Sea of

Overview

Crete is ’s largest island and traits, dialect and traditions. The seasonal changes. Snowfall and the 5th largest in the Mediterranean island was first inhabited in 6.000 extreme weather conditions are Sea, and is located approximately BCE, as a prehistoric settlement. It common only in the mountain areas 160 kilometers south of the was the center of the first advanced during the winter months. The Greek mainland. Together with civilization in Europe, the Minoan. climate adds to the attractiveness of its neighboring islands, Crete The Minoan civilization flourished the region as a holiday destination forms one of the 13 administrative between 2700 - 1420 BCE and throughout the year. regions of Greece. The island is ended with the volcanic eruption subdivided into 4 prefectures – of Thera (Santorini). According to Crete is a well-established holiday , , and Greek Mythology, Zeus, was born market worldwide. It offers long Lasithi, and 24 municipalities. in Crete, where his mother Rea hid stretches of beach - more than Heraklion is the largest city and the him in a cave at Mount Dikti, so 100 with Blue Flags eco-label, administrative capital of the region. that Kronos, his father, wouldn’t archeological and religious sites, The total land area is 8,336 km2 find him. The palaces of local culinary experiences, ideal with a population of 623,065. The and Phaistos and the site of Gortys climate and beautiful landscapes islands and islets of the area offer are the main archaeological sites of as well as sports facilities - 2 golf a coastline of more than 1,000 km. the region. courses and many water sports Crete is located at the crossroads of facilities, general hospital in three continents, the south-western Large and impressive plateaus, every prefecture and numerous part of Asia, northern Africa and breathtaking gorges, cliffs and cafes, bars, clubs, taverns and south-eastern Europe, and includes numerous caves, lakes and rivers restaurants. Its tourist infrastructure the southernmost part of Europe, shape the mountainous and wild can support all types of tourism. island. morphology of the region, offering It is a place of rare beauty that an extremely rich biodiversity invites millions of people every The region has a very rich history (flora and fauna). Crete has a year to discover the island’s hidden and cultural heritage while still mild Mediterranean climate with treasures. retaining its own local cultural sunshine all year round and minor

Demographic Prefecture Total Land Population Population density (km2) people per (km2) of land area Heraklion 2,641 305,490 115.7

Chania 2,376 156,585 65.9

Rethymno 1,496 85,609 57.2

Lasithi 1,823 75,381 41.3

2

Economy

The economy of Crete is primarily Viticulture and olive groves are Cretan Museum of Natural History, based on tourism and services and also significant to the economy, 60% of Crete’s terrain is suitable it makes up for 7% of the Greek while honey and herbs, grown for ‘green’ energy investment. GDP. Agriculture and livestock on the island, are of excellent The renewable energy sector is farming were the main contributors quality. Dairy products are also expected to develop in the coming to the economy until the mid-70’s important with a number of high years, benefitting the economy when tourism gained in importance. quality cheeses such as graviera and the employment of the region. Agriculture played an essential role (gruyere), mizithra and anthotyro. Tourism is undoubtedly the Cretan in the economy of the region due The island produces 30 products economy’s flagship, contributing to the mild climate, the soil and the categorised as PDO (Protected more than 50% of the island’s GDP. geomorphology of the island. Destination of Origin) including Crete attracts more than six million olive oils, cheeses, fruits and wines. visitors every year and contributes The island produces a wide variety According to a study published 20% to the Greek tourism sector. of vegetables, fruit and flowers as it by the Technical University of has 50% of Greece’s greenhouses. Crete in collaboration with the

3 Sea of Crete

Tourism

Crete is one of the most popular the above, in Crete, the share of Heraklion airport - the second holiday destinations in Greece visitors from abroad is 60%. busiest airport in Greece after the for local and foreign visitors. The AIA (Athens international Airport) island is easily accessed by an The main markets are Germany, - with a completely new airport at array of international and local UK, France, Russia and the Kastelli of a 10 million passenger flights or by well serviced ferry Scandinavian countries. An capacity. The completion of the connections. There is one port increased share from Israel, UAE, tender procedure is expected in the in every major city – Chania, Lebanon and China was also beginning of 2015 while Chinese, Rethymno, Heraklion, Agios recorded in the last 2 years. It is French, Greek and Spanish investor Nicholaos, welcoming around 2 estimated that above 3.5 million groups have expressed interest. million visitors mainly during the international tourists arrived at The upgrading of the “Ioannis summer months. It is estimated that the two international airports in Daskalogiannis” airport at Chania 500,000 additional people visited Crete in 2014.This was a 25% is also under procedure. Crete through cruise ships in 2014, increase compared to 2012 while and recorded a 50% increase the growing trend is expected to Crete has all the features and since 2012. The region also has continue in 2015. ‘Ryan Air’, the the facilities to satisfy even the two international airports, ”Nikos largest low-cost airline in Europe, most demanding visitor. Sun and Kazantzakis” in Heraklion and created a base in Chania in 2013 beach luxury tourism, agro-tourism, “Ioannis Daskalogiannis” in Chania with significant benefits in terms medical and therapeutic, cultural, as well as a smaller national one of tourism for the entire region. religious, and gastronomic tourism, in . It is estimated that more The two airports almost reach the as well as many outdoor and sea than 4 million local and foreign limit of their capacity during the activities are available for the visitors were serviced through the months of July and August. There visitor to enjoy. three airports in 2014. From all of is a long-standing plan to replace

International Tourist Arrivals at the main Airports (mil) The main

4 markets are 3.56 3.34 Germany, 2.83 2.82 2.83 2.56 2.52 UK, France,

2 Russia and the Scandinavian countries

0 2008 2009 2010 2011 2012 2013 2014f

Chania Heraklion Crete

4 Holiday Home Market

Overview

Crete is one of the most developed has weakened the demand from spark back into the interest from segments of the Greek holiday abroad, stopped any residential abroad. If the new coalition home market with a significant development and has led to a government ensures a sustainable track record. A large number of substantial fall in the sale prices. solution for the debt, securing transactions have been completed In 2014, the improvement of the political stability and the recovery mainly by northern and central Greek economy and the incentives of the economy, transactions will Europeans in the past years. Since to foreign investors, such as the pick up for the entire Greek holiday 2009, the ongoing financial crisis “Golden” visa scheme, put some home market in 2015.

Demand

Crete is a popular destination for demand was anemic both from in excess of €250,000. Russians all types of holiday home buyers. locals and foreigners. A growing are interested in seafront detached It offers easy access, moderate interest appeared in 2014. residences mainly in the prefectures climate, quality of life, natural Northern and central Europeans of Heraklion and Lasithi. Chinese beauty and good investment value. look for residences in organised are also considering buying land In this context, Scandinavians, residential complexes but they are plots outside the residential zones British, Germans and other still wary due to political instability. to build their own residential Europeans have already bought There has been an increasing communities, while Israelis and properties in Crete either as holiday demand by non-EU citizens led Arabs prefer luxury properties with home, investment or retirement. by the “Golden” visa scheme - swimming pool, sea views and on- During the financial crisis, the residence permit for investments site amenities.

Supply

The official survey by Elstat, overseas demand and high building unsold and many Greek and “Population and Housing Census activity. Large residential complexes foreign owners have placed their 2011”, recorded that the total have been built and others are in private residences on the market. number of holiday homes in Crete the pipeline. It is estimated that the The new growing overseas interest was 37,470. This figure represents holiday homes for sale in Crete is adequate and can absorb the only 5% of the country’s total stock are about 5,000, as a number current supply and re-launch the of holiday homes. An additional of residential complexes remain investment activity in the region. amount of 44,186 residences was recorded as secondary homes in the same report. The number of holiday homes in Crete has The new growing overseas interest remained essentially unchanged during the last three years as any is adequate and can absorb the residential development was put on hold. Before the financial crisis, the current supply and re-launch the Cretan holiday home market was a fast growing market with strong investment activity in the region

5 Holiday Home Market

Prices - Transactions

Holiday home prices in Crete are Average asking price of prime holiday homes in Crete expected to remain stable in 2015, following a cumulative decrease €/m2 €/week of 40% since the beginning of 8,000 10,000 the crisis. The drop in high - end 8,000 holiday homes is relatively lower. 6,000 The asking sale price for prime 6,000 holiday homes ranges from 4,000 2 €2,500 - 4,500/m . Bargains at 4,000 lower prices still exist, mainly by 2,000 local owners or developers with 2,000 matured debts. The rising interest 0 0 by foreign visitors for rental of Heraklion Lasithi Rethymno Chania Crete luxury villas has led many owners to let their properties at high rates. Sales Price - left axis Rental Price -right axis The higher rates are mostly found in the prefecture of Lasithi where more than a 5% average gross below the pre-crisis levels and the the well-known luxury holiday yield. Therefore, the acquisition region’s potential. We expect this destinations of and Ag. of a holiday home in Crete is an growing trend to strengthen further Nikolaos are located. According to excellent investment decision. An in 2015, assuming the political and our research, the high-end holiday upturn in the number of transactions financial stability of the country homes in Crete are let at a €2,500 was recorded in 2014. On the continues. - 5,500 weekly rate, offering other hand, the figures are still

Cretan Holiday Home Market Snapshot The acquisition

Stock 37,470 of a holiday

For Sale up to 5,000 home in Crete

Sale Price (€/m2) 2,500 - 4,500 is an excellent investment Rental Price (€/week) 2,500 - 5,500 decision Expected Gross Yield 5,5%

Outlook

Crete is an established holiday religious sites, Mediterranean in a location with high tourism home market with great potential climate and cuisine and draws prospects. In 2015, demand from and an existing track record. It the attention of foreign holiday foreign investors will pick up on has all the infrastructure – airports, home buyers. The incentives in the the number of transactions in the roads, ports, hospitals, shops, etc. – new legislative framework and the Cretan holiday home market and and features unspoiled landscapes substantial discount in sale prices lead to the revival of investment and beaches, archeological and offer investment opportunities activity in the region.

6 Hospitality Market

Overview

Crete is the key driver of the Greek investors. Even though various Crete can support different types hospitality market and contributes international operators are already of tourist activities, such as sun 20% to the Greek tourism sector. present in Crete, the Cretan and beach luxury tourism, agro The performance of the tourism Hospitality market is mainly tourism, cultural, religious, medical sector enhances the image of controlled by local brands. The new and therapeutic, outdoor and sea Crete as a tourist destination and investment friendly framework and activities and gastronomic tourism. draws the attention of international tourism demand have rebooted the hotel operators, developers and investment activity on the island. Supply

The total hotel capacity in Crete the country’s 5 star hotel beds has The lack of international brands amounts to 1,540 hotel units with climbed to 30%. Heraklion has the and upscale hotel units in Chania 87,551 rooms and 166,370 lion’s share - 40.9% - of Crete’s and Rethymno make their markets beds according to latest data hotel beds with 68,122 beds along promising for hotel investors. Lasithi from the Hellenic Chamber of with 491 hotel units and 35,358 has the smallest share of Cretan Hotels. Of which 14,693 hotel rooms, predominantly four and hotel capacity. 26.2% of 5 star beds have been added to the five star hotels amounting to 60% hotel beds in Crete are located stock of the region in the period of the prefecture’s hotel rooms in Lasithi, as the area is highly 2008 - 2013, recording a 9.7% and beds. The hotel capacity in dedicated to luxury tourism. In increase. More than 75% of new Chania amounts to 536 hotel units Crete, the average hotel size is 57 hotel beds were in the high end with 23,357 rooms and 42,938 rooms while for 5 star hotels the category. Crete contributes more beds, mostly in the 2 star category. corresponding figure goes up to than 20% of the country’s hotel The hotel market in Rethymno is 206 rooms. beds. The corresponding figure for mainly in the middle categories.

Hotel Capacity in Crete per category, 2013 Hotel Capacity in Crete per prefecture, 2013 Hotel Units Hotel Rooms Hotel Beds Hotel Units Hotel Rooms Hotel Beds Number % Number % Number % Number % Number % Number % 1* 211 13.7% 5,688 6.5% 10,482 6.3% Heraklion 491 31.9% 35,358 40.4% 68,122 40.9% 2* 672 43.6% 24,019 27.4% 43,275 26.0% Lasithi 201 13.1% 12,423 14.2% 24,133 14.5% 3* 339 22.0% 15,916 18.2% 30,006 18.0% Rethymno 312 20.3% 16,413 18.7% 31,177 18.7% 4* 232 15.1% 24,220 27.7% 46,848 28.2% Chania 536 34.8% 23,357 26.7% 42,938 25.8% 5* 86 5.6% 17,708 20.2% 35,759 21.5% Total 1.540 100.0% 87,551 100.0% 166,370 100.0% Total 1.540 100.0% 87,551 100.0% 166,370 100.0%

Hotel Beds per category per prefecture, 2013 25,000 25,000 1* 20,000 20,000 2* 15,000 15,000 3* 10,000 10,000 4* 5,000 5,000 - 5* Heraklion - Lasithi Rethymno Chania Heraklion Lasithi Rethymno Chania 1* 2* 3* 4* 5* 7 Hospitality Market

Perspective

The performance of the Cretan hospitality market was impressive Visitor’s Profile in Crete during the last years as it recorded a remarkable increase in tourist arrivals. There is a strong trend Germany, UK, France, for luxury tourism while visitors Country Russia and the are mainly from EU countries. An Scandinavian countries essential weakness is its perceived seasonality found in most regions of Greece. More specifically, 87.4% Average per capita € 1,162 almost double than the of international tourists arrived in tourism expenditure country’s average of € 604 Crete between May to September in 2014. The average occupancy rate Average Stay 1 week was above 60%, with Heraklion having the top performance. A 57% acommodation & transportation number of essential measures are Main expenses 17% food and beverage required in order for the Cretan 12% shopping hospitality market to further achieve its promising prospects. 65% to hotel units (of which 25% The improvement of the island’s Acommodation all inclusive tourism) infrastructure - airports, roads, 20% to “rooms to let” ports, marinas – is necessary. Indicatively, the two international Natural landscape airports reach the limit of their Reasons to visit Crete Climate capacity during the summer months. Hospitality and Food The replacement of the Heraklion Quality of Services airport and the upgrading of the international airport in Chania 67% yes, I will are of major importance. The Returning Visitors 46% already visit Crete development of different types of tourism products is also crucial for attracting additional visitors, increasing the average stay and prolonging the holiday season.65.00% Occupancy Rate per prefecture There is a strong 70.00%70.00% trend for luxury60.00% 65.00%65.00% tourism and the development of 60.00%60.00% different types55.00% of 55.00%55.00% tourism products

50.00%50.00% is crucial 50.00% 2009 201020102010 201120112011 20122012 2012 2013e2013e 2013e2014f2014f 2014f Heraklion Lasithi Rethymno Chania 8 Hospitality Market

Transactions

The potential of the Cretan unit only 6 kilometers away located in Milatos, Lassithi. hospitality market is already from the city of Rethymno, The estimated cost for the attracting international hotel in front of an 8 mile beach, renovation of the hotel is operators, developers and comprised of 71 suites and €8.5million. In 2016, following investors. A number of important villas in 2014 b) White the renovation, the hotel will developments and agreements have Palace Grecotel Luxury Resort: be renamed to Radisson Blue been announced. Some indicative Renovation and reopening Beach resort investments are: of the former 5 star El Greco 8. Ledra Hotels and Villas 1. Minoan Group, Loyalward hotel, comprised of 256 suites a) Domes of Elounda resort: Company, Gaia: and villas. The project was Investment of €10million for the investment of €270million for completed in 2014 and the cost development of 28 new villas the development of 5 hotel units estimated at €10million in Elounda, Lassithi b) Elounda with a capacity of 1.936 beds, 5. Aquila Hotels and Resorts Blu: Investment of €3million for a professional golf course and a) Atlantis Hotel: an investment the development of additional a spa center in a 2,500ha land of €7million for the renovation 24 suites in Elounda, Lassithi plot in Cavo Sidero, Lassithi of the 5 star hotel, comprised – Both developments were 2. Dolphin Capital Investors & J&P, of 158 rooms and 6 suites in completed in 2014 Plaka Bay Resort: development Heraklion, Crete. Completed in 9. Sentido Hotels and Resorts, of 5 star hotel units, holiday 2013 b) Porto Rethymno: Plan Renovation and management of homes and a golf course in a for the renovation of the 5 star three hotels in Crete from 2015 440ha land plot in Cavo Plako, hotel with a capacity of 202 a) Sentido Blue Sea Beach Sitia, Lassithi rooms in 2016 Hotel: A 5 star hotel, offering 3. Dolphin Capital Investors, 6. Vita Hotels, Investment of 225 rooms, bungalows and Sitia Bay Resort: investment of €44million for the acquisition, suites in Stalida, Heraklion €300milion for the development renovation and rebranding of b) Sentido Sun Beach: Newly of an integrated resort with a) the 3 star Carolina Mare built hotel with 115 rooms in conference center, marina, hotel (former Phaedra Beach) at Malia, Heraklion and thalassotherapy center and Malia, Heraklion and b) the 4 c) Sentido Elounda Blu: An a golf course under the star Zorbas Village at Anissara, integrated resort with 147 management of Waldorf Heraklion. The transaction was rooms of 6 different types in Astoria (Hilton Hotels and completed in 2014 Elounda, Lassithi. Resorts) in a 280ha land plot in 7. Carlson Rezidor Group, (page 10: view locations on Siteia, Lassithi Minos Imperial Luxury Beach map) 4. Grecotel a) Caramel Boutique Hotel and Spa: A franchise Resort: Opening of a new hotel agreement for the hotel Outlook

Crete is a worldwide recognised cuisine, cultural and historical and further improve the current brand name as a tourist destination. sites, hospitality, safety, outdoor infrastructure. The promising Nevertheless, there is still a life, and c) well developed prospects of the Cretan hospitality lot of room for improvement in facilities – international airports market and the growing trend of order for Crete to become the and ports, roads and marinas, tourism is expected to revive real leading tourism destination in healthcare system, sports and estate activity and attract more the Mediterranean. It combines food and beverage amenities. international hotel operators, a) an ideal location – easy The Cretan hospitality market developers and investors to the access, moderate climate, infinite must focus on more luxury and region. coastline, geographical diversity, exclusive accommodation, develop b) an excellent lifestyle – local products for alternative tourism

9 Locations

Key Locations

Chania

Rethymno Heraklion 4b 4a 5b 6b 7 5a 9a 6a 8a 9b 8b 1 3 9c 2

Agios Nikolaos

Chania Rethymno Heraklion Lasithi

Population 156,585 85,609 305,490 75,381

Weather Av. Temp: 21 Co 20 Co 21 Co 20 Co

Av. Wind: 5 kts 7 kts 10 kts 12 kts

8-9 hours 8 hours 7-9 hours 12 hours Accessibility (from Athens) 60 mins 50 mins 85 mins Chania (CHQ) Nearest Airport Chania (CHQ) Heraklion (HER) Siteia (JSH) 1 hour by car Season May - October June - Sepember January - December May - September

Healthcare General Hospital General Hospital General University Hospital General Hospital

Historical, Religious, Historical, Religious, Culture Historical, Archaeological Historical, Cultural Archaeological Archaeological

Social International, Local Local, Quiet International, Local International, Local

Lifestyle Nightlife, Dining, Shopping Wineries, Dining Dining, Nightlife, Shopping Nightlife, Dining

Golf, Water Sailing, Water Windsurfing, Kite Surfing, Golf, Water Sports, Sports,Windsurfing, Sports Sports,Windsurfing, Rock Climbing, Mountain Climbing, Trekking, Scuba diving, Hiking, Cycling Water Sports Hiking, Mountain Bikes Horseback Riding

10 Locations

Key Locations

Chania Rethymno Heraklion Lasithi

A mature market with Still relatively virgin to An established market with Property prices have proven excellent oportunities for foreign investors. real bargains. to be more resilient due to Investment actual buyers. An emerging market The substantial existing high – end destination and A wide range of prices with beautiful properties stock has depressed the sale sought after residences. due to diverse properties. at relatively low prices. prices. Place to be.

Hotel Units 536 312 491 201

5* Hotel Units 19 12 31 24

4* Hotel Units 54 48 97 33

Sale Price1 €2,500-5,000/m2 €1,500-3,500/m2 €2,000-4,000/m2 €3,000-7,000/m2

Rental Price1 €2,500-6,000/week €2,000-4,000/week €2,000-5,000/week €3,500-8,000/week

Expected Gross Yield1 5.4% 5.8% 5.6% 5.5%

1. The above analysis is based on more than 300 comparable properties, selected by the Algean Property research team. Each property features a minimum 3 2 bedrooms, a private pool, and high quality fittings in an area of 150 to 350m .

This report has been produced by Algean Property for general information purposes only and nothing contained in the material constitutes a recommendation for the purchase or sale of any property, any project or investments related thereto. Information on this report is not intended to provide investment, financial, legal, accounting, medical or tax advice and should not be relied upon in that regard. The intention of this report is not a complete description of the markets or developments to which it refers. Although the report uses information obtained from sources that Algean Property considers reliable, Algean Property does not guarantee their accuracy and any such informa- tion may be incomplete or condensed and Algean Property is under no obligation to issue a correction or clarification should this be the case. Any information of special interest should be obtained through independent verification. Views are subject to change without notice on the basis of additional or new research, new facts or developments. All expressions of opinion herein are subject to change without notice. Algean Property accepts no responsibility or liability for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. The prior written consent of Algean Property is required before this report can be reproduced/ distributed or otherwise referred to in whole or in part. Algean Property, All Rights Reserved.

Sources: , Eurostat, Hellenic Statistical Authority (ELSTAT), Association of Greek Tourism Enterprises (SETE), Hellenic Chamber of Hotels, Ministry of Reconstruction of Production, Environment and Energy Rural Development, Wind Finder, Technical University of Crete, Cretan Museum of Natural History, Seez Travel and Algean Property Research.

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Contact Info

George Eliades Konstantinos Sideris Managing Partner of Algean Group Senior Analyst Skype: george.elias.eliades Skype: ksideris.algeanproperty [email protected] [email protected]

Giannikos Giannakos Junior Analyst Skype: ggiannakos.algeanproperty [email protected]

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