Written by Babis Charalambopoulos
Honorary President of the Hellenic Appraisal Institute, Former Chartered Appraiser, Scientific Advisor of SOLUM Property Solutions
The housing market saw increases in nominal prices, relative to 2023, of 14.3% to 8.8%, depending on the region.
The older properties appreciated by 12.4% while the newer ones by 11%. Rents in major urban centers moved upwards.
In offices, there was a milder increase, with the largest percentages recorded in new green office buildings.
Shops also recorded increases similar to those of offices, but this is mainly found in the central commercial areas of the cities.
In logistics, where the demand for modern constructions (Grade A) is stable, there have been increases in rents while yields have also decreased depending on the area and are moving above 7%.
The hotel sector, due to the strong tourist traffic, moved dynamically with many developments and transfers.
Short-term leasing moved at a very satisfactory rate.
Logistics, hotels
Logistics spaces, when they are modern, with great heights, with automation and friendly to the environment, while at the same time they are located in current locations in Attica or in Thessaloniki, are a product that is in great demand, because it is missing from the market and this is how we see many AEEAP enriching their property portfolio with such properties, which are also performing well. In Thriasio, rents for Grade A properties are around 5 euros/M2.
Hotels, both before the pandemic and after it, especially those of 5 and 4 stars have multiplied in our country supporting our heavy industry which is tourism. The combination of a hotel complex with residences within it – serviced apartments – is a product that gathers the interest of many foreigners while helping the cash flow of the unit both in the construction phase and in the operation phase.
The residences
Newly built houses, where they are built, have high sales prices due to the construction costs which have skyrocketed due to inflationary trends but also the requirements of the regulations for higher quality and green buildings as well as the new modern trends for smart buildings. On the other hand, the value of land has also moved upwards.
The changes to the Golden visa will have effects that will somewhat slow down the demand or turn it to more economical points.
Foreigners still have Greece on their radar as it is cheaper than other European Mediterranean destinations.
The incomes of the majority of households cannot easily support the purchase of a new home.
Offices and shops
In the area of offices, the demand is noted mainly in Athens and Thessaloniki, especially in Grade A offices.
Old-style offices with shared toilets are not in demand and the only solution is the radical renovation and modernization of such buildings. Demolition is rarely an option, especially in the center of Athens, because the old buildings have been built with a higher building factor than is allowed today.
The shops in the central shopping streets are in demand and in fact there are no such properties available while rents have reached high levels, so that Ermou in Athens has reached the 15th place internationally in terms of rents.
On the contrary, many empty shops can be found in secondary axes, due to the fact that before the crisis our country had many more shops than necessary, while now e-commerce is also very developed.
The process of building permits
Based on ELSTAT data, there is a significant increase in reconstruction that is directly related to the development of our country.
The reasons for the lack of housing in Athens, Thessaloniki and some islands
The lack of reconstruction during the ten-year crisis.
Urbanism with the abandonment of the countryside.
The distorted development model of the country where ~50% of its population is in Attica. Policies must be implemented to reverse the current situation.
The closed apartments located in funds, servicers, banks, the public sector, NPDD and elsewhere.
The inability of many owners to renovate many old properties.
The lack of dynamic state assistance through OEK-type programs.
The short term lease.
However, it is worth noting that the country has a number of houses that are empty, in the villages, in the countryside and in the declining cities, but they are not in demand.
Interest rates, banks
The role of banks has always been important through mortgages. But before the crisis, there was a derailment in the ease of granting loans, without serious criteria.
Today we have a completely different landscape with a stricter control framework and with a minimum equity participation of more than 25%, while loans are given with the dropper.
On the other hand, the cost of borrowing is very high, which discourages candidates and forces them to rent or to try to buy with cash with the help of family and relatives.
Also, having seen what they suffered and are still suffering, those who took loans that turned red, many are those who avoid getting into trouble with the banks and in case of failure to have corresponding sufferings.
JLL’s office market watch
According to JLL’s European office market clock, Athens has reached a peak in rental prices in Q4/2023. This means that, in JLL’s view, the downward cycle will slowly begin.
The perils of a bubble
Foreign investments in real estate reached approximately 2.1 billion in 2023. Construction costs, wage levels and inflation are negative factors that are likely to affect property prices and cause a correction in property classes and areas.
Based on the price-to-rent index and the other price-to-income index, it appears that there is an overvaluation of housing and therefore at some point there will be a correction, but this does not mean that we have a bubble. Any overvaluations or revaluations were made:
- Because of the demand from foreigners
- Because of the “my house” program
- Due to increased construction costs
- Due to increase in land value
O ENFIA
We all know that this tax is imposed every year on the owners of real estate.
In our opinion, it is necessary, in the calculation of ENFIA, to take into account, even to a small extent, the commerciality coefficient of the stores, because until now it is not taken into account and therefore the stores pay much less ENFIA in proportion to their value, compared to offices or residences.
This change will give the state the possibility to reduce the ENFIA on residences and other property categories.
Example of ENFIA and objective value
Here is an example of ENFIA paying:
An office with an area of 100 M2, on the third floor of a 1970 building, in a central location on Ermou Street in Athens.
A ground floor shop of 100 M2 in the same building as above.
Likewise, we list the objective value of these two properties, so that the difference in proportionality is visible.
PPP programs
This issue was addressed by Mr. Tachiaos at the 9th Delphi economic forum, saying that limits are set because the State’s money is not unlimited.
The auction model is a form of public borrowing from individuals through availability payments and this model is finite.
At the same time, because many of the infrastructure projects in the country are old and require maintenance, significant funds must be allocated for this purpose.
So this means that such projects will be carried out, not remuneratively, but at rates that the public finances can withstand.
- Because there are cycles in the economy, similar cycles exist in construction, but they do not have the same periodicity in all real estate categories, nor in all countries.
- In Grade A offices we have probably reached the upper point of the cycle.
- In housing, so far there is an upward trend, but it is possible that next year we will have corrections in some places where outbreaks are observed. However, demand from abroad plays an important role, which is important.
- The wars in the immediate area, the difficulties of crossing the Suez Canal, the increased costs of energy, are risks.
- Investing in selected properties is a hedge against inflation, while also providing a better return than bank interest rates.
- Our infrastructure (roads, airports, ports, hospitals and health centers, cleanliness, etc.) must be constantly improved because this will make our Greece a more attractive destination.
- We as a country need to become more competitive and produce quality products that are exported. It is not right to rely only on tourism.
- Development of the region and addressing the demographic must become priorities.
- The speedy delivery of justice, the friendly and stable tax regime, land registry and zoning are serious issues.
