You are reading post What’s next for the Property Market – Which properties are in high demand, what do specialists say
Right after the pandemic, the focus of attention is drawn to the property market of our country, a field with significant tolerance during the past 12 months.
According to the records collected by the Bank of Greece, a 4,2% increase was noticed in property prices in 2020, following a 7,9% increase observed in 2019.
The price increase within the fourth trimester of 2020 compared to the correspondent trimester of 2019 was 2% for “new” apartments, constructed up to 5 years ago, and 3% for “old”, constructed more than 5 years ago.
For 2020, the average yearly price increase rate for “new” apartments was 4,7%, while the average yearly price increase rate for “old” apartments was 3,9%.
What are the trends in separate fields of the property market and specifically in large investment properties and urban centers which are the center of attention for thousands of citizens?
Expansion of property portfolio in affected fields
During the ten-year financial crisis, as mentioned in Athens Macedonian News Agency (ΑΠΕ-ΜΠΕ) by George I. Kormas, CEO of Piraeus Real Estate, chief of Group Real Estate and Senior general manager of Piraeus Bank, the property market suffered a significant lump, mainly due to the decline of transactions, the decrease of prices up to 40% and the lack of new developments.
“I will, however, express a “controversial” but optimistic opinion that the financial crisis partly contributed to the rational growth of the Greek real estate field. This emerged from the creation of a large portfolio of available properties, mainly in companies that will use them for the achievement of their business objectives, but also for the preservation of prices in very competitive levels in comparison to other neighboring Mediterranean countries”.
“The pandemic consequences on the economy are expected to bring a new increase in the property portfolio emerging from sectors which were affected significantly, such as tourism, food services, and retail market. The property market will continue its inclining route, existing since March of 2020, exactly from where it left off. Along with tourism, the property market will bring impressive financial outcomes, both in owners who will see the value of their property increasing, as well as for the country as a whole”, as estimated by the executive of Piraeus Bank Holdings, based on the available records.
Small storage units – bioclimatic buildings under discussion
After being asked regarding the specific fields of property development with larger growth potentials, Mr. Kormas mentions that the pandemic will generate significant rearrangements in the ranking of real estate fields based on their significance.
“Storage units are a category of properties which is favored by the pandemic due to the significant increase of e-commerce, with the new element being the increase of demand for small storage spaces, within or near large cities which solve the problem known as “las mile”, viz. the shipping of products from the distribution center to the final recipient. In addition, we will notice an increase in demand for bioclimatic buildings, mainly offices with complete ventilation systems, in central roads with easy access and larger residentials with available spaces suitable for remote working”.
Facing the question regarding the particulars of properties under demand, George Kormas underlines that “the building portfolio in Greece, in its largest proportion is over 30 years old, constructed with dated building specs and not compatible with the new demands for eco-friendly urban development, with low energy footprint”. “The pandemic has offered a clear picture of the future in the use, and therefore the demand, of urban properties. Remote working, which will be maintained for various reasons, at least in the form of a hybrid working model, has shown the need for larger residential properties where isolation between household members will be an option. Also, it has shown that it is possible to live outside large cities, enjoying larger, cheaper, and residential properties which are closer to nature, while simultaneously offering services in a productive way, as mentioned by Mr. Kormas, underlining that Piraeus Real Estate, based on experience and constant data collection and analysis, is able to offer a competitive product throughout the whole range of Real Estate”.
Decisive cooperation between the contracting parties in purchase-and-sale procedure – «Spring» Phenomenon
Alexander Demertzis, a property consultant specialized in property purchase-and-sales in premium areas of Athens and suburbs, underlines that during the past months there is a significantly increased demand for urban properties of high value in areas such as the center of the city, near the Presidential Palace as well as in suburbs such as Filothei, Psychiko, Kefalari, etc. The demand for investment purposes has also initiated right after the start of the pandemic since there was a potential for lower prices, and during the past months, the demand has peaked, resulting in a surge of property prices in premium sections within the broader geographical area of Athens. The demand is mostly noticed by Greeks of the high-income class and by constructors, who, after many years, have dynamically resurfaced, while foreign interested parties who were purchasing properties before the pandemic are on a standby mode since they cannot keep up with the price levels. Alexandros Demertzis also estimates that intense mobility will be noticed in urban properties within areas under regeneration such as Ellinikon, both from Greek citizens as well as foreign parties.
Standby mode by foreign citizens
Mr. Demertzis explains the standby mode of foreign citizens with the fact that especially smaller properties are addressed to golden visa investors, who are currently unable to travel, specifically Chinese citizens who were a large proportion of the market.
Specific, but few, individuals, are proceeding with virtual viewing purchases, but definitely this market is expected to demonstrate a “spring” phenomenon, once traveling starts at a normal pace, and not under the current restrictions. In addition, a large incline is noticed in demand of coastal residencies of all classes, mainly in islands, since following the pandemic experience, many seek for safest holidays with their own accommodation. This demand will also demonstrate a “spring” phenomenon, for the same reason, once traveling is free of restrictions.
Overall, he underlines that an increase in prices is evident in purchases and sales. As he mentions, the neighborhood of Exarcheia tends to reach the prices of the Kolonaki area, and the Omonoia area tends to reach the prices of the Exarcheia area before the pandemic. The question is if these prices set by sellers can be met and for how long by potential buyers. He defines that approximately within six months up to one year the trends will be evident.
Mr. Demertzis emphasizes the necessity of cooperation between the contracting parties in a purchase and sale procedure in order for it to be completed. Potential buyers and sellers shall take under consideration the opinions of professional consultants of the Real Estate field in order for the price levels to be maintained at reasonable levels and not to be led to exaggerations that do not benefit either side.
Sale agreements under materialization – Differentiation of reflation depending on the property
On the other hand, Konstantinos Georgiakos, CEO of Intrum REO, underlines that early signs in the property market show that the interest remains substantial, with considerable sale agreements under progress and being materialized, while the attention is still focused on special types of properties in specific areas, mainly urban centers.
Focusing on individual fields of property development, Mr.Georgiakos notes that “the consequences of the pandemic on the total real estate market are not unified and the recovery rates will diversify according to the type, location and property particulars”. He also adds that “we notice that, even though the pandemic has proven that many can work from anywhere, both individuals, as well as businesses, continue to seek proximity to basic infrastructure, social activities as well as easy access to healthcare. The interest is now focused on residencies with modern specs within the suburbs of large cities, Athens and Thessaloniki, which are more sparsely populated and have higher proportions of communal spaces and green areas per citizen”.
“There is still major interest in smaller logistics buildings with proximity to cities for the service of immediate distribution needs (last mile). The future of high-quality logistics with good job particulars, accessibility, and size, seems positive within the horizon with Real Estate Investment Company (in Greek: ΑΕΕΑΠ) having already proceeded to significant installations. Currently, the yearly returns for prime logistics remain at 8,5%. In this context, we estimate that the increase in demand in combination with a limited supply of modern storage units will accelerate the further inclining c
ourse of their prices”.
As mentioned by Mr. Georgiakos, taking into consideration the challenges of the market, Intrum Hellas has created Intrum REO solutions, the first property management company with investments in software systems, digital marketing, and skilled human resources and, having ensured the concrete sustenance of the Company Group regarding resources and technical knowledge, aims to offer solutions through a one-stop-shop service of high quality.