The notable drop in real estate prices the last five years which continued in the first half of 2013, in addition to a relative stability in the country the past year, have transformed Greece to an attractive destination for investors. Yet, the country needs to continue its reforms and efforts in sustaining a stable and viable financial environment, property consultants Danos, an alliance aember of BNP Paribas Real Estate, said in the Athens property market review for the period.
The office sector is strongly affected by the financial crisis with no significant development in the short or medium term.
Business activity remains low; more than 1,000 companies are in insolvency and banks are merging which will lead to greater number of vacant office spaces.
Rental prices in prime office locations such as Syngrou Ave. and Kifisias Ave. have dropped from 22% to 30% the past years. Prime yields are in the range of 9-9.5% for Athens. Many corporations are looking to relocate, trying to benefit from lower rents and more flexible terms or continue to renegotiate their leases.
The most severely hit of the real estate market is the retail sector, the Danos report said. Taking as an example rent prices in the big shopping malls of Athens, there is almost nothing stable. Prices are fluctuating and are subject to more issues than just square meters. The credibility of the lessor, for example, has become one of the most important factors of the final price.
According to a new law that was introduced during the last semester, all retail stores should operate seven (predetermined) Sundays of the year. The law also implies that any store which surface is less or equal 250 sq m can operate any of the 52 Sundays of the year. A possible outcome from this law could be that the unemployment rate will fall and the needs of consumers coming from both Greece and abroad will be satisfied.
There are some large corporations, Public and Orchestra to name a few, that are seeking to develop and expand their network.
One of the good news in the retail market is the deal of Charagionis Group and H&M, renting a building in the center of the most commercial street of Piraeus making it the largest store of the company in Greece.
Contrary to forecasts for 2013, prices in the residential market continued to decline; about 180,000 residences remain unsold.
On average, residential prices dropped about 11.5% compared to the same period in 2012. The overall drop in prices in the past three years is about 28.7%. New built houses experience a drop of 10.8%, while those 5 years or older, experience a drop of 11.9%.
Thus, Chinese and Russian investors, who are looking to benefit from a visa allowance for purchase worth 250,000 euros or more have expressed their strong interest to invest in the residential market, especially in Athens, Rhodes, Corfu and Crete. There is also interest from the UK for properties in the Cyclades and Corfu.
There is a remarkable rise in Russian tourist arrivals, up 64.9% compared to the first semester of 2012, with two big projects in the pipeline aimed at Russians. One is a mineral springs project at Paliouri in Chalkidiki and the investment is estimated to be 150 mln euros. The other is in Crete where Pegeze, a Russian company rented five hotels for the next five years.
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