Rising Greek consumer spending, estimated by the European Commission to grow by 2.7 percent this year and 3 percent in 2004, is projected to bolster demand for commercial properties. In a recent report, real estate firm FPD Savills noted that the popularity of big shopping malls with entertainment facilities is spreading among Greek consumers, whose per capita income has now risen to 72 percent of the European Union average, thanks to the country’s sustained high growth rates. Demand for shop space in malls is expected to grow, while the restructuring under way in the commercial property sector should lead to greater concentration and modernization in retailing, the FPD Savills report said. Further evidence of the large growth potential for shopping malls in Greece is the very low ratio of available space for rent per capita, which is in fact the lowest in the EU. This particular trait is attracting the interest of domestic and foreign construction firms; even so, after completion of current plans in coming years, the above ratio will still be around one-third of the EU average, according to the report. Interest is not restricted to Athens and Thessaloniki but is also evident in other provincial cities. Chains Further encouraging evidence is offered by the growth in turnover of the large hypermarkets and retail chains of electrical goods in 2002. Foreign chains are continuing their expansion in Greece, forcing domestic operators to modernize and improve services. The IKEA chain of household goods, for instance, is already operating successfully in Thessaloniki and is planning two more outlets in Athens. Metro is planning to enter the Greek market next year through Media Market/Saturn and is looking for spaces in strong commercial properties of at least 5,000 sq.m. The Zara group is also reported to be studying an expansion of its labels – Zara, Massimo Duti and Breshka – in at least 10 new outlets. Short supply The FPD Savills report notes that overall, new commercial property continues to be in short supply, while the total area of malls larger than 5,000 sq.m. comes to about 230,000 sq.m. (23 hectares). Two more malls are scheduled for completion in 2003, but a boom in additional space, totaling 400,000 sq.m. (40 hectares), is projected in the next two years, although naturally there is considerable uncertainty. Currently, a lack of available property seems to be a serious impediment to expansion. LaSalle Investment acquired the Carrefour supermarket and the Europlex cinema complex in Larissa and is looking for more opportunities. Klepierre, in partnership with Carrefour, has acquired a majority holding in the Macedonia shopping mall in Thessaloniki and is studying the purchase of four malls, either new or under construction. Office space The report refers to stabilizing trends in the office space market, although leases for facilities above 1,000 sq.m. this year are expected to end slightly higher than in 2002. Generally, the market is moving slowly, the report says. A total of 135,000 sq.m. (13.5 hectares) in additional office space is estimated to be added in the next two years, most of it in 2004. More than 50 percent of office space under construction is in the northern Athens suburbs. Finally, house rents are estimated to have declined 5 percent since September 2002.