this. These include simplifying the administrative procedures concerning licensing, further development and use of new technologies and promoting stability in the market for sustaining RES investment interest. Today, the world’s leading RES companies are developing RES projects in Greece and are expected to continue investing over the next decade more intensively, because the Greek government provides and will continue to provide stable and transparent market conditions, securing international and domestic investment in RES. Indeed the government is expected to draw investments worth 10 billion euros by 2020. We are blessed in Greece with year-round sunshine that facilitates the promotion of solar energy, windy Mediterranean conditions which are conducive to the construction of wind and energy parks, and of course seawater and wave energy initiatives.
Cover Electricity production from RES in Greece, mainly in the form of wind power and small hydroelectric projects, has increased significantly in the last few years and is approaching 4 percent of gross domestic electricity consumption.
Green power high on priority list evelopments are needed in the energy sector, particularly in the oil industry — where skyrocketing prices are having a drastic effect on the economies of most countries — and the continually growing threat of climate change has now made it obvious that a transition to new, less polluting and more secure energy sources is vital. The most promising proposal for this transition is the use of renewable energy sources (RES), which can reduce greenhouse gas emissions and pollution using local and decentralized sources. At the same time, we now realize that we cannot keep increasing energy production to cover our needs, but that we must manage energy in a rational way and improve our energy efficiency. Investments in these sectors contribute to the protection of the environment, the security of energy supply and long-term development while functioning simultaneously as a magnet for innovation, providing export opportunities. The main strategic energy target for the European Union is the reduction of greenhouse gases by 20 percent by 2020, compared to 1990 levels. In order to achieve this goal, the European Commission is proposing three individual targets for 2020: a 20 percent improvement in the efficiency of energy systems, an increase of 20 percent in the contribution of RES to final consumption and an increase of 10 percent in the amount of biofuels used for transportation. For Greece, the initial target for RES by the year 2010, including large hydroelectric plants, was equal to 20.1 percent of the electricity produced. In the energy efficiency sector, which the minister of development, Christos Folias, has set as a priority of the national energy strategy, by 2016 — according to the relevant European directive — we must reduce final energy consumption by 9 percent compared to the five-year period 2001-2005. In recent years, Greece has been moving steadily in this direction. The contribution of RES to the national energy balance was 6 percent of the total available primary energy in 2006 and 16 percent of the domestic production of primary energy. Electricity production from RES in Greece (excluding large hydro) has increased significantly in the last few years and is approaching 4 percent of gross domestic electricity consumption. It concerns mainly wind and small hydro and to a lesser extent, biomass. Recently, photovoltaics has begun to make a noticeable contribution. If large hydro plants are included (excluding production from pumped storage), electricity production from RES is around 10-12 percent of gross domestic electricity consumption. The installed capacity of electricity production from RES at the end of 2006 was 3,900 megawatts and the steadily increasing development in wind, small hydro and biogas was the result of the financial support measures mainly from the operational programs ‘Energy and Competitiveness’ of the 2nd and 3rd Community Support Framework Programs and the Development Law. In Greece, at present, there are approximately 1,200 wind turbines installed with a total capacity exceeding 800
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MW. Most of the wind turbines are installed in central and southern Evia, followed by Thrace, Crete, the Peloponnese and the islands of the northern and southern Aegean. The power of the wind turbines installed in Greece ranges from engines with a low output of about 100 kW, using mainly older technology, to modern engines with an output of 3 MW. The Regulatory Authority for Energy has set up a development program for photovoltaic plants and the national target for the penetration of photovoltaics in the energy system has been set at about 800 MW for the next three years. The response by investors was extremely high, to the point that applications began to backlog. It is expected that by fall this year the first production permits will be issued. The great expansion in the solar thermal collector industry (water heaters) has put Greece in second place on a European level regarding installed surface of collectors. The implementation of the directive on buildings with ‘increased energy efficiency’ into national legislation will create even more favorable conditions for the above renewable energy technologies. In the area of biofuels, the biodiesel market is seeing rapid development. While only one unit was operating in Greece in 2005, at present, according to the latest available data, 10 biodiesel production companies are already in operation with a total maximum yearly capacity of 575,000 tons. In contrast to biodiesel, the bioethanol market is at an early stage and bioethanol production in Greece is not expected to start before 2009. We face two energy challenges: on the one hand, to ensure secure and sufficient energy and, on the other, the sustainable management of the environmental impacts of the production, conversion and use of energy. These challenges are not insurmountable. If we all take greater responsibility for our actions, basing our energy decisions on best practice, we can ensure a clean, intelligent and competitive energy future.
Ioannis Agapitidis President of the Center for Renewable Energy Sources (CRES) www.cres.gr
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Cover Prime Minister Costas Karamanlis recently signed a deal in Russia putting the country in the Kremlin-backed South Stream natural gas pipeline project expected to start operating in 2015.
New move made on energy chessboard s global oil prices continue to climb to record highs, Greece’s decision to join the Kremlin-backed South Stream natural gas pipeline will boost the country’s role as a transit hub while also feeding its own growing energy appetite. Greece has also announced that it plans to take new steps on the energy front in an attempt to further diversify its sources and building on its position on the global energy map without being a producer. The deal was recently signed at a ceremony at the Kremlin attended by Greek Prime Minister Costas Karamanlis and Russian President Vladimir Putin, shortly before being replaced by Dmitry Medvedev. The proposed Russian-Italian South Stream pipeline will pump Russian gas under the Black Sea to Bulgaria before splitting into two branches. One branch will take gas northwest to Austria, while the other will head southwest to Italy, going through Greek territory. ‘Our country is securing a key position on the world energy map even though we are not a producer and this is very important in terms of national, economic and development reasons as energy moves the global economy,’ said Development Minister Christos Folias. The pipeline, which will be jointly built by Russian gas export monopoly Gazprom and Italy’s
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energy group ENI, will eventually transport 30 billion cubic meters (bcm) of Russian gas a year to Europe. It is not yet clear how much of the natural gas will be absorbed by Greece before the remainder is transported off to Italy. The project, which aims to link Gazprom’s Siberian gas fields with Europe and is seen as a competitor to the EU- and US-backed Nabucco pipeline, will cost around 10 billion euros. Critics of the deal, however, place the figure well over the 20-billion-euro mark. Fellow Balkan nations Serbia and Bulgaria, as well as Hungary, recently joined South Stream. ‘Based on these facts, Greece sees the construction (of the pipeline) based on the conditions of growing demand as being particularly positive,’ said Karamanlis at the signing ceremony in Russia. According to experts, consumption of natural gas is expected to double in Greece over the next few years. Greece’s consumption of natural gas is expected to reach 4.7 billion cubic meters by the end of 2008, with this figure exceeding 7 billion cubic meters in 2010, according to Development Ministry data. ‘We are planning to move ahead with other steps that will allow us to increase the number of energy suppliers, so that we can guarantee the existence of energy needed and so that we can act as a transit hub for natural gas moving from the east to the west toward our European Union partners,’ said Folias, without giving further details. Greece now gets almost 80 percent of its natural gas from Russia’s state-controlled OAO Gazprom, the world’s largest producer of natural gas, through a pipeline from Bulgaria. The rest is LNG from Algeria.
Energy chessboard Changes on the world energy map are taking place at a fast pace as countries adjust to an environment of high oil prices and the need to boost power from environmentally friendly sources. Greece’s entry into the South Stream deal places the country on an energy chessboard where each move has an impact on broader international political and economic ties. Analysts see the South Stream project as posing a major challenge to the rival US- and EUbacked Nabucco pipeline scheme. Under Nabucco, gas would come from ex-Sovi-
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et Azerbaijan to Southern Europe via Turkey in an EU effort to diversify energy sources away from reliance on Russia, though experts say the pipeline’s fruition is becoming increasingly more difficult as Azeri reserves are in doubt. Days after the South Stream agreement was signed, the US government said it did not oppose the deal but believed it would harm the interests of consumers. Matthew Bryza, US deputy assistant secretary of state for European and Eurasian affairs, indicated that Greece needs to pick up the pace on the Turkey-Greece-Italy (TGI) natural gas pipeline, currently under construction. ‘You can have both, TGI and South Stream, if you build TGI first. If you build South Stream first, then I am afraid that you will have just that,’ he told reporters. Washington, fearful of Russia’s tightening grip on the European energy market, has urged countries, including Greece, to diversify their energy providers. According to Bryza, Greek consumers will be at the mercy of Russian gas company Gazprom, which will be supplying the country with the majority of its gas after the South Stream pipeline starts operating. On the other hand, Putin has said both the South Stream project and a proposed Russianbacked oil pipeline through Greece could only benefit Europe. ‘The aim is to significantly increase the energy security, not only of the Balkans but of the entire European continent,’ stressed the outgoing Russian president. ‘The countries that are capable of supplying raw fuels in the necessary volumes at competitive prices for Europe can be counted on the fingers of one hand,’ he added. In Moscow last month Putin and Karamanlis
also discussed the 280-kilometer (175-mile) Burgas-Alexandroupolis oil pipeline that will connect the Black Sea to the Aegean as a vital alternative route, bypassing the tanker-congested Bosporus Strait. The 950-million-euro Russian-Bulgarian-Greek oil pipeline, agreed upon last year after 14 years of negotiations, is expected to enter its construction phase soon. Senior government officials say that by the end of the year, the studies, the planned route and the tender for the construction of the oil pipeline will be completed. Joint steps in Europe’s energy map have also resulted in frequent reciprocal visits by Karamanlis and Putin. Karamanlis's recent visit to Moscow was his third trip to Russia, while Putin has also visited Greece three times. The Greek prime minister is additionally thought to have discussed the possibility of buying Russian aircraft or weaponry during his Moscow visit. Other sources said that Russian businesses are eyeing investments in Greece in a range of different fields. The South Stream project is not expected to start operating until 2015, well after the TGI start date set for 2012. After moving ahead with the establishment of the company that will build and manage the South Stream project, Greece and Russia will proceed with putting together a study on the pipeline that will take about 18 months. Once this stage is completed, a two-year assessment and approval period will follow before any further decisions are made. Greece and Turkey last year inaugurated the local branch of the the TGI pipeline, linking the two neighbors in the Evros region, in the country’s northeast.
The 300-kilometer pipeline will provide the European Union with its first supply of gas from the Caspian region, bypassing Russia and the volatile Middle East. It will link the Greek and Turkish networks, and eventually carry gas from Azerbaijan to Italy. The project is also seen as a deterrent for any future political or military crises with Turkey. ‘It is a great step forward for relations between the two countries and for stability in the region. By cooperating we can build a better future for all,’ according to Karamanlis. The EU is backing the Greek-Turkish project as it seeks to diversify its energy suppliers and reduce its natural gas dependence on Russia, from where it buys about a quarter of its gas. The United States also welcomed the project, describing it as a ‘critical new energy bridge’ between East and West but said the European Union ought to open its energy market to more Central Asian states. Folias rejected talk that the two projects will be competing against each other, highlighting that it will help diversify the country’s energy suppliers. ‘These two pipelines are complimentary. They will be parallel with each other. One does not depend on the other. One pipeline will bring gas from Turkey while the other will bring gas from Russia,’ said the minister. In July last year, Greece and Azerbaijan signed a protocol of cooperation to strengthen the broader economic and trade relations between the two countries, making special reference to the TGI pipeline that will transmit Azeri natural gas to Western Europe. Industry experts, however, have questioned Azerbaijan’s ability to supply the gas quantities needed for the pipeline, saying that additional suppliers will need to be found. Stelios Bouras
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Cover A quick glance at the region’s map showing the various pipelines carrying energy from East to West is enough to set matters within a realistic framework: Greece will evolve not into a global energy hub, but into an important regional transit hub.
Loose ends and solid prospects in South Stream deal he recent Greek-Russian handshake on the South Stream project, in combination with the Burgas-Alexandroupolis pipeline and the Interconnector Turkey-Greece-Italy (ITGI) natural gas pipeline, will, if brought to fruition, establish Greece as an important link in the West’s supply chain to Caspian hydrocarbons. Now firmly established on the energy map, Athens is enhancing its geopolitical standing and its voice and role in energy affairs, while also guaranteeing to a significant degree its own energy security and that of the wider region (in the sense that any crisis allowed to bear on energy delivery would be felt by European consumers, who will be the end users of the oil and natural gas transiting Greece). However, a quick glance at a map of the region showing the various pipelines carrying energy from East to West is enough to set matters within a realistic framework: Greece will evolve not into a global energy hub, but into an important regional transit hub. The ITGI, Nabucco and South Stream natural gas projects — as well as the existing Blue Stream — impact broader developments in the Balkans, but are categorized by many as supplementary, given that beyond carrying gas from different sources, the quantities of gas have been secured by different companies (e.g. ITGI and South Stream by the Italian Edison and ENI respectively). However, given the political support and consequent involvement of the US and Russia, as well as the fact that their target markets and the quantities they will be moving are more or less the same, they will be for the most part competitive. The scolding the Greek government came in for from Bryza was no mere coincidence, and neither are the efforts to accelerate construction of the projects in question so as to beat the competition into Western markets. In this escalating energy crisis, Russia has clear comparative advantages, while the US has serious strategic problems, including: ■ Overestimation of Azerbaijan’s potential; ■ The international isolation — for which the US is responsible in the main — of an energy-rich Iran that could, under the right circumstances, compete with Russia; ■ Iraq’s inability — due to the geopolitical fluidity brought on by the US invasion — to deliver its vast energy reserves to Western markets; ■ The agreements signed recently by Moscow with Kazakhstan and Turkmenistan, which will increase Russian control over the natural gas
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Dr Constantinos Filis Head of Russia & Eurasia Center, Institute of International Relations and Senior Member of St Antony’s College, Oxford University www.cere.gr
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exports of these two Central Asian states.
Keeping Greece’s options open Greece — irrespective of its contractual obligations — thus has no choice but to bear in mind the objective energy realities that make Russia, rather than Azerbaijan, the more pragmatic choice, at least for the time being. At the same time, Athens has to avoid becoming dependent on Moscow in terms of absolute numbers. Any reckoning by which Greece might reduce its dependence on Russia in the coming years presumes the ITGI’s operation at full capacity — an eventuality by no means certain given the current state of affairs and the need to secure quantities of energy to cover the increasing needs of the domestic market. So there is also a need to seek other supply sources in order to distance ourselves from any fallout from the ongoing US-Russian energy tugof-war, which may result in lines being redrawn in Europe, with perhaps unforeseeable consequences for the cohesion of the EU. Greece, like other transit states, obviously doesn’t want to identify with one or the other of the power poles (US, Russia). And this is because it wants to keep its options open, securing supplies from various sources. Whatever the case, the energy plans we are referring to (apart from Blue Stream, which is already operating, if not at full capacity) won’t go into operation before 2012 in some cases, and 2014-2016 in others — and these are best-case scenarios. Regarding the broader alliances taking shape as a result of the energy agreements, it would be premature to pigeonhole Greece or any other country in any one of these. With the exception of Albania and Serbia, the countries of the region (Bulgaria, Romania, Turkey, Italy, Hungary and Greece) are participating in projects that — while serving the geopolitical interests of both the US and Russia — first and foremost serve their own interests. It is no exaggeration to claim that for transit countries, given the relatively limited economic gains for conduit states (these rise only in the case of resale or the securing of special accommodations — low prices — for domestic markets), the basic objective is to upgrade their geopolitical role and strengthen their negotiating clout on broader issues beyond energy (e.g. the Greek government sends a message of insubordination to the US, which in recent years has not supported Athens on any major national issue).
So it is easy to see why vigilance is imperative on the part of the Greek government, with the salient areas of interest being problems with the projects and potential economic gains. Specifically, while Burgas-Alexandroupolis seems to be moving toward implementation, despite delays, the other two projects have some structural problems that have to be resolved. Given that the ITGI is slated to carry Azeri natural gas, the potential for which has been overestimated, it is unlikely that it will operate at full capacity even when the Greek-Italian section has been completed. This means that it will carry smaller quantities and be less competitive than other projects. South Stream is a high-cost, high-risk project. Regardless of Russia’s intention to move ahead with it in order to gain a negotiating advantage over other transit states, such as Ukraine, it is by no means certain that — following financial and technical studies — this project will prove viable from end to end, much less commercially alluring. Although Moscow has the quantities necessary to supply the global market, in this particular case it seems to be moving in the direction of making geopolitical gains without taking into account the economic cost. And this is why it is vacillating even now concerning the participation of certain states (e.g. Serbia). The fact that the Kremlin decided — in a reversal of initial plans — to incorporate Belgrade into the northern branch, rerouting the pipeline, points to the vastness of the political dimension of the South Stream project. Moreover, the involvement of a number of states in this project will probably bring about delays if and when details and requirements concerning their participation need to be hammered out. Strong political will from governments speeds things up, but when the negotiations pass on to the companies
involved, the process takes on another dynamic.
Economic gains It is difficult to forecast the direct or indirect economic gains Greece can make through participation in the three energy projects. I think that the general framework set out below deserves the attention of the Greek government: ■ Transit duties. Judging from the figure set for the Burgas-Alexandroupolis pipeline ($1 per ton), no significant economic gain can be expected. ■ New jobs during the construction and operation phases. Needs — and, consequently, exact numbers — are hard to predict. A significant role will be played by whether the pipelines are accompanied by infrastructure projects, the construction of storage facilities etc. ■ Attracting foreign investment (e.g. energy, real estate, tourism, new technologies). Used effectively — and in adequate quantities — foreign investment will bolster the development prospects of areas of northern Greece, most of which are more or less depressed. ■ Securing adequate quantities of energy for the country while avoiding dependence on a single supplier. The argument that we get (liquefied) natural gas from Algeria or other countries so we are not dependent on Russia is specious, given that 82 percent of the natural gas we consume is Russian. This is all the more pressing a problem because natural gas will be consumed by more and more households in the coming years, increasing the country’s dependence. This dependence could be halved in coming years if we double or triple our imports from other sources, such as — but not exclusively — Azerbaijan. No one questions the undesirability of dependence; thus we need to seek other supply sources in the near future, at least to cover
the needs of the domestic market. As for the Russian factor, we can all see that with few exceptions (Hungary, Belarus), Moscow isn’t big on subsidies or write-offs and operates based on prices on the open market. It would be a major success — and quite a feat — if we could secure Russian natural gas for Greece at a cut rate. ■ The potential for resale of oil and/or natural gas by Greece. Our economic and geopolitical gains would multiply if — following the required agreements — we secured a portion of the reserves transiting our country for resale to other countries (in the Balkans, for instance). This would require tough negotiating because it would mean losses for the supplier state.
Summing up Wielding oil and natural gas pipelines, Russia is clearly attempting a comeback in Southeast Europe. But it is equally clear that beyond doing this and backing a few hostile buyouts, Moscow has to use its petrodollars to expand its activities into other sectors in order to go some way toward consolidating its influence. This is even more starkly the case given that the US has established strong political, military and economic footholds in the region in question, while also trying to create smaller state entities (e.g. Kosovo) that are under its full control. Finally, the current clash between Washington and Moscow, which is taking place against an energy backdrop, is not cold war in nature. Nevertheless, the two sides do have conflicting interests; interests that they promote and, in some cases, impose, rather indelicately at times. Let’s hope that the conflict between these two poles of power (one, the strongest pole, the other, up and coming) in the international system won’t have collateral casualties.
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Real estate The real estate market demonstrates stabilization and maturity, which is supported by the enhancement of the domestic macroeconomic figures. Prospects are seen as being promising with more room for development.
Real estate market weathers international subprime crisis he yields of the Greek real estate market have been descending over the past five years, although a trend toward stabilization has been observed during the last two years. The same behavior has been displayed by average rental rates, which reflects the intensification of competition in the market and the increase in the stock supply. However, recent economic developments in the Greek and international markets have forced a small increase in the required yields during the first quarter of 2008. The effects of the international crisis are not evident in Greece to the extent that they are elsewhere, especially other Balkan countries. This can be explained by the successful path of the Greek real estate sector during the last decade. Since entering the European Monetary Union, the Greek real estate market has demonstrated stabilization and maturity, which is supported by the improvement of domestic macroeconomic figures. In particular, interest rates fell, which led to increased liquidity, high construction rates and a steady decrease in the required entry yields and rental rates for real estate assets. This, combined with the entrance of multinational companies and greenfield investments in Greece, established solid foundations for the increased future growth of its real estate market. In addition, the government contributed positively to the development of the real estate sector with the relaxation of urban planning regulations and the introduction of the Land Registry system, the reduction of corporate income tax rates and the issuance of favorable tax regulations regarding real estate investments. Indeed, the first permit for the operation of a real estate investment trust (REIT) was acquired in 2003, the first listing on the Athens Stock Exchange occurred in 2005, and two law amendments were made, in 2002 and 2007, opening up and increasing the potential of the Greek real estate market, which has attracted and continues to attract the interest of foreign investors. The question raised here is: How has Greece successfully survived the international crisis to date? The answer lies in the fact that since the introduction of the euro and ECB regulations, the real estate market has experienced abrupt globalization initiated by the slow growth of EU markets, particularly Germany. Thus, investments were focused on the US real estate market and experienced through 1995 to mid-2007 an average annual increase in prices of 4 percent over CPI. In the meantime, Greece did not present significant global investment activity, trailing behind its EU peers; however it initiated an expansion path toward the Balkans, supported by the advancements described above. The interesting point here is that
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Panagiotis Tziogkidis Real Estate Analyst
Nikolaos Vlachakis Supervisor of Research Department Real Estate Advisory Services Division EFG Eurobank www.eurobank.gr
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Greek financial and real estate markets had significantly lower risk exposure to the international volatility of real estate markets, in contrast to several European banks which had placed their investments in the US market, considering them safe and profitable placements. The subprime crisis started to be felt in the US after mid-2007 and was experienced in the EU by way of the increase in interest and inflation rates, leading to higher required entry yields for real estate investments and higher asset prices. The crisis has hurt the European market, and especially countries outside EMU which have their currency pegged to the US dollar (e.g. Ukraine), due to its negative rally against the euro. By contrast, EMU countries did not experience the crisis to the same extent, due to the balancing of their macroeconomic figures deterioration with the upswing of the dollar/euro exchange rate (with the exception of countries involved in large overseas investments). The fact that during this period Greece had a continuously growing real estate market (expanding mainly in the Balkans), combined with its macroeconomic stability and the certainty of the euro, made its real estate market a center of interest for international investors. Furthermore, geographically, Greece is at the center of one of the fastest-developing real estate markets — the Eastern Mediterranean — implying rosy future prospects for real estate developments. Greece has survived the challenge of the subprime crisis with minor damage compared to other European countries, namely a small slowdown due to the unfavorable global climate in international markets and a small increase in entry yields. The conservative attitude of investors toward the circumstances has set as a prerequisite that transactions are thoroughly examined and filtered, while deals are structured on the basis of attractive terms over qualitative and secure asset classes. From the viewpoint of foreign investors, they would rather enter the Greek real estate market than those of other European countries, due to the higher yields offered for lower risk, its continuous enhancement of the property and corporate tax systems and the development opportunities available, which offer considerable increments. The future prospects of Greece are very promising as there is still room for development in smaller cities as well as in the capital. Recent activity has been driven by the development of a new office market in southern Athens, the increased demand for qualitative storage spaces, along with third-party logistic services (3PL), as well as to the development of large shopping centers and small retail parks in the suburbs.
Real estate As it eyes growth opportunities in the Balkans, Colliers has announced two new deals in Albania and Montenegro.
Atlas invests in Montenegro olliers has announced that it will be the exclusive agent for the Atlas Capital Center, the biggest mixed-use project in Montenegro. The joint venture in the capital, Podgorica, is owned by the Atlas Group and Capital Investment of the United Arab Emirates, and will feature residential, retail and office units. The total built-up area of the project will be 85,000 square meters in a land area of 13,850 sq.m. It will feature 28,550 sq.m. of office space, 13,750 sq.m. of residential space and 13,900 sq.m. of retail space. There will also be 31,529 sq.m. of garage space, with 1,112 parking spaces. The Atlas Capital Center will be located in the central business district (CBD) of Podgorica, on Cetinjski Road. The area is considered the most prestigious and desirable business and residential area in the capital due to its close proximity to downtown Podgorica and its great accessibility. The center is due to open in 2010. Colliers International Montenegro and Colliers International Greece are undertaking the project.
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CityPark, Albania’s largest shopping center, prepares to debut he retail market in Albania is in the midst of expansion, giving developers, retailers, and shoppers alike a great deal to look forward to. CityPark occupies a central role in this development and will be the largest shopping mall in Albania. AM Group, owner of CityPark, was founded by Artan Mene in 1991 and its brands Deka and Olim are market leaders. Colliers was brought on board by AM Group as real estate consultant, exclusive leasing agent, and property management service provider. CityPark, with an aggregate gross leasable area of 40,000 square meters, provides enough space for over 150 retailers. The main anchors will include a supermarket and an electronics center, while the mall will also feature leisure facilities and a kids’ center. As CityPark is located along the Tirana-Durres national road, a main transportation artery in Albania, and is only 15 kilometers from Tirana, it enjoys excellent visibility and accessibility with ample parking to
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accommodate over 3,000 vehicles. Its catchment area includes Tirana, Durres, and the surrounding suburban communities, with a combined total population of approximately 1.5 million. CityPark is expected to open to the public in early 2010. Colliers International Southeast Europe has been chosen as the exclusive leasing agent for
the biggest shopping center in Albania, CityPark Tirana. Dimitris Voutsas, director of Retail Services for Colliers International Hellas, said, ‘The Albanian market has acquired the institutional and financial standards of a modern economy and we are of the opinion that the first international companies to establish their pres-
ence in the Tirana retail market will have immense benefits.’ Philip Bay, regional director of Colliers International Southeast Europe, added, ‘We are delighted to be working with market leaders AM Group on this fantastic shopping center which will set new standards for excellence in retail in Albania.’
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Real estate Continuing exploitation of Olympic facilities, the utilization of state properties through the public private partnerships or sale-and-leaseback method and developing infrastructure are seen having a large effect on the market.
Upside potential of property market remains strong he Greek economic environment is nowadays very encouraging for the companies active in the real estate market. The reasons for the optimistic environment are many and diverse. First of all, the need for property ownership is strongly rooted in the Greek mentality. Moreover, stability in the political and economic environment constitutes a very serious prerequisite for domestic and foreign investments in the real estate sector. For the last two years, the Greek real estate market has been experiencing a period of stagnation, but we expect the situation to improve in 2008 due to a number of factors. First of all, the implementation of the pending urban planning frame, with all its specific details, especially concerning tourism, will provide more opportunities for quality and environmentally friendly developments. Moreover, the finalization and use of the national cadastre will speed up the processes for land ownership and greatly benefit development in the process. Another important factor affecting the market is the continuing exploitation of the Olympic properties, which has already started and will continue to provide new development opportunities in the future as well. Furthermore, the Greek government’s determination to succeed in the utilization of state properties through public-private partnerships or the saleand-leaseback method is also expected to have positive effects in the market. The government is displaying its willingness to aid land development also through its upcoming tax relief policies and its eagerness to equalize the objective and commercial values of properties. Nonetheless, new infrastructure developments such as the expansion of the Athens metro, the suburban railway and the Attiki Odos highway and the construction of the Thessaloniki metro will strengthen the development potential in many adjacent regions, with a positive effect on price levels as well. Another factor that we believe will be a market driver for the coming years is the new operational framework for real estate investment trust (REIT) investments, which has already started to show its potential. As for the financial aspect of the real estate market, we can say that Greece has much lower levels of mortgage loans compared to other European countries, which leads to the conclusion that the margins are still high. Also, the fact that banks in Greece have been only marginally affected by
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Ioannis Panagiotidis Vice President of PANHOL Developments - Sokratis Panagiotidis SA www.panagiotidis.gr
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the subprime crisis and collateralized debt obligations (CDOs) gives the market credibility and boosts development in all sectors. In terms of supply and demand, there is still inadequate supply for high-quality offices and warehouses. The positive results of Greek banks and other companies in Greece and the Balkans are driving the demand for office spaces upward. Another source of hope for the real estate market is immigrants’ housing needs. Immigrants in Greece now number some 2 million people (mostly Albanians) and those who have been here upward of 10 years or so are now looking to buy homes. At this point, we would like to highlight some figures for the most promising sectors in the Greek real estate market at the present time. Regarding the progress of the commercial sector in our country, we would like to mention the development of several shopping centers, totaling a built area of 600,000 square meters and located all around the country (Athens, Thessaloniki, Ioannina, Larissa, Iraklion). These developments are planned to be delivered within the next two to three years by both local and international players in this sector. We would also like to draw attention to the prediction of a radical increase in the shopping mall/inhabitant ratios in the following years. In the European Union list of countries, Greece is one place above the country with the lowest ratio in the EU, Romania. The figure for Greece currently stands at 38.4 sq.m./1,000 inhabitants, but by 2010 this ratio should increase to 95 sq.m., according to the announced projects and the opinions of many real estate specialists. The fact that many significant players in the global retail market (including Tesco, Aldi, Fnac, H&M, Douglas, Parfois, Leroy Merlin, IKEA, Dixons, Media Markt, Tengelmann and Praktiker) are looking for spaces in big Greek cities, together with the fact that large commercial areas can be pre-leased (97 percent of Golden Hall, a former Olympic property of 40,000 sq.m. built by Lamda Development, has already been leased) constitutes a serious reason for believing in the potential of this specific sector. Last but not least in our argument for the great potential of the commercial real estate market in Greece is the quite attractive return on investment (ROIs) that commercial properties in Greece offer (9 percent pre-taxation for logistic centers and 6-8 percent for offices and leased shops).
Real estate International investors accounted for over 75 percent of investment activity in 2007, a figure which has been increasing steadily over recent years. However, concerns over lease structures, a complicated tax regime and red tape hamper growth.
Foreign investors tune in to local property he year 2007 was a relatively good one for property investment in Greece, with the total volume of transactions reaching approximately 650 million euros. Compared to the majority of other European markets, Greece remains small, although year-onyear rises in investment volumes is indicative of the increasing level of interest that the market is attracting, coupled with the rising amount of available investment grade stock. The retail sector retains its position in the market, accounting for nearly 68.0 percent of transactions, with retail parks and shopping centers proving popular. However, there has been an improvement in the office market, which demonstrated better performance in 2007 than in 2006, now accounting for 23.0 percent, up from 15 percent. The same trend is expected to continue in 2008. Historically speaking, private individuals and domestic institutions have been the main investors in commercial property, although the market has become steadily more international. This is demonstrated by the fact that foreign players accounted for over 75 percent of total investment activity in 2007, a figure that has been increasing steadily over recent years. However, international interest in the Greek market has been somewhat slow as concerns over lease structures (which are viewed as too ‘tenant-friendly’), a complicated tax regime and the bureaucratic planning process have all made the market difficult to maneuver in. This is compounded by the high proportion of owner-occupation across all sectors, which has exacerbated the difficulties in sourcing stock, leaving the direct property market highly competitive, especially as many developers also act as investors. This is changing as the market opens up and foreign developer interest emerges. The overall level of liquidity is low but increasing as the level of interest from foreign buyers and developers increases, although the local funding and development market remains important. The majority of transactions are single-asset ones, often involving private, domestic investors. Institutional interest remains limited, as the larger funds tend to focus more on more sizable portfolio opportunities. Both the office and retail sectors have seen a sharpening of yields since the beginning of 2007, while industrial figures have held firm. The relatively weak leasing markets and lack of stock have however held back the overall investment market. Despite these falls, yields remain high, although recent shopping center and retail park deals show yields to be more in line with the more mature European retail markets. Toward the end of 2007 high-street prime yields saw an outward shift and are now expected to stabilize. This year is expected to be quieter in terms of investment transactions. Activity in the first half of 2008 was lower in relation to the same period of 2007 mainly due to the credit
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crunch, with banks more hesitant to provide financing than in previous years and requiring reduced loan to values and higher margins. Office and industrial yields should hold at their current values over 2008, although secondary values may see an early outward shift. In all sectors price levels for prime properties should prove sustainable while secondary properties and secondary locations are most likely to be affected as it becomes more difficult to obtain financing for the acquisition of secondary products. As the market has become more difficult for investors who are interested only in existing and income-generating stock, we have witnessed an increasing number of joint venture initiatives. Investors are looking at development projects as well as value-added opportunities, especially within the retail and office sectors. While economic growth is expected to ease somewhat in 2008, it is expected to remain robust and outperform the EU in the short term. Athens and Thessaloniki will remain the two key target cities, although more regional locations should also be given some consideration, in particular in the retail sector which has the most growth potential. Welllocated retail parks and shopping centers are expected to continue to trade well with strong demand from both domestic and international brands. The office market is reaching a significant turning point as vacancy rates fall and performance in the near term will be driven by rental growth rather than yield compression. Infrastructure developments including the Athens metro and city ring road will help to spur interest in the industrial market, although sourcing investment stock that is of good quality and adequate lot sizes remains an issue across all sectors.
Nicky Simbouras Managing Director of Cushman & Wakefield Hellas www.cushwake.com
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Themes The Alternative Market represents a multilateral negotiation mechanism and is characterized as ‘non-organized.’ It is targeted at small and medium-sized modern developing companies in search of financing in the secondary market (stock market).
Alternative Market n February 21, 2008, the Athens Exchange’s Alternative Market went into operation. Currently, there are five companies trading on the Alternative Market, and soon they will be joined by one more. The Alternative Market represents a multilateral negotiation mechanism and is characterized as ‘non-organized.’ It is targeted at small and medium-sized modern developing companies in search of financing in the secondary market (stock market). In addition, it is aimed at investors who are looking for alternative forms of potential investment, in order to achieve high output, as well as at companies that intend to prepare themselves for transition to the organized market through the gradual augmentation of the spread and liquidity of their shares. The Alternative Market is designed to constitute a flexible market, which, through different entry criteria and lower costs, will boost small and medium-sized companies searching for alternative capital in order to finance projects and to accomplish their business plans. The Alternative Market is more flexible than the Athens Exchange with regards to the requirements a company has to fulfill in order to subscribe. The companies that subscribe acquire experience in the environment of the Greek capital market, which will enhance their potential transition to the main market. The Alternative Market is under the supervision of the Capital Market Commission, particularly for those issues that concern the market’s transparency, public offerings and the information bulletin. It doesn’t fall under the decrees that obligatorily apply to the organized markets, which impose strict subscription requirements. Companies interested in listing on the Alternative Market have to submit listing documentation via a consultancy agency that advises it during the two-year period. In parallel, the Athens stock market has created a commission which checks the potential subscription requests.
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Epsilon Net Epsilon Net, which is based in Thessaloniki, was the first company to see its shares traded on the Alternative Market. It operates in the informatics sector, developing standardized software solutions for accounting offices and small or medium-sized companies. The company’s sales during 2006 reached 6.26 million euros and profit accounted for 1,096 million euros. Its stable augmentative tendency continued during 2007. Its sales increase is estimated at
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over 20 percent. The company has been included, for the fourth successive year, within the 500 most dynamic European companies (Europe’s Growth Plus Top 500). Epsilon Net shares were listed on the Alternative Market on February 21, 2008.
Mediterra Based on the island of Chios, the company was created in 2002 by the Mastic Producers’ Union in order to develop the Mastihashop network and production of mastic products. It is the distributor of Chios mastic in Greece and operates 10 Mastihashops in the domestic market and two abroad. During its short history, the company has managed to increase the credibility and recognition of mastic and to establish the Mastihashop
brand as one of the most promising Greek business projects. The implementation of the 200811 business plan involves the introduction of 200 new products in order to cover the needs of all the business units (Mastihashop, Mastihatherapy, Cultura Mediterra), with the objective of their distribution to both the local and international markets. In addition, the company intends to increase its production infrastructure and activities, as well as open new shops. Mediterra shares were listed on the Alternative Market on February 28, 2008.
Envitec Envitec specializes in the research, construction and management of environmental protection
projects (civic waste, biological cleaning) as well as in the renewable energy sources sector (wind, solar and biomass). The company offers knowledge and experience and carries out projects concerning energy production for the public and private sectors. Envitec shares were listed on the Alternative Market on March 3, 2008.
Dopler Dopler designs, produces, installs and repairs elevators. In addition, the company develops different mechanical accessories and constructions. The import, export and marketing of these products and services as well as its agency abroad, are included in the company’s business plans.
Dopler shares were listed on the Alternative Market on May 7, 2008.
Euroxx Euroxx offers investing services to institutional and private investors who operate in the Greek and international capital markets. It offers a great range of investment products and services. The company is a member of the Athens Exchange, the Cyprus Stock Exchange and Eurex Frankfurt. Euroxx shares were listed on the Alternative Market on May 12, 2008. The next company to trade on the Alternative Market is Entersoft.
John Dionatos
Companies
Annual Results Piraeus Group According to Michalis Sallas, chairman of the Piraeus Group’s Board of Directors: ‘The Piraeus Group continued its dynamic course in Q1 2008 as well, despite the volatile international environment. The growth rate of deposits accelerated to 39 percent, of loans remained 48 percent and of profitability reached 46 percent*. At the end of March 2008, the Group’s total assets reached 48.5 billion euros, the branch network exceeded 780 units, while net profit amounted to 138.5 million euros. Interest income and commissions, comprising 80 percent of total net revenues and constituting a dynamic source of recurring profitability, were enhanced significantly. These developments are aligned with the Group’s business plan targets through to 2010, which remain intact.’ Key performance highlights of the first quarter of 2008 ■ Increase of Group net profit after tax and minorities by 46 percent up to 138.5 million euros versus 94.9 million euros(*) in Q1 2007 (248.2 million euros, including the one-off trading gain). ■ Profit before tax excluding trading gains reached 153.0 million euros compared to 103.2 million euros, increased by 48 percent. ■ Significant enhancement of profitability, +24 percent from Greece and +217 percent from international operations. ■ Retention of net interest margin (NIM) on average interest earning assets at 3 percent. ■ Increase of net interest income by 38 percent and net commission income by 18 percent y-o-y. ■ Improvement of cost-to-income ratio to 47 percent compared to 52 percent(*) in Q1 2007. ■ Acceleration of deposits growth rate to 39 percent y-o-y, while loan growth remained at 48 percent. The quarterly incremental change of deposits in absolute figures exceeded the respective loan increase (+3.3 billion euros deposits, +3.0 billion euros loans). ■ Further improvement of loans-to-deposits ratio to 122 percent at the end of March 2008, compared to 127 percent in December and 130 percent in September 2007. Excluding securitized loans, which are funded by respective bonds issues, the ratio evolved to 117 percent compared to 121 percent at the end of 2007. ■ Improvement of loan portfolio quality, with the relative ratio of loans in arrears more than 90 days over total loans at 3.3 percent in March 2008 against 3.4 percent in December 2007. ■ Retention of high capital adequacy ratio at 10.8 percent (e) with Core Tier I at 8.8 percent (e), according to the new supervisory framework of Basel II. ■ Significant expansion of international activities volumes: loan portfolio up by 106 percent and deposits accelerated as well, up by 71 percent y-o-y.
■ Expansion of the branch network from 545
units in March 2007 to 782 at end-March 08 (+43 percent), out of which 322 units are in Greece and 460 abroad. In Q1 2008 alone, 38 new branches were established. ■ The Group’s human resources reached 13,115 (+34 percent), growing by 3,312 new employees from March 2007, 834 in Greece and 2,478 abroad. (*) Net profit in Q1 2007 excluding the one-off trading gain from the disposal of the Bank of Cyprus stake.
Piraeus Group balance sheet At the end of March 2008, the Group’s total assets reached 48,547 million euros against 34,486 million euros in March 2007, increased by 41 percent. Deposits & retail bonds issued to customers through the branch network reached 27,231 million euros, posting a rise of 39 percent y-o-y, with further acceleration compared to the annual growth rate recorded in December 2007 (33 percent). Savings and sight deposits had an annual increase of 13 percent, while time deposits, repos and retail bonds issued grew by 56 percent. On a quarterly basis, incremental deposits in Q1 2008 exceeded the incremental loans for the first time: +3.3 billion euros deposits against +3.0 billion euros loans respectively. It is worth noting that the Group’s deposits in Greece posted an increase of 34 percent on an annual basis (*), compared to 31 percent in December 2007. The Piraeus Group has emphasized acquiring customer deposits in Greece during recent years by targeted new branch openings (+20 in the last year, over 110 in the last five years), launching of new products, as well as marketing activities, which all resulted in a significantly accelerating deposits growth rate. At the same time, the Group’s effort for acquiring deposits intensifies also in its international operations by new products promotion, expansion of the branch network and vitalization of the Group’s operations in Cyprus that commenced in 2008, already contributing by 361 million euros to the Group’s deposits. Securities issued by the Bank (through ECP, EMTN, residential mortgage backed securities and hybrid bonds) to institutional investors reached 7,578 million euros at the end of March 2008 from 6,487 million euros a year ago, up by 17 percent. It is worth mentioning that at the end of March 2008 the amount raised through the ECP program increased to 3.3 billion euros from 2.9 million euros in December 2007, reflecting the Bank’s seamless access and the acceptance of its brand name to this specific market, in spite of the international market turmoil. Loan portfolio kept the same annual growth (+48 percent y-o-y) for second consecutive quarter, reaching a balance of 33,736 million euros at the end of March 2008. It is noted that the Group’s loans in Greece in March 2008 advanced
by 37 percent y-o-y, just like December 2007 (*). The growth rate of mortgage lending was set at 28 percent y-o-y, with balances up to 6,076 million euros in March 2008 against 4,742 million euros a year ago. Consumer loan portfolio rose by 50 percent y-o-y, reaching 4,659 million euros at the end of March 2008 versus 3,116 million euros a year ago. Loans to individuals’ contribution represented a 32 percent of the total loan portfolio at the end of March 2008. * Estimate for growth rate of the Greek banking market in March 2008 +21 percent for loans, +11 percent for deposits. Loans to small and medium-sized enterprises in Greece and abroad grew by 55 percent, amounting to 15,566 million euros at the end of March 2008, compared to 10,056 million euros a year ago. Hence, as a result of the special importance given in this market, this particular segment represents the main loan category accounting for 46 percent of the Group’s total loan portfolio. Loans to large corporates, including shipping and project finance, represented 22 percent of the total loan portfolio and amounted to 7,436 million euros at the end of March 2008 versus 4,910 million euros a year ago, up by 51 percent, reinforcing the Group’s presence in these business segments as well. With regards to loan portfolio quality, the Group’s non-performing loans (NPLs) ratio was recorded at 2.0 percent at the end of March 2008 compared to 2.1 percent in December 2007. The coverage ratio of non-performing loans by cumulative provisions stood at 69 percent, while the ratio exceeds significantly 100 percent when collaterals are taken into account. The ratio of loans in arrears more than 90 days over total loans stood at 3.3 percent in March 2008 against 3.4 percent in December 2007, also revealing a trend of improvement. The Group’s target is to further improve this ratio below 2.5 percent by 2010. The loans-to-customer-deposits ratio at the end of March 2008 improved substantially by 5 percentage points setting at 122 percent from 127 percent at the end of 2007, due to the significant increase of deposits also during the first quarter of 2008. Excluding securitized loans, which are funded by respective bonds issues, the ratio evolves to 117 percent (121 percent in December 2007). It is also pointed out that the Piraeus Group continues to possess high liquidity level of the level of 2 billion euros. Total equity of the Group at the end of March 2008 amounted to 3,314 million euros versus 3,310 million euros at the end of December 2007. Shareholders’ funds rose respectively to 3,084 million euros, up by 82 percent against March 2007, due to the share capital increase in September 2007. Capital adequacy ratio was 10.8 percent (e) with Core Tier I at 8.8 percent (e), according to the new supervisory framework of Basel II.
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Companies
Emporiki Bank ‘Emporiki is accelerating its market turnaround according to the strategic priorities of 2008, in spite of the adverse conditions prevailing in the financial markets, which had a negative impact on the first-quarter results of the Bank. We fully maintain our focus on achieving the goals set for the current year, which are the unimpeded implementation of the Transformation Program, the completion of Emporiki’s turnaround in the local market and the acceleration of our further business growth in the Balkans.’ said Mr Anthony Crontiras, vice president of the BoD and CEO of Emporiki Bank. Smooth and rapid implementation of the Transformation Program continues including the reorganisation of the retail banking network with a new organizational structure in force as of March 3, 2008. Emporiki launched its new type of retail branches: 23 branches commenced pilot operation, based on a new model with clear sales staff roles tailored to the needs of each different market and customer segment. The new model will gradually expand throughout the country; by the end of 2009 the entire network will have been renewed. At the end of May 2008 the Bank’s net-
work for the exclusive service of small and medium-sized enterprises (SMEs) will be fully developed, with the launch of six more business centers in Athens (Athinon Avenue), Koropi, Thessaloniki (outer ring road), Argos, Rhodes and Volos. In total, the network will consist of 21 business centers. With the launch of centralized units for housing loans, pledged checks and payrolls (already in pilot operation) as well as the gradual automation of accounting processes, the retail branches will eventually be relieved of back office and administrative tasks and will become fully dedicated to customer service. The Bank’s growth momentum is being strengthened as a result of the rapid transformation progress. The credit expansion rate has been accelerated: The overall loan portfolio of the Bank increased by 6.8 percent in the first quarter, equivalent to an annualized growth rate of 27 percent, versus growth of 13.7 percent for the fiscal year 2007. The new business center network keeps delivering positive results: Loans to SMEs and professionals increased by ¤273 million euros in Q1. Corporate and investment banking also benefited from the Bank’s transformation, with the large corporate customers loan
portfolio growing impressively by 17.9 percent in Q1. Development of the Group’s international activities continues. During the first quarter the total loan portfolio in the three Balkan countries (Albania, Bulgaria, Romania) and Cyprus increased by 7.1 percent, while total deposits increased by 4.5 percent. Emphasis has been placed on the Romanian market, where 20 new branches will commence operation in the coming months and the loan portfolio is expected to double upon disbursement of the new loans already approved. Adverse market conditions had a negative impact on Q1 results. Portfolio losses of 24 million euros, the majority of which reflect unrealized losses due to mark-tomarket revaluations related to the adverse developments in the bond markets. Interest margins have been under pressure, mainly due to the intensified competition for deposits. Effective risk management is maintained and operating expenses remain well controlled. Regular provisions reduced by 15.2 percent versus Q1 2007. Operating expenses remain practically unchanged vs Q1 2007, despite the expansion of the network related to the dedicated coverage of SMEs through the business centers.
Q1 08 performance highlights:
Hellenic Petroleum First-quarter results are up for Hellenic Petroleum (HELPE) as the weak refining environment is compensated by the impact of crude oil price increases, improved performance on the remaining portfolio (non-refining) of the Group and one-off items. Net Income was up 77 percent to 97 million euros (earnings per share, or EPS, 0.32 euros), while earnings before interest, tax, depreciation and amortization (EBITDA) increased 39 percent to 141 million euros. Reported results were influenced by the record-breaking crude oil price increases and euro/dollar exchange rate levels; adjusting for these and other one-off items, comparable EBITDA is at similar to last year’s levels. Commenting on the results, HELPE CEO John Costopoulos mentioned: ‘This last quarter has been a challenging one, with rapidly rising crude oil prices reaching all-time highs, a continuous weakening of the US dollar, low gasoline and fuel oil cracks and unprecedented volatility. The impact on refineries has been severe, with euro-denominated benchmark
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a) Refining, supply & trading ■ Refining, supply & trading Q1 08 reported EBITDA were up 34 per-
cent to 99 million euros. ■ Crude oil prices continued to rise during the quarter, moving 67 per-
cent year-on-year with a positive inventory effect. Q1 08 average benchmark cracking margins were down 29 percent year-on-year, while simpler refinery margins declined even more. The euro strengthened considerably against the US$, with an adverse translation effect on refining margins. ■ Total sales volume in Greece reached 4.2 million tons, in line with last year, with increases in premium automotive fuels and bunker fuels, but lower heating gasoil sales due to warmer weather. ■ The OKTA refinery reported increased volumes (293 kMT) and EBITDA of 35 million euros, which includes a 26-million-euro gain. This is a result of a settlement with the Former Yugoslav Republic of Macedonia (FYROM) in relation to the long-outstanding issues in OKTA’s initial share purchase agreement. b) Retail marketing ■ Q1 08 EBITDA grew 42 percent year-on-year to 17 million euros, accounting for 12 percent of Group EBITDA. ■ EKO continued the rationalization of its network and the strengthen-
Companies EFG Eurobank The EFG Eurobank Group sustained strong financial performance in Greece and New Europe and continued its rapid organic growth based on solid foundations in the first quarter of 2008. Total assets reached 72.2 billion euros, Regulatory capital stood at 5.4 billion euros and the network of branches, points of sale and business centers exceeded 1,570 units at the end of the first quarter of the current year. The adverse conditions that prevailed in the capital and money markets in the first three months of 2008 and the increased cost of funding partly affected the profitability of the Group. However, the robust organic business expansion in Greece and New Europe led recurring profit before tax to grow by 24.2 percent to 234 million euros. Group net profit increased by 5.7 percent to 215.3 million euros in the first quarter of 2008. Results outside of Greece were particularly strong, as New Europe net income climbed to 36 million euros, from 7 million in the respective quarter of 2007. The continued brisk credit demand in Greece and New Europe led Group total loans 34.2 percent up to 50.1 billion euros at the end of March 2008. Loan balances in Greece grew by 20.8 percent and reached 39.2 billion euros, while the loan portfolio in New Europe more than doubled and escalated to 10.9 billion euros, from 4.9 billion in the first quarter of 2007. Net loan additions in New Europe equaled additions in Greece and amounted to 1.7 billion euros in the first quarter of the current year. It is pointed that 48 percent of net loan additions outside of Greece come from Poland and Cyprus. Group corporate lending enjoyed buoyant growth, supported by the strengthening of EFG Eurobank ties with the corporate clients in Greece and New Europe. Business lending expanded by 35.2 percent and reached 26.7 billion euros, with loans to large and medium-size corporates rising by 34.6 percent to 18.6 billion euros and loans to small businesses advancing by 36.5 percent to 8.1 billion. Robust growth rates were also recorded in Group household lending. Loans to households advanced by 33.1 percent and amounted to 23.4 billion euros at a group level, with consumer
ing of its brand image and marketing position. Our domestic marketing subsidiary managed to gain market share in premium products (gasolines and auto diesel). Total sales volume was up 7 percent yearon-year and EBITDA increased by 43 percent to 8 million euros. ■ International Marketing posted an EBITDA of 9 million euros, up 41 percent, as network expansion continues and margins in key markets improve. Total sales volume was up 32 percent year-on-year. c) Petrochemicals ■ Polypropylene retained last year’s strength, while the prolonged work stoppages at Greece’s main ports did not significantly disrupt our exports supply chain. EBITDA came in at 13 million euros, down 9 percent. d) Power generation, trading & gas ■ Within a positive environment of increased power demand, our subsidiary T-Power increased utilization benefiting from higher load factors and spark spreads. Revenue was up 49 percent and Q1 08 EBITDA was up 80 percent year-on-year to 18 million euros. ■ Our discussions with Edison for the formation of a joint venture to expend our power generation business are close to completion. ■ Income from associates (DEPA natural gas business) grew by 80 percent to 18 million euros as the company benefited from increased sales of gas for power generation as well as industrial, commercial and domestic use.
■ Group net profit has risen by 5.7 percent to 215 million euros. ■ Recurring profit before tax has increased by 24.2 percent to 234 million euros. ■ New Europe net income has multiplied by five times to 36 million euros, with first-time positive contribution from Poland. ■ The robust increase in Group deposits by 31 percent and 25 percent in Greece has led to further market share gains. ■ The strong expansion of Group loans by 34 percent. ■ Credit quality remains resilient — NPLs at 2.45 percent of total loans. ■ The cost to income ratio in Greece stands at very low levels (40.2 percent) — New Europe has seen a substantial improvement to 66.2 percent. ■ Strong capital position — 11.3 percent risk asset ratio. credit increasing by 29.2 percent to 11.1 billion euros and mortgages rising by 36.8 percent to 12.3 billion. The increase in the client base and the establishment of new branches in Greece and New Europe pushed Group customer deposits 31 percent up to 39.1 billion euros in the first quarter of the current year. Outstanding balances rose by 24.9 percent in Greece and by 75.9 percent in New Europe. It is pointed that the difference between new loans and new deposits at a Group level was only 250 million euros in the last six months; a fact which verifies EFG Eurobank’s ability to rely on own sources in order to fund its business expansion. The loans to deposits ratio over the same period fell to 125.5 percent, from 130.1 percent. In addition, it is worth noting that the EFG Eurobank Group has established contingent liquidity that exceeds 3.5 billion euros. Within a volatile and unfavorable environment for asset management, private banking funds under management (FUM) rose by 5 percent to 7.8 billion euros on the back of the Group’s long-term expertise in this field. In addition, life insurance FUM posted a significant increase of 21.3 percent and stood at 1.2 billion euros. Overall, Group customer FUM expanded by 13.5 percent and amounted to 52.9 billion euros, with New Europe FUM growing by 55.5 percent to 7.8 billion euros, from 5 billion last year.
refining margins reaching some of the lowest levels seen in recent years. ‘However, given the diversity of our portfolio, it is important to highlight that our results benefited from the improved performance of our non-refining businesses, with international marketing companies, power generation and our investment in the Public Gas Corporation of Greece (DEPA) all reporting increased results. Our chemicals business also managed to maintain close to recordhigh results. These, as well as foreign exchange gains on our US$-denominated loans and a one-off item, lead to a 77 percent increase in our net income and EPS. ‘Looking ahead and given the continuation of volatile market conditions, it is difficult to project the full-year outlook. We remain however committed to accelerating our operational efficiency improvements, progressing with the refinery upgrades in Elefsina and Thessaloniki, and continuing to build our presence in international markets and in power, in line with our strategy for profitable growth.’
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Companies Hygeia First-quarter 2008 operating results of the Hygeia SA Diagnostic and Therapeutic Center of Athens are characterized by significant growth. The improvement of financial fundamentals is illustrated in all company and group accounts. Consolidated revenues reached 66.2 million euros, increasing by 138.1 percent, versus 27.8 million euros in the same period last year. Parent revenues increased by 18.6 percent y-o-y, reaching 33.2 million euros, versus 28 million euros in the same period last year. Consolidated EBITDA increased by 109.8 percent y-o-y to 15.8 million euros. The consolidated EBITDA margin stood at 23.9 percent. Parent company EBITDA reached 7.9 million euros, increasing by 6.4 percent y-oy, while the EBITDA margin reached 23.7 percent. Consolidated earnings before taxes (EBT) increased by 31.9 percent to 8.4 million euros, although Q1 2008 results were burden by inter-
Commenting on the results of the first quarter, the vice chairman of Hygeia’s Board of Directors, Mr Andreas Vgenopoulos, made the following statement:
est expenses of circa 5 million euros ‘I am particularly satisfied as the strategic choice of Marfin that occurred from the 300 million Investment Group (MIG) for significant investments in the euros convertible bond loan (CBL). health sector is bearing fruit. With the conclusion of the acquiRecall that Q1 2007 results were sitions of Safak Group in Turkey and Evangelismos in Paphos, inflated from circa 1.1 million euros Cyprus, the Hygeia Group will control in total nine hospitals in as a result of the consolidation of the Greece, Turkey and Cyprus, with 1,547 total beds capacity in Mitera-Leto Group 24.8 percent stake its effort to accomplish its strategic target to develop the through the equity method, inflating largest private sector provider of integrated healthcare services the comparison base. in Southeastern Europe. I believe that the accomplishment of Group net income increased by our initial plan that is implemented by the Board of Directors 1.4 percent y-o-y to 5.7 million euros. and Management of Hygeia will increase the value for the comThe parent company’s earnings after pany’s shareholders.’ tax (EAT) exceeded 1.6 million euros, versus EAT of 6.02 million euros in the same period last year, mainly due to the burden of Q1 2008 results with million euros from its 24.8 percent stake in the interest expenses of circa 5 million euros that Mitera-Leto Group. Note that the dividend of occurred from the 300-million-euro convertible circa 11.4 million euros from Mitera-Leto Group bond loan (CBL). Moreover, in Q1 2007 results, for the fiscal year 2007 will be booked in Hygeia booked fiscal year 2006’s dividend of 1.6 Hygeia’s H1 2008 income statement.
Proton Bank
FRIGOGLASS Frigoglass, the world’s leading manufacturer and solutions provider of ice-cold merchandisers (ICMs), with operations in 18 countries across four continents, has announced its first-quarter 2008 results (IFRS). Frigoglass reports continued growth and fully consolidates SFA. First quarter reported sales rose 21.2 percent to 162.3 million euros while net profit reached 20.8 million euros, up 11 percent. The managing director of Frigoglass, Mr Petros Diamantides, said ‘Following the exciting start-up of our greenfield development in China last year, we are delighted to have further expanded our global footprint in the first quarter of this year through our acquisition of SFA3 of Turkey, in line with our long-term growth strategy. ‘In terms of our existing regions, we are pleased with the continued growth in Cool Operations and Glass in Nigeria, particularly set against challenging trading conditions and the strong comparable period last year. Astute pre-buying of raw material requirements enabled us to cushion the effects of rising commodity and energy costs and allowed us to achieve a 8.7 percent increase in net profit, despite further investment in our sales capability in Cool and an increase in financing costs. ‘This solid start ensures that we remain confident in our ability to achieve our previously stated guidance for the full year, on an underlying basis, despite the continued raw material cost pressures and the uncertain global economic backdrop. This confidence is driven by our widening portfolio of geographies and diversification of our customer base.’
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Interest income for the period January-March 2008 grew by 45 percent. Given the negative financial markets conjecture, this growth in interest income did not boost the net interest income result, which remained broadly stable for the period (-1.8 percent). Net commission income increased by 61.63 percent, with all commission categories contributing to this growth, especially commercial banking (+93 percent). Operating expenses on a consolidated basis decreased by 2 percent. The decline in the results for the period is largely attributable to the result of the trading portfolio, which declined to 1.3 million euros, as compared to 10.7 million euros in Q1 2007. Consequently, consolidated net profit before tax amounted to 7.1 million euros, corresponding to a y-o-y decrease of 43.5 percent, while the respective after-tax figure for the first quarter reached 5.04 million euros, decreasing by 55.6 percent on an annual basis. The figures at a glance 1. Consolidated net revenues reached 21.4 million euros (Q1 07: 27.5 million euros), whereas at a Bank level the respective figure amounted to 21.0 million euros (Q1 07: 26.8 million euros). 2. Consolidated interest income amounted to 31.9 million euros (Q1 07: 22 million euros), while net interest income reached 10 million euros (Q1 07: 10.2 million euros). At a Bank level interest income amounted to 32 million euros (Q1 07: 22 million euros), whereas net interest income reached 9.9 million euros (Q1 07: 10 million euros). 3. Consolidated net fee and commission income amounted to 9.6 million euros (Q1 07: 5.9 million euros), while the respective non-consolidated figure amounted to 9.6 million euros (Q1 07: 5.8 million euros). 4. Consolidated operating expenses reached 13.7 million euros (Q1 07: 14.9 million euros). At a Bank level, operating expenses amounted to 13.2 million euros (Q1 07: 14.3 million euros). 5. Loans to customers reached 1.3 billion euros while total assets amounted to 2.3 billion euros. Deposits from customers amounted to 1.4 bilion euros. 6. Consolidated profit before tax amounted to 7.1 million euros (Q1 07: 12.6 million euros), while consolidated profit after tax reached 5 million euros (Q1 07: 11.3 million euros). 7. Profit before tax for the Bank amounted to 7.8 million euros (Q1 07: 12.5 million euros), while profit after tax reached 5.7 million euros (Q1 07: 10.8 million euros). The Bank continues to expand its operations, strengthening its market share in all core activities, with an emphasis on increasing recurring income, expansion of the branch network and the restructuring of its loan portfolio.
Companies Jumbo Jumbo Group, the biggest retail company of toys, baby products, stationary products and other related products in Greece, has announced its nine-month results for the period 01/07/200731/03/2008: Sales growth reached 14.22 percent y-o-y from 17.39 percent yo-y in the six-month period of the current financial year. The reason for the slowdown of the sales growth is that the third quarter doesn't include sales from the Greek Orthodox Easter period at the end of April this year. The management has already announced that for the period including Easter (10 months), sales grew by 18.32 percent y-o-y. For the nine months, gross margin reached 52.64 percent from 51.14 percent in the nine-month period of 2006/2007. At the end of the current financial year a deterioration of the gross margin is expected but it will be still slightly improved against the six-month level. The Group's net profits reached 58.7 million euros, improved by 18.04 percent y-o-y. Nine-month results were negatively affected by the continuing disruption at Greek ports. As a consequence, general expenses such as advertising, internal transport costs, overtime etc were increased. Cyprus was particularly affected by the interruption in the supply of the Jumbo stores on the island. As a result, the third-
quarter results were mainly supported by stores in Greece and in Bulgaria. For the end of the current financial year, an improvement of expenses as a percentage of sales is expected from the nine months levels, if the situation settles. Sales performance for the 10-month period led the management to positively revise the guidance for the current financial year of 15 percent growth of sales and profit at the six-month levels. Specifically, the company's management estimates that for the full financial year the Group's sales growth will reach the six-month growth of 17.39 percent or will be improved. Regarding net profit, the management estimates that the six-month growth rate of 21.42 percent is feasible with a probability to exceed it if there is a last-minute positive development regarding the situation at Greek ports and road transport with the continuing strikes. The Group currently operates 41 stores in Greece, Cyprus and Bulgaria while the investment program is accelerated for the operation of new stores. In the first half of the coming financial year (July 2008 June 2009) the company is expected to open three new hyperstores in Greece
Mytilineos Mytilineos’s consolidated turnover for Q1 2008 stood at 227.4 million euros, from 225.4 million euros for the same quarter in 2007. This increase in sales is particularly significant considering that it was achieved in the midst of the negative movement of the US dollar against the euro, a development which had a negative impact of 27 million euros on Group turnover. The above, combined with the consistently high level of oil prices to an all-time record high of over US$125 per barrel, and coupled with the fact that the capital gains from the agreement with Endesa Hellas have not been incorporated into the results for the first quarter (the significant contribution of the energy sector is expected to be reflected in the results for the quarters to follow), drove net profit after tax to 6.9 million euros against 32.3 million euros for the same quarter in 2007, while net profit after tax and minorities stood at 4.3 million euros against 30.2 million euros for the same quarter in 2007 which also included around 10 million euros of extraordinary income for the Group. Finally, earnings before tax, interest, depreciation and amortization (EBITDA) stood at 25.7 million euros, down from 41 million euros for the same period in 2007, a decrease attributed to the negative impact on the Group of the movement of the US dollar against the euro (13 million euros) and to the high oil prices during the period reported (11 million euros). The Group’s total assets for the period reported amount to 1.64 billion euros. On March 31 2008, the Group’s equity stood at 706 million euros, whereas if the mark-to-market value of
the subsidiaries capitalization is taken into account, then the Group’s adjusted equity is close to 940 million euros. Finally, the Group’s net debt (loan liabilities less cash on hand and equivalent items) is maintained at the low level of 246 million euros. The significant progress and successful strategic planning of METKA continues to be reflected in the Company’s results for Q1 2008, confirming its establishment as one of the major players in the sector of EPC projects abroad. The Company’s turnover for Q1 2008 reached 87.9 million euros, up by 28.8 percent from 68.2 million euros for the same period in 2007, with earnings before interest, tax, depreciation and amortization (EBITDA) standing at 16.5 million euros, up from 14.1 million euros for the same quarter in 2007. The EBITDA margin remains very high (18.8 percent), both as an absolute value and in comparison with international competition. Finally, net profit after tax and minority rights stood at 10 million euros versus 9 million euros for Q1 2007. Having established itself as the principal specialist contractor for energy projects in Greece, METKA is now expanding dynamically to competitive markets abroad, with a new agreement concluded with Romania’s Petrom for construction of a 860-megawatt energy center in the country. METKA’s signed backlog today stands at 775 million euros, and is expected to grow further during 2008. The company's successful progress is expected to be reflected in its results for 2008 as well as for the coming years. In the energy sector, Endesa Hellas now
holds a prominent position as one of the key players driving market trends and developments (market liberalization). The progress made by the new company so far proves that it satisfies all requirements that will allow it to evolve into the largest independent energy producer in Greece and will spearhead its expansion in the wider region of Southeastern Europe through a broad power-generation base utilizing thermal and renewable energy sources. The recently launched integration into the system of the Cogeneration plant (COGEN) and the rapid development of the two gas-driven combined cycle power plants in Volos and Aghios Nikolaos will enable Endesa Hellas to supply the Greek market with more than 1,300 MW of electrical power by the year 2010, thus making a significant contribution toward a solution to the serious social issue of deficits in the power supply system, while at the same time helping reduce power imports that are expensive for Greece. According to Endesa’s business plan for 2008-2012, recently announced at the Madrid Stock Exchange, Endesa Hellas is expected to invest in Greece a total of 2.8 billion euros solely in thermal power plants (excluding investments in renewable energy sources). The implementation of this plan is expected to act as a catalyst for the substantial liberalization of the Greek energy market, and to improve further the revenue and profitability structure of the Group. The results for the first quarter of 2008 were to be presented in further detail in a conference call with market analysts and institutional investors on May 21, 2008.
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Themes Sotheby’s International Realty and Regency Real Estate will team up in a deal that will help increase the exposure of the local property market to foreign buyers.
Sotheby’s enters Greek market
egency Real Estate has announced that its residential real estate services division will henceforth trade as Greece Sotheby’s International Realty following its negotiation of exclusive rights to become the Sotheby’s International Realty affiliate throughout Greece. Regency Real Estate is a subsidiary of First Mediterranean Investments (FMI), a holding company with commercial interests in Southeastern Europe spanning real estate, hospitality and energy. The new company hopes to bring the Greek real estate market a combination of intimate local knowledge and expertise with a renowned global sales and marketing network capable of connecting sellers of high-end residential real estate with an international community of potential buyers. The Athens-based
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team of real estate professionals is led by Constantinos Kaliakatsos, chief executive officer of Greece Sotheby’s International Realty, and Aggeliki Liakos is the firm’s chief operating officer. George Koukouzelis is chief executive officer of FMI. Founded in 1976, the Sotheby’s International Realty network has more than 9,000 sales associates located in more than 470 offices in the US and 29 other countries and territories. Michael R. Good, president and chief executive officer of Sotheby’s International Realty Affiliates LLC, said: ‘Greece has always been an important target market for us. Through its rich cultural and historic value, great climate and a unique geography on the threshold of Europe, North Africa and West Asia, Greece offers great investment opportunities for buy-
ers across the world. We are delighted that FMI, which has had commercial interests in this region for over 30 years, has joined our network of affiliates.’ According to George Koukouzelis, CEO of FMI: ‘The Greek market has been supported by very limited international quality real estate services that properly address the needs of clients who are seeking buyers of the finest real estate available either for owner-occupancy or secure investment. ‘The Sotheby’s International Realty brand will provide Greece’s upper residential market sector with undisputed prestige, market presence and service excellence. We commence our work with a wide range of mainland and island properties for sale and will be actively marketing these to both local and overseas buyers.’