Public utilities enter property development

This year was a sobering one for the property market, especially in the second half. Those involved in the market must have finally realized that it is not the goose that lays the golden eggs and those who haven’t yet will certainly do so next year, when prices will keep falling. In the past two years, as the Athens Stock Exchange staggered through a prolonged crisis, investors headed into the property market with a vengeance, and transactions on every sort of property – houses, offices, retail space – were made at inflated levels. Most sector studies estimate that house prices will drop slightly, or remain stable. The same is expected to be true of office space. This year, however, and against all predictions, rent prices along the highly coveted Kifissias Avenue plunged precipitously, with companies, or individuals, refusing to pay more than 20 euros per square meter in monthly rent. Compare this with the 30-35 euros per sq.m. demanded, and given, in 2001, and you will see why developers are reluctant to lease, or sell, newly completed office space. This year was also marked by the entry of public utilities into property management, with OTEestate, a subsidiary of telecommunications company OTE, and GAIAOSE, a subsidiary of Hellenic Railways, being by far the biggest efforts. OTEestate is about to hire a financial consultant and waits for the completion of the transfer of the parent company’s property portfolio. GAIAOSE made its first significant deal, with Athens 2004, the Olympic Games organizers, for the construction of a large storage facility for the needs of the Games. Also preparing to enter the property market are the Piraeus-Kifissia electric railway (ISAP), the Public Power Corporation and the Postal Service (ELTA). The Church of Greece is expected to launch a pilot property development program next year. Many construction and investment companies, aware of the Church’s vast property portfolio, have expressed interest in taking part. Next year will also mark the full operation of real estate investment firms whose launch has been slower than expected. The first bank, Alpha Professional Properties – where Alpha Bank has a 60-percent stake and construction group Hellenic Technodomiki has 40 percent – was licensed in September and is expected to apply for listing on the Athens bourse within the next six months.

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