ECONOMY

The changing face of the home construction industry in Attica

The homebuyers’ market is gradually changing in the Attica area, with an increasing number of construction firms striving to gain a piece of the pie that is already divided among a great number of small concerns. According to estimates by market experts, at least 80 percent of new homes are being built by small operators, most of whom do not have more than two projects going at any one time. A further 10 percent are constructed by medium-sized firms, which carry out up to three projects annually, while big construction firms build the rest. This picture is projected to change in the near future, largely thanks to the big operators, who, projecting a fall in profits from traditional activities in public projects after the 2004 Olympic Games, are now preparing the ground to move into the new homes market, which continues to flourish. However, market experts consider it only a matter of time before prices level off and stabilize. Such a trend is already evident in the market for luxury homes in areas such as the suburbs of Kifissia and Palaio Psychico where the high costs have hurt sales. Big firms move in Several large companies have begun turning to home construction; these include Michaniki, Hellenic Technodomiki, Themeliodomi, Cyprus-based Cybarco, J&P Avax, GEK-Hermes and Olympic Technical as well as energy-oriented group Kopelouzos. The list must also include the consortiums building the Olympic Village, which will be sold as housing facilities after the event. To be sure, the big players have now also seen a certain prospective conditions, which were lacking previously, for turning to the home construction market. One of these basic conditions was the relative lack of appropriate land plots. Big construction firms need to have land reserves to develop at a quick pace in order to secure the smooth «recycling» of their capital (investment-construction-sale). Such land can now be found in areas of Attica that are considered ripe for development and are projected to attract new populations. One of these is Mesogeia, east of the Athens basin, which before the construction of the new airport at Spata represented a high risk for any construction firm. The Lofos Pallini Project, being built by Hellenic Technodomiki on land owned by OTE Telecom and planned to be used as a media village during the 2004 Games, is one example of a large development in the district. Other up-and-coming areas are to be found on the western and northern outskirts of the capital, particularly in Anoixi and Stamata, and as far as Kapandriti, which are seen as new housing poles for expansion. The launch of the suburban railway, currently under construction, will no doubt play a major role in the development of new areas, offering easy access to Athens’s center, even though they are located a considerable distance from it. Because of this, large and small construction firms are now rushing to acquire land in these areas. Of course, the big companies will not be able to dominate the sector from one day to the next; the modernization of the taxation and physical planning systems is a necessary prerequisite. The strong current interest by big construction firms has also been fueled by the prospect of the government introducing value-added tax (VAT) on new buildings. The recent announcement that this will take effect in 2005 is seen as a green light for dozens of big construction companies to take an even stronger interest.