ECONOMY

Ermou Street, one of world leaders in commercial rents

Greece is a laggard in most tables of key economic data for developed countries but disappointment with the relatively low income per capita is offset by the reflection that the «others» have a higher cost of living. Whether this is correct or not is a matter for a separate discussion; but the fact of the matter is that the badly paid Greeks maintain the seventh most expensive high street in the world in terms of commercial rents: this is Ermou Street, off Syntagma Square. A survey by real estate company Cushman & Wakefield (C&W), which is active in Greece through a consortium set up with Sotiropoulos Bros, estimated the average annual commercial rent in Ermou Street in 2003 as 2,640 euros per square meter. Ermou rose two places up the list, from ninth in 2002. New York’s Fifth Avenue remained the world’s most expensive commercial street, with annual rents of 7,967 euros/sq.m., and the Parisian Avenue des Champs Elysees the second most expensive, with rents of 6,287 euros/sq.m. Hong Kong’s Causeway Bay was in third place at 4,687 euros/sq.m., followed by London’s Oxford Street, Sydney’s Pitt Street Mall, Seoul’s Kangman Station and then Ermou in seventh place. The lowest rents among the 45 commercial streets listed by C&W was Krasta Street in Riga, Latvia, at 366 euros/sq.m. The average annual rent in the eurozone was 1,296 euros/sq.m. and the European average, 1,190 euros/sq.m. Athenian real estate agents take the view that Ermou Street’s high rents are due to a concentration of high rents in the Greek capital in just two places, the other being the upmarket neighborhood of Kolonaki. They argue that other cities have a much larger number of expensive districts, pointing out that Ermou is among the 10 most expensive streets in Europe, the other nine being four in Paris, four in London and Moscow’s Manezhnaya Square. Market conditions have induced many chains to trim the number of their branches and set up larger shops at more central points capable of attracting a larger turnover, like Ermou, which has retained a steady composition of the firms it hosts for a number of years. The Greek commercial property market faced a downturn in 2003. In most local markets, rents declined and most rented space, after being given up, is not reoccupied soon. In Ermou, rents did not fall but goodwill values declined by as much as 50 percent to 2,930 euros/sq.m. Agents’ views on the effects of the impending opening of the first large malls differ. Some believe they will absorb a big chunk of retail business by concentrating a large number of brands in a few places and will therefore increase the concentration of high rents. Others think malls will upgrade the retail market by attracting more foreign chains and boost consumption, benefiting smaller outlets as well.