ECONOMY

Demand tapers off for Mesogeia realty

The domestic real estate market, many experts believe, may often unjustifiably discount events, forecast surplus values and nurture false expectations, all of which are almost always proven wrong by reality. A recent survey by Kathimerini of the property market showed that demand is dropping in both Athens and other major urban centers. The largest drop has been recorded in the Attica region, resulting primarily from wrong estimates of demand and prices in specific locations. Perhaps the most characteristic example is that of the Mesogeia region, northeastern Attica. Here, the construction of the new Athens International Airport and the Attiki Odos highway some years ago had sparked great initiatives for the development of the region into a new residential area, which saw land prices skyrocket. However, prices are currently very stable in this specific region, with the levels of concession of old property in exchange for apartments (or, «antiparochi» in Greek) dropping considerably, compared to 2005. Such antiparochi levels are regarded as a good index for a region’s development prospects. «The drop in antiparochi levels was to be expected following the boom in 2005 which had been driven by the imposition of value-added tax (VAT) on newly built properties,» says Zois Bougionikolos, of Intercasa group of companies. This development had then led many contractors and constructors to amass a great number of properties for development, which in turn had driven antiparochi to higher levels, he added. Another factor explaining the drop in demand, according to Bougionikolos, has been a low rate purchases of old properties in Athens’ northern suburbs, which had diverted many apartment developers to turn to Mesogeia region, forecasting that large numbers of the population would move there. But this internal migration was not strong enough and eventually did not help demand. «I could say that developers have lost almost all interest in new concessions of old properties in exchange for apartments in the Mesogeia region and other coastal locations in Attica,» said real estate agent Thanassis Ziroyiannis. He added that the current low demand does not encourage the construction of new properties, further dampened by the complex and confusing property taxation provisions. Any interest shown by developers may be described only as incidental and focuses on first-rate land, where luxury maisonettes or apartments may be developed. But again, property agents argue, tough negotiation on the price should be expected with prospective buyers.