By Dennis Lidis
Lidis Property Partners Founder, CEO & CIO
As we enter a new phase in the real estate cycle, Lidis Property Partners (LPP) is positioned to take advantage of emerging trends that are reshaping the market.
By leveraging innovations and structural shifts, we continue to deliver enhanced value and superior returns for our investors.
Image: Lidis® Property Partners Serviced Apartments Brown to Green project situated in Zografou Athens.
Unprecedented Growth in Real Estate Markets
Global real estate markets are witnessing a convergence of trends driving demand and reshaping investment opportunities. In Athens, a key market for LPP, according to the Bank of Greece, property prices in Athens rose by 8.3% in 2022, with rental demand outpacing supply.
This trend is expected to continue with an annual average increase of around 5-6% through 2025, driven by strong demand from digital nomads and local economic recovery.
In comparison, cities like Berlin saw rental price growth of 3.6% during the same period, underscoring Athens’ superior growth potential.
Supply-Demand Imbalance: In Athens, housing supply has lagged behind demand, with an estimated 20% shortfall in the number of available rental properties compared to pre-pandemic levels. As shown in the Supply-Demand Imbalance chart below, demand has grown consistently from 2019 to 2023, while supply has lagged behind, creating sustained upward pressure on both property prices and rental yields.
Strategic Acquisitions and the Power of Local Expertise
Our strategy of acquiring properties below market value, driven by strong local expertise, has delivered consistently strong results. In 2023, we secured key acquisitions at discounts of 10-12% below market value, resulting in a 20% higher ROI upon redevelopment. This approach allows us to uncover hidden pockets of value and maximize returns.
A recent study by Deloitte on real estate acquisitions in Greece indicated that properties acquired below market value yielded an average return of 12-15%, compared to 6-8% for market-value acquisitions, especially in emerging markets like Athens.
LPP’s Brown to Green HSARF fund is positioned to capitalize on key macroeconomic trends:
Sustainability Demand: There is increasing pressure from governments, corporations, and consumers to reduce carbon footprints. According to McKinsey, sustainable real estate projects can command 10-15% premium in rental prices and sales value.
Regulatory Tailwinds: The European Union’s commitment to achieving carbon neutrality by 2050 provides support for eco-friendly investments. Government subsidies and tax incentives for green building projects create further upside.
Undervalued Properties: There is an abundance of older properties in prime urban locations that are significantly undervalued due to outdated infrastructure. These properties are ideal candidates for LPP’s redevelopment approach, which integrates sustainability and advanced AI-based management systems.
Brown to Green: A Sustainable Construction Revolution
LPP’s Brown to Green initiative continues to deliver exceptional results. By integrating sustainable building practices, we have achieved a 30% reduction in carbon emissions, as shown in the Carbon Footprint Reduction chart below.
Additionally, energy savings from green technologies are expected to grow over time. As shown in the Energy Cost Savings chart, we project a 15-18% reduction in energy costs over five years, creating long-term operational savings and enhanced value for our assets.
Harnessing AI to Revolutionize Real Estate Operations
AI investment in real estate technology is expected to grow at a CAGR of 37.1% through 2028, according to Deloitte. Applications in tenant experience, operational efficiency, and predictive analytics are projected to reduce costs by up to 25% over the next five years.
Artificial Intelligence (AI) has transformed how we manage our properties, enabling 10-15% reductions in operational costs. Our AI-driven systems are helping to optimize energy use, reduce maintenance costs, and enhance tenant satisfaction. As we continue integrating AI into 70% of our portfolio by 2026, we anticipate even greater cost efficiencies.
Private Equity Advantage: Outperforming Traditional REITs
A Preqin study from 2022 found that private equity real estate funds returned an average of 12.9% annually over the past decade, compared to 7.6% for listed REITs.
According to research by Cambridge Associates, long-term investment in private equity real estate has resulted in 30-40% higher compounded returns over a 10-year horizon, compared to individual real estate projects or publicly traded REITs.
Our private equity structure consistently outperform listed REITs and single-project investments. This superior performance reflects the power of compounding returns and diversification under expert management, enabling us to deliver enhanced value while reducing risk.
Sector-Specific Opportunities in Hospitality, and Infrastructure
We are particularly excited about opportunities in hospitality and social infrastructure. Greece’s tourism recovery post-pandemic has been robust, with visitor numbers up 23% in 2023, as reflected in the Tourism Growth chart.
With a projected €500 billion investment gap in social infrastructure by 2030 across Europe, we see significant opportunities in affordable housing, healthcare, and education sectors. These investments are not only profitable but also socially impactful, aligning with our long-term vision of building sustainable communities and sound investments.
Macro Trends and Global Market Dynamics
We believe that the current global market conditions favor sustained growth in real estate investments. The European Central Bank (ECB) is expected to reduce interest rates by 1-2% over the next 18 months, according to Goldman Sachs, following recessionary pressures in northern Europe that will lower financing costs and further drive real estate values upward.
In 2023, the UK government implemented a 5% tax increase on high-value properties, pushing investors to seek alternatives in Southern Europe. Similarly, political instability in the Middle East has driven 30% more capital towards European real estate, particularly in Greece and Spain.
Looking Ahead: Building for the Future with AI and Innovation
At LPP, we are committed to staying ahead of the curve by investing in AI infrastructure and sustainability. Our roadmap to carbon neutrality by 2030 includes further integration of renewable energy sources and circular economy principles. By embracing these trends, we ensure our assets are not only future-proofed but also environmentally responsible.
Image: Key aspects of our Construction Development Team, showcasing on-site action photos and snapshots from our meetings discussing our sustainability protocols, energy efficiency research, and workshops on innovative eco-friendly construction materials.
Conclusion
LPP is uniquely positioned to capitalize on the growing demand for sustainable real estate investments through its Brown to Green strategy. With a proven track record, advanced technology integration, and focus on high-growth urban areas, the firm expects to deliver attractive returns for investors while contributing to the global push for environmental sustainability.
Disclaimer: Any expression of opinion is personal to the author and the author makes no guarantee of any sort regarding accuracy or completeness of any information or analysis supplied. The authors and LIDIS® PROPERTY PARTNERS are not responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained here. The information and publication are not intended to be and do not constitute financial advice, investment advice, or any other advice or recommendation of any sort offered or endorsed by LIDIS® PROPERTY PARTNERS.
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