Recovery appears to be slow in real estate market
Athens Plus, 14 August 2009

The omens are not good for a recovery in the real estate market this coming autumn. Construction activity continues to decline and prices remain subdued. All available data indicate that residential building licenses this year will number about 60,000-65,000, against 120,000 in 2005. Such a figure, despite being one of the lowest in recent decades, is considered too high to help with the absorption of the excess supply of properties that appeared about 18 months ago.

According to data gathered by Aspis Real Estate in the first half of the year, residential house prices in the greater Athens area fell on average between 4.75 percent in the western suburbs and 10 percent in the areas around the center. Sales were down 9.4 percent compared to the first half of 2008.

Aspis CEO Miltiadis Efthymiadis notes, however, that after a slump in January and February, the market has started to pick up.

"Prospective buyers remain cagey and are continuing to look for opportunities but are slowly coming to the realization that it will be very difficult for average sale prices to decline any further," he says.

According to a survey concerning 2008 transactions, the vast majority of prospective buyers are looking for apartments that are more than five years old. In fact, 30 percent of transactions concern houses built more than 30 years ago. Brand-new apartments are sought by just 23 percent of buyers.

According to realtors, 46 percent of the apartments sold in Athens and Thessaloniki are no larger than 80 square meters and those over 170 sq.m. represent just 12 percent. Apart from the cost, the main deterrent seems to be the much steeper tax rate for larger apartments.

Prospects are also dim for a recovery in the domain of commercial real estate this fall. In the Athens area, plans for malls in Galatsi and Votanikos are not making any headway, while the difficulty in borrowing does not encourage any prospective investors. The slump in retail sales and negative expectations regarding when recovery will actually begin are also driving chain stores to scale down previous expansion plans.

As regards office space, the most likely scenario sees a small decline in rental prices and a significant rise in availability. An increase in the number of empty office spaces was reported last month on the high-profile avenues of Kifissias, Mesogeion and Syngrou.