8G Capital Partners has eyes on Athens

Tassos Kotzanastassis, managing director at Cyprus-based private equity real estate firm 8G Capital Partners Ltd., will be speaking on “Island Markets” during the The Mediterranean Resort & Hotel Real Estate Forum, running October 29-31 at the Hilton Athens. 

The session at MR&H, which is presented by Questex, parent company of Hotel Management, will look at investing in islands where infrastructure, incentive schemes and land availability offer interesting opportunities, such as in Baleares, Cyprus, Malta, Crete, Rhodes, Hvar and Sicily. 

Kotzanastassis has nearly a quarter-century of experience in property investment, and through offices in London, Nicosia and Hong Kong, 8GCP has activities in property, renewable energy and property technology.

Ahead of the forum, Kotzanastassis shared his insights on sustainable investment and why Athens is the darling of property investment markets…for now.

With most European markets approaching saturation point, are investors venturing into riskier markets like Greece?

I think yes. This is one of the main reasons we see increased interest in the Greek market. Core European markets are viewed as fully valued and one of the main concerns of investors is the lack of attractive opportunities. As a result, investors employ strategies such as investing in ‘alternatives’ and, to a lesser extent, moving up on the risk curve. 

Hospitality assets in Greece tick a number of boxes. The ‘beds’ sectors in general are considered as particularly attractive from a risk/return perspective. Hospitality in Greece is an export sector and demand is uncorrelated with the local economic malaise. Investments so far have been focused on existing assets: acquisition or recapitalization through non-performing loans and redevelopment of existing assets. The new government has pledged to cut down on red tape to attract foreign investment. The Hellenikon Project (former Athens international airport), which itself has a substantial hospitality and leisure component will, in my view, provide a harbinger for further development projects.

You chaired the “International Real Estate Trends and the Greek Perspective” panel at the Delphi Economic Forum 2019. Can you share some insights, specifically on sustainable and socially responsible growth policies for tourism? 

Sustainability has tremendous ramifications on obsolescence and future investment value. In other words, when assets are brought to the market at the end of their hold period, which may typically be between three to seven years depending on the investment strategy, the value gap between sustainable and non-sustainable assets may be enormous. But sustainability is not just about regulations and government policies. 

Related: Atrium Hotels on growth track in Greek Islands

It’s something that is increasingly demanded by occupiers themselves and this trend is particularly evident in the hospitality sector. The value handicap may therefor become apparent well before exit. In essence, one should be very careful when [underwriting] existing, particularly older, assets. Another very important insight is the way that property is now viewed, not as space but as a service. In this regard we have a lot to learn from the hospitality sector.

What is happening to the hotel industry in Athens? The city center seems to be attracting new investors.

Indeed, it’s been the darling of property investors, private and institutional, local and foreign alike. Athens has, at long last, emerged as a destination in its own right. The property market has suffered from years of underinvestment. The crisis has caused prices to drop sufficiently to spark investor interest.  We’ve had existing hotels such as the former Ledra Marriott being acquired, refurbished and rebranded. More importantly, we have had a raft of office buildings, ranging from the former ministry of education, banking headquarters and other smaller properties, being acquired or leased and then converted into hotels, many of the boutique kind. Numerous hotel chains have scrambled to put their flag on the map and unwavering interest was observed in the first half of the year. However, there are some signs of concern, such as a slight reduction in RevPAR, possibly caused by oversupply. We believe the window of opportunity in Athens hotels may be narrowing. We remain bullish on hospitality though through other, more-innovative strategies.

During the recent Red Business Forum you participated in a panel discussion: “Data Driven Credit & Asset Management.” Can you share some of the key themes?

Technology is playing an increasing role in property today. There are several so-called ‘verticals’ that are redefining the way we develop, invest, occupy and manage properties. One of the themes was big data and machine learning--how they enable us to organize data more efficiently, devise automated valuation models and market properties in smarter ways. While we’re on the subject, this is of prime importance to us. Though 8Gi, our dedicated PropTech subsidiary, we’ve been investing substantially in that field and we’ll soon be making some announcements.

What is your secret spot for a holiday in Greece?

Being contra-cyclical by nature, it’s not Mykonos. Greece is so varied that I always try to explore new places. But the Sporades and the lesser-known Cyclades count among my favorites.

What are you most looking forward to at MR&H 2019?

Catching up with friends and contacts in the hospitality industry, learning about the new trends in the sector, discussing our recent developments in Greece and Cyprus and hopefully making some announcements on certain initiatives we are working on.

Kotzanastassis will be speaking on “Island Markets” on October 30 at 2:20 p.m. during the upcoming MR&H Forum. Click here for more information and to register for this Questex event.