ECONOMY

Professional property owners in trouble

Real estate experts are expecting further pressure on the prices and rental rates of professional properties, primarily shops and to a lesser extent offices and hotels.

Market professionals suggest that in the current climate, even owners of properties in prime locations will be forced to yield to the pressure resulting from the deepening recession and constantly swelling unemployment figures.

This combination has forced thousands of shop owners to exit the market, leaving behind a huge number of empty properties, with inadequate demand to fill them.

A similar phenomenon is gradually emerging in the office market, too. A considerable number of companies are looking for smaller offices in secondary locations, while some are opting for spots away from the city center but which offer easy access via public transport.

The abovementioned trend is most evident in cases where companies have failed to persuade property owners to make big cuts to rental rates.

Professional property owners have been exposed to huge pressure from leaseholders to cut rental rates since the onset of the financial crisis, with their demands being accepted in most cases.

However, a law amendment by former Economy Minister Louka Katseli in spring 2010 relaxed the already favorable conditions for leaseholders of professional spaces to an even greater degree, a factor which has added to property owners? problems, as they can now suddenly find themselves without tenants and with very little room for maneuver.

As a result, rental rates have declined by up to 50 percent in the case of smaller shops.

The Katseli amendment allowed the leaseholders of professional property to terminate their contracts even if they had forfeited that right when signing the rental agreement.