PROPERTY

Rental cuts are on the horizon

Rental cuts are on the horizon

The possibility of a reduction in rents is now emerging in Greece, especially in areas where rental costs are deemed unsustainable for the vast majority of households.

Property market professionals note that if the inflationary pressures and high costs of energy continue till the summer, it is likely that is the time when the first rental cuts will be implemented in the market.

Lefteris Potamianos, the head of the Athens-Attica Real Estate Agents Association, tells Kathimerini that “we are already seeing the first pressure on certain areas of the capital, in the form of the significant delays in finding tenants, precisely due to the high asking rates. A decisive factor for tenants is electricity costs that are factored in to rental rates.”

He adds that if the existing high rates of energy remain at those levels, landlords will be forced to reduce their asking rents due to their inability to find tenants. At the same time “we will start seeing a new wave of unpaid rents, especially concerning contracts signed over the last few months, with rental rates at particularly high levels. What is certain is that the energy factor has a negative effect on rental rates.”

Such have been the rental hikes and the expectations of some landlords recently that a number of cases have been observed where the asking rates for apartments have risen some 40% higher than three years ago – i.e. before the outbreak of the coronavirus: A third-floor 80-square meter apartment in Palaio Faliro, southern Athens, is now leased for 850 euros per month, against €600 before the pandemic – i.e. a 41.5% hike. Likewise, a Kolonaki landlord is now asking for €1,200/month for a 130 sq.m. apartment, when a similar property nearby was leased for €850/month two years ago, signaling a 34% hike.

The Spitogatos Property Index data also show a rise in asking rents by up to 17.2% across Attica, peaking in the eastern suburbs, where the average rate is €7.5/sq.m. per month, from €6.4/sq.m. a year ago.

Therefore this situation could evolve into a “perfect storm” for tenants, given also the hikes in the cost of energy and food.