ECONOMY

Construction giants get into house building

Greece’s housing construction market is about to undergo a massive change as more and more large firms realize that, with the tapering off of the big project construction binge after the 2004 Olympics, the market offers a lucrative alternative. At present, the market is dominated by small companies, which do not build more than one or two houses or apartment buildings per year. They account for about 80 percent of all construction activity. Medium-sized firms, which build a few more houses, account for another 10 percent of the activity, while large construction firms have a meager 10 percent share of the market. This is expected to change by 2005-2006. Already, construction managers have realized that housing is the only real estate sub-sector that has not slowed down, even during this period of economic slowdown. The unique feature of the Greek housing market is that there has never been any slump; prices keep rising, often to dizzying heights. However, according to housing experts, a price stabilization or even a return to more rational levels is simply a matter of time. This trend is first expected to emerge in places where many luxury homes are being built, such as the rich Athens suburbs of Psychico and Kifissia. This will be a response to the dramatic drop in new activity due to prohibitive costs. Many of the large construction firms have only recently branched into housing. These companies, such as Michaniki, Hellenic Technodomiki, Themeliodomi, Cyprus’s Cybarco, J&P-Avax, the GEK-Hermes group, Olympic Technical and the Kopelouzos group are currently developing housing complexes, most of them luxury homes. To these must be added the developers of the media villages, which, after 2004, will be sold parcel by parcel to individual owners. Why didn’t this entry into housing happen earlier? There are several reasons: Perhaps the most important is the scarcity of available plots. A large company needs «land reserves» to develop in order to recycle its capital (investment, construction, sale or leasing). The newly found land lies mostly in the area of Mesogeia, near the new Athens airport, and has been recently incorporated into town plans. Before the building of the airport, housing construction in Mesogeia was a risky business. Now, the area offers great prospects. One of the biggest projects under construction, Lofos Pallini, is directly related to the Olympics, since it will initially house a media village.