Banking on crisis

How ESTIA does it differently

As Winston Churchill worked to form the United Nations after WWII, he said, “Never let a good crisis go to waste”. This has been Antoine Assi’s motto and business model, Managing Partner of ESTIA Real Estate Group.

Assi predicted the crisis in Lebanon three years before it happened. At the time, a similar hurricane of crises was afflicting Greece. Assi decided to capitalize on the Greek crisis, and expanded his real estate business, where he eventually benefited from the sharp drop in real estate prices. Assi sold over 2,000 apartments, developed over 20 hotels, and manages over 500 million euros in property.

In this interview, Executive sits down with Assi, to get a better sense of his experiences and successes as a dominating figure amongst the Lebanese diaspora.

Can you tell us about ESTIA as a company and what kinds of services it offers?

ESTIA is a real estate development company that develops residential and touristic projects. We focus on residential development specifically in Athens and Portugal. We offer residential apartments ranging from 50 sqm lofts in the center of Athens up to 400 sqm apartments in the south and other luxurious areas along the Greek riviera. The budget of the properties we offer ranges from 180,000 euros to 3 million euros per apartment, we also offer villa development ranging from 2 to 5 million euros.

Estia manages everything in-house, from architects, lawyers, property managers to rental management. We provide a full 360-degree service for our clients and investors.

Estia Capital, a division of Estia group manages 3rd party investors and gives them the opportunity to invest in any of our ongoing residential developments or hotels.

We were reluctant to venture into commercial real estate development. We believe that when you have a crisis like COVID-19 the commercial tenants are the first ones to leave. Thus, we prefer, as a group, to have exposure on residential or touristic projects than to have exposure on commercial tenants.

ESTIA started in Athens in residential rentals during the crisis. It started buying apartments, renovating, and renting them as short term (Airbnb etc..), medium- and long-term rentals, because the yield was at that time very high, around 16 -17%.

The team grew from a two-person operation to a 200-employee operation in less than 4 years.

 Where are ESTIA properties located? How do these locations attract investors?

Most of our properties are in Athens which is a strategic location that generates high rent. Wherever we decide to develop a residential building, the number one requirement is to be in a strategic location, so that the client or investor who is buying the property can generate a decent profit of 7 to 10% annually.

We also have properties in Portugal. It is always interesting for us to choose locations that give us long-term opportunities. We don’t just want to sell our apartments; we want to retain the   management of the property to generate the maximum income to our clients.

Our rental division in Athens is managing over 2,000 apartments. These locations are prime locations that get high yields and will always have a demand for rent.

The clients can decide to rent the apartment for short-term use, and use it themselves in the summers, for example; or, they can rent it for a longer contract when they don’t need it.

The apartment serves as a three-dimension investment: firstly, for their own use, secondly for getting a Golden Visa and becoming permanent residents of Europe, and thirdly, making yearly rents and [passive] income.                

What experience does ESTIA have in Airbnb hotels?

I will tell you a small story. When I came to Athens, I was staying in the Hilton hotel. I saw that during the worst year in the history of Greece – when there were riots, political and security problems – the Hilton was running on full staff and offering food every day. So, I said to myself, “I want to establish a hotel that doesn’t offer food nor has a staff problem”.

My dream was to launch one hotel that runs on one employee. This way when there is a crisis, investors will be safe from pouring money back into the project because of the high cost of the hotel. Thus, I started something close to an Airbnb hotel, where the whole building is running like a hotel but with one employee. And this is done through our application and center management.

We provide our clients with a delivery menu and all our Airbnb hotels are strategically located. The clients love to go down and have breakfast in the different nearby restaurants. The unit at our hotels ranges from 25 to 200 sqm. Our 3-bedroom unit is around 80 sqm that can cater to eight people for just 150 euros a night, where the 16 sqm couple room at Hilton stands for 280 euros/night.

This advantage raised our ratings to 9.5 in comparison to 8.3 rating for Hilton hotel. So now the families prefer our concept.

Our Airbnb concept is very competitive, and its real estate value is high because it is a custom-made project. Our interiors are well designed, and we make sure that every unit is a signature apartment.

In terms of luxury, they are even higher than the ones in the market with more amenities such as furnished kitchen, high end gym, laundry area, bags storage etc. while being three times cheaper than a typical hotel. In October 2020, the worst time of the year, we had 85% occupancy, while most hotels had 20%. Our experience in Airbnb hotels started in 2016 and now we have over 20 under development. 

Do you have any advice for people seeking to invest in real estate?

In the past thirty years, we have seen that real estate has been the safest investment and the most secure. I would advise anyone to invest in any real estate property that generates income. The real estate investment can turn into a burden if it does not generate income.

What people do not know is that there is a holding cost. For example, if you are buying land, your holding cost for it is the interest of your money that you are not receiving. When you are buying an apartment that is not rentable you have municipality taxes and common charges and utility to pay that will be a burden on you. So, when you buy a real estate property you need to see the location, the quality, and how rentable it is, because at the end of the day, you need to account for one month of every year of rental going towards the payment of these costs, which are the municipality taxes, utility, and common expenses.

So, if you buy in places that cannot be rented, the real estate will turn into a burden. Besides, I always advise people to buy early from the developer when he is launching his project because they can get a 10% to 20% discount.

What types of investment opportunities does ESTIA offer for potential or seasoned real estate investors?

We offer opportunities in the typical residential business, where people can either invest with us to buy the lands and develop them, or they can buy apartments from us and we can rent them so they can make a good profit. And they can also invest in our upcoming hotels where they can make a very good return by owning shares.   

What types of architecture and interior design does ESTIA provide to its diverse clients?

First, it is important to highlight that we have a team of thirty engineers, interior designers, and a furnishing department. We give the clients the option to do everything with us in terms of interior design. We have a department that offers interior design since most of our clients live abroad.

As part of our services, we handle the full furnishing of their apartments, we deliver the apartment ready to move in.

For the architecture, we are working with a panel of top architects in Athens to provide multiple architectural projects for every taste. We are delivering different styles from modern architecture to the renovation of heritage buildings.    

What kind of residency does “owning a property” in Greece provide the owner?  How can ESTIA help in this regard?

ESTIA has provided until now over 1,000 residencies in Greece alone. Every country has different laws regarding residency, but what is common between all these residencies is that they give you access to all Europe.

When you become a resident of Greece you become a resident of Europe. It is a permanent residency (PR). So as long as you buy an apartment for 250,000 euros, and maintain it, your residency remains for life. Every five years you would have to renew the PR and simply show that you still own the apartment.

What people don’t know, and what they are discovering now, is that when they become residents of Greece, they don’t have to pay taxes. In comparison to the Schengen Visa, the PR is more stable since all the Schengen Visas were cancelled or recalled when the crisis started in Greece, but the PRs were still active. When you have a PR, it is easier to submit a work permit application to the ministry of interior.

What is important to highlight in this regard is that most people think that a Schengen acts like a PR, which is not true. They must understand that when they have the Schengen for 5 or 10 years, they cannot stay in Europe more than 50% of their visa period, which means 182 days per year.                      

Any last words of advice for the Lebanese looking for a way out of the crises?

I believe that the economy in Lebanon collapsed and what the Lebanese are witnessing is the tip of the iceberg.

The state in Greece is protecting the Lebanese expatriates. In the COVID-19 crisis, the Greek banks called us suggesting to extend the payment of our loans and to reduce the interests. However, I heard that some Lebanese banks increased the interests from 8 to 27% during the crisis.

Soon, the Lebanese will be banned from entering several countries. So, every Lebanese should have a Permanent Residency and an income generating property in Greece or Portugal to safe keep their families in terms of crisis.