ECONOMY

Real estate market shows consolidation in the aftermath of the Olympic Games

The first post-Olympic Games quarter (October-December 2004) saw the domestic real estate market maintain the positive picture it gained over the whole year according to a survey by international property consultancy firm CB Richard Ellis, which is active in Greece through Danos & Associates. Infrastructure projects, combined with the particularly successful hosting of the Olympics, have rekindled the interest of foreign investors in the Greek real estate market, CBRE notes in its report. This interest focuses on the plan for the utilization of Olympic venues, the mobility noted in the use of state-owned properties, as well as the development of modern shopping centers to cover thousands of square meters, working as an attraction for big international chains that wish to penetrate the domestic market. The international investment community views as positive the forthcoming imposition of value-added tax, seen as harmonizing Greece with international standards and helping the market’s rehabilitation. Additional incentives that the government is considering are expected to be announced soon, such as the reduction of tax on enterprises. Referring to developments in the housing market, the CBRE report stresses the consolidation of prices during the last quarter of 2004, implying that the intense rumors about a big decline after the Olympics did not materialize. The market is moving, with considerable shifts at certain points, with the areas that directly benefited from infrastructure projects and the expanded road network maintaining their value or posting a small rise (e.g. Neos Cosmos, Ilion). On the other hand, prices in the traditionally expensive areas (e.g. Kifissia) seem to be falling slightly. Regarding the disquiet created by the change in the tax system, the report underscores the fears of a blow to the concessions of old property in exchange for apartment blocks and considers possible a makeshift increase in land sales and new buildings before January 1, 2006, which might aggravate the problem of housing oversupply in certain areas. Office shift The US company further estimates that the new situation created by infrastructure projects has also affected the office market. The emergence of new areas with easy and reliable access, along with high leasings in the city center and the notorious parking problem, are leading big multinationals toward new markets. Siemens is a typical example, presently moving to new offices on Kifissos Avenue from Kifissias Avenue, which is much more expensive. Demand is mainly coming from multinational enterprises for single stories between 1,500 and 2,000 sq.m., while the relocation plans of six ministries, if realized, will alter the situation in the center’s market, with the availability rate increasing rapidly. Nowadays in the city center, this rate is at 7.5-8 percent, while in other main markets that reaches 15 percent. Leasings are dominated by consolidation, ranging between 25 and 30 euros per sq.m. in the city center (Vassilissis Sofias St), while on Kifissias they range between 18 and 25 euros per sq.m., although some pay more due to older agreements. On Mesogeion and Syngrou avenues, there has been a slight drop in prices, while the opposite is occurring on the National Road and Kifissos Avenue, where demand is clearly rising and significant leasings are being completed. Besides Siemens, S&B has recently relocated with more companies to follow. CBRE finds the greatest interest in real estate purchases to be in the domestic retailing and recreation sectors. Shopping and entertainment centers of thousands of square meters are in their last stages of development, attracting the interest of chains, foreign developers and even investors, who note that in Greece there are the conditions for a substantial change in the commercial map. On the main commercial roads of the center and the suburbs, rental prices remain high and the availability of new spaces is minimal. Ermou and Tsakaloff streets remain the most expensive commercial roads, with monthly leasings reaching 180 euros per sq.m. Similarly, the lack of space also drags neighboring roads higher, with Stadiou Street being a case in point: Despite the existence of many department stores, leasings on Stadiou even reach 160 euros per sq.m.