ECONOMY

What next for property prices?

The Athens Olympics were a huge event, especially given the country’s size and that of its economy. Despite delays in starting certain projects, it was a highly successful event that leaves a positive legacy for the country. The Games were marked by new, important infrastructure projects and actions that dramatically changed the face of Greece. In Attica, especially, the number and size of new projects and infrastructure is so great that it is easy to see a marked improvement from previous decades. The time taken to cover distances within the Athens basin has been greatly reduced. This development favors new areas which will grow in demand in the property market. At the same time, a large number of Olympic installations will be used either as housing (in Thrakomakedones, Edisson Hill and Ilida) or as offices, convention centers, exhibition halls etc., while the post-Olympic use of other projects has yet to be determined, despite the fact that their upkeep will cost millions of euros in the meantime. All these developments will dramatically change the property market. The housing market in Athens and Thessaloniki presents no uniform picture. In some areas, there are very high prices; in others, demand has stabilized, and in some cases, demand is weak. Recently, there has been a rise in demand for apartments between 100 and 120 square meters, that is, smaller than previously the case. Trends in the market are influenced by the low rates for housing loans, the development of new areas, changes in land use and the change in investment preferences toward safer investments by people who got burned on the Athens Stock Exchange. The most likely scenario concerning housing prices in Attica during 2005 is that prices in luxury areas will rise slightly after a previous correction, while, in middle-income areas, prices will either remain stable or rise very slightly. By contrast, it is felt that there is quite a margin for price rises in areas close to the Athens airport, along the Attiki Odos highway but also around the area of the old Athens airport at Hellenikon, depending on how much empty space will be developed. Things are similar in the Thessaloniki area, with price rises notably expected in the eastern suburbs, such as Kalamaria, Thermi, Playari, Peraia, Kardia and Evosmos, but also in city areas, such as Saranda Ekklissies, the upper city, and northwestern suburbs, such as Pylaia. Both major Greek cities face severe shortage sin parking space and any solutions provided for by the State will affect property prices. We should mention here the new legal provision that essentially prevents small properties in Attica from having garages. There has been a lot of opposition to this provision and it may be withdrawn. Offices and shops In Athens’s office market, property prices and rentals have fallen significantly and there is still a great number of empty properties. The competitive prices offered in new areas are an additional reason keeping prices from rising in established areas. There are many new buildings, many of them built originally for Olympics-related use. Thus, there is lots of supply at a time when demand is mostly limited to existing enterprises moving their offices. These would like to upgrade their office environment but, in these lean times, often end up looking for the cheapest alternative. Several companies have canceled their plans to move. The Thessaloniki market has been greatly affected by the closing of hundreds of small and medium-sized enterprises, especially small industries. The fact that the city lost its bid to host Expo 2008 will put a damper on new developments or the upgrade of existing facilities. In conclusion, it is safe to say that the office market has not bottomed out yet and, therefore, a further correction in prices is expected. However, in the new year, some companies are expected to move to highly desirable areas, such as industrial parks near the airport and the Vari-Koropi road or places such as the western suburbs and Elaionas. The shop market was not affected by the Olympics but faces big changes, as shopping malls and theme parks are belatedly developed in Greece. Despite the new developments, however, the traditional city center areas are never going to lose their value. Depots Further development of logistics centers is expected as more foreign commercial chains get a foothold in the domestic market. The need for modern logistics facilities is great, as most existing spaces are outdated. The areas most open to such development are alongside the big national highways, close to both Athens and Thessaloniki, the Attiki Odos and the Athens airport area. (1) Property Valuator, Member of the Chartered Valuators Agency.