ECONOMY

Commerce and entertainment get linked under ambitious new property developments

The operation of the first major shopping centers in Greece and the development of modern multiple-use entertainment spaces along big motorways are two factors setting the tone in the domestic real estate market this year, creating new poles and destinations that will certainly affect the prices of commercial and residential properties. Trade and entertainment seem to be replacing infrastructure projects as the main event in the property sector, at a time when the retail sales pie appears to be redistributed and competition for securing a slice in the new game is expected to be tough. No wonder many people forecast that in 2005 the property sector will be the focus of investor interest, as Theodoros Haragionis, head of the Haragionis Group that specializes in developing shopping centers and office space, tells Kathimerini. «The modernization of the retail sector will continue this year, as existing chains expand and new ones enter the Greek market. At the same time the first international-style large shopping centers apply the system of commercial cooperation between the tradesmen and the property owner, through the main lease payment and a percentage of the shops’ turnover,» Haragionis says. He finds the momentum to be particularly favorable at this point: «The general rule for real estate is while interest rates are low, real estate will be particularly attractive, not only for residences but also as investment tools. The expected small increase in rates this year can in no way affect this attraction negatively,» he explains. The recreational domain is also very active, Haragionis stresses. «New announcements are awaited for the construction of cineplexes and other spaces with a particularly high quality of services. There will be fierce competition among them in the future, with the consumer being the ultimate winner,» he says. ‘Hermion’ After 72 years of presence in the Greek market, the Haragionis Group controls, directly or indirectly, property worth over 110 million euros. Within this year the construction of «Hermion» at Plaka will start. «This is an ambitious plan which for years had run into a series of town-planning and ownership problems, since 1978 when we first got involved with it, and now we have just had issued the second-stage permits and can start construction works this year. The relevant decrees have been signed and the permit process proceeds without problems,» Haragionis says. He adds that Hermion will constitute a new commercial attraction linking the trade of Plaka (Adrianou Street) with that of Monastiraki (Ifestou Street), offering visitors the ability to walk along a commercial route starting from the Olympic Zeus columns to Thiseion. «The whole complex will be developed on a 3,000 sq.m. plot, with buildings of 10,000 sq.m. in total, 30 percent of which will be dedicated to culture, 40 percent to stores and the rest to houses and offices,» Haragionis reveals. Hermion will be included in the «Fun in the City» program, which today includes four developments: The Anesis multiplex on Kifissias Avenue, the Korai arcade that was recently renovated, and the Aegli and Millennium shopping malls. «This program will continue to be enriched by new developments in the broader sphere of entertainment, as for us trade is also entertainment, while our target is to double the program’s developments in the next three years,» suggests Haragionis with his eyes on the future. The resulting question is whether the retail sales and entertainment market is growing too quickly during a period when available income is shrinking. «The shopping centers under construction at Maroussi and the Army Fund building (in central Athens) are just two of the five developments that Athens and greater Attica can afford. Madrid, for example, today has more than 20 malls, and is rightly among the extremely mature markets. Such a big number of developments creates the conditions for market cannibalism,» comments Haragionis, adding that this will not happen in Greece. He also believes that the creation of shopping centers can bolster the market, bringing new commercial poles to upgrade trade across entire city parts. «We should not forget that for a number of people shopping has its own pleasure, and the creation of new destinations offering a multitude of options will definitely refresh consumers’ interest,» he says. Haragionis’s cooperation with Portuguese property developer Sonae Imobilaria, dating from 1999, began with the development of the Aegeon shopping center in Faliron, close to the Karaiskaki soccer ground. The project has for years remained stuck in red tape, disappointing the Portuguese firm’s officials. The Sonae/Haragionis consortium is now developing, in cooperation with Lamda Development, the Mediterranean Cosmos mall at Pylaia, Thessaloniki, covering a total of 45,000 sq.m. To date, 60 percent of spaces have been leased and the mall is expected to operate from the end of this year. «Sonae has been in Greece for five years and until now it has only taken part in one project, a fact that worries Portuguese investors and puts a stain on Greece, discouraging new investments, as town-planning and institutional problems circulate in international meetings,» Haragionis warns. He goes on to observe that «not only do we fail to attract, but we are also turning away investments at a time when new markets with great momentum are being created around Greece. Attracting investments requires the will from the state to support the effort with all its potential.» The head of the Haragionis Group notes that real estate companies have for years asked specific things from the state, starting with respect of ownership: «It is not possible to have requests for property ownership clarification stuck at the Council of State for 10, 20 or 30 years. Ownership will be respected only by defining the clear use of land, according to which every company and investor will know what they can do, where and when. Yet prolonged uncertainty allows municipalities and the state to confiscate properties. If all is made clear then permits will be issued more easily, although some will lose revenues. Uncertainty assists those selling permits, as whatever is not clear is sold,» he explains. The Haragionis Group today owns 50,000 sq.m. of land in Attica, where the group could build 200,000 sq.m., that have been frozen for years for many reasons, by various state bodies, as Haragionis says: «This is enough to defame Greece in the eyes of a foreign developer,» he adds.