ECONOMY

Prices of realty level off but investors’ uncertainty grows

After several years of continuous rises, Greek real estate prices seem to have reached a plateau with a tendency to decline. Irrational exuberance has been succeeded by concern over finding the right time and place for investment. But despite the declining trends, prices remain relatively high. Experts advise that any investment moves must be made only after careful thought, given the climate of uncertainty in the global economy which is bound to affect Greece as well. They say investors must evaluate options on a long-term basis and weigh the likelihood of interest rate rises which may prove disastrous for them, capable of putting monthly installments on mortgages up by 300-450 euros. There is a general consensus, however, that worthwhile investments are to be found near infrastructure projects, and that the areas with the best growth prospects are those that remain undeveloped but have enough positive prospects for rapid growth in the future. Of course, they note, the big opportunities are always in a declining market, but the big question now is whether the correction in prices is ending or just beginning. Whichever, agents see some investment opportunities even in the centers of Athens and Thessaloniki, while prices around the Mesogeia plain in Attica are still considered accessible. According to Dika Agapitidou, general manager of Athens Financial & Jones Lang LaSalle, 2002 had a jolting effect on the Greek market. «The volume of transactions shrank considerably, the time lag between a non-residential building being advertised and being leased or sold became longer, and office and shop rents in many areas fell up to 25 percent. «The next phase in such a process usually is a fall in real estate values and a rationalization in supply – in the sense that owners, on the one hand, adjust their requirements downward, and on the other, constructors slow down the pace of their activity. To date, we have clearly seen the first tendency but not the second; this may be explained by the absence of alternative investment instruments. With the stock market in the doldrums and real interest rates way below inflation, what can a constructor do apart from what he knows best and hope that demand will recover at some point?» says Agapitidou. «However, the news is not all downbeat. A declining market means one thing positive for investment; it is this lowest point in the cycle that institutional investors the world over always try to forecast with econometric models so as to make their move at the ideal moment,» she adds. But the place where you invest is equally important. «Investors would be well advised to look for land in those zones where developments are under way, adding value. Such areas are in urban districts being redeveloped, or suburban areas acquiring new access points or being integrated into a new town plan, or even towns with a rising population – either through migration or due to new facilities, universities or industrial zones.» In the greater Athens area, realtors see buying opportunities for offices in Korydallos, Peristeri, Maroussi, Halandri, Kifissias Avenue, in the centers of Athens and Piraeus and near Metro stations.