In the focus of the next day after the pandemic are the developments in the real estate market in our country, a sector that has shown particular resilience during the last 12 months.

Significantly, according to Bank of Greece data, there was a 4.2% increase in property prices in 2020, following a 7.9% increase recorded in 2019.

The price increase in the fourth quarter of 2020 compared to the same quarter in 2019 was 2% for “new” apartments, up to 5 years old, and 3% for “old” apartments, over 5 years old.

For 2020, the average annual rate of price growth for “new” apartments was 4.7%, while the average annual rate of growth for “old” apartments was 3.9% in 2020.

But what are the trends in the individual sectors of the property market? In large investment properties and in urban properties that are of interest to thousands of citizens?

Increase in the stock of real estate in affected sectors

During the ten-year economic crisis, as George I. Kormas, CEO of Piraeus Real Estate, head of Group Real Estate and senior general manager of Piraeus Bank, points out to APE – MPE, the real estate market suffered a significant decline, mainly through a reduction in transactions, a drop in prices of up to 40%, as well as the lack of new developments.

“However, I will express a ‘heretical’ but optimistic view that the economic crisis has also contributed in part to the rational development of the Greek real estate sector. This has been achieved through the creation of a large stock of properties for disposal, mainly to businesses that will use them to fulfil their business objectives, but also by keeping prices at very competitive levels compared to neighbouring Mediterranean countries.”
“The effects of the pandemic on the economy are expected to bring about a new increase in the stock of real estate coming from the sectors that were significantly affected such as tourism, catering and retail. The real estate market the next day will resume the upward trend it had until March 2020, picking up where it left off. Together with tourism, the real estate market will bring impressive economic results, both for the owners who will see the value of their property increase and for the country as a whole,” the Piraeus Bank Group executive believes, based on the data available to him.

Small warehouses in demand – Bioclimatic buildings

Asked which specific sub-sectors of real estate development have the greatest growth potential, Mr. Kormas says that the pandemic will bring about significant shifts in the importance of real estate sectors.

“Warehousing is a property category that is a major beneficiary of the pandemic due to the significant increase in e-commerce, with the new element being the increase in demand for small warehouses in or near major cities that will provide a solution to the problem called the last mile, i.e. shipping products from the distribution centre to the end user. We will also see an increase in demand for bioclimatic buildings, mainly offices with integrated ventilation systems, on main roads with good access and larger residential buildings with space available for teleworking.”
In response to the question of what will be the characteristics of the properties that will be in demand, George Kormas points out that “the building stock in Greece is mostly over 30 years old, constructed with outdated building standards and not in line with the new requirements for environmentally friendly urban developments with a low energy footprint”. “The pandemic has given a picture of the future in the use, and therefore the demand, of urban real estate. Teleworking, which will remain for many reasons in the next day, at least in the logic of a hybrid working model, showed the need for larger residential properties where isolation between different household members is possible. It also showed that it is possible to live outside the big cities enjoying larger, cheaper and closer to nature residential properties while providing services in a productive way, says Mr. Kormas, noting that Piraeus Real Estate, through its experience and continuous data collection and processing, is able to provide a competitive product across the entire spectrum of real estate.

The cooperation of all parties in the purchase and sale process is crucial – “spring effect”
Alexandros Demertzis, a real estate consultant specializing in real estate transactions in premium areas of Athens and its suburbs, points out that during the last few months there has been a particularly increased demand for urban properties in areas such as the centre around the Presidential Palace and in suburbs such as Filothei, Psychiko, Kefalari, etc. Demand also started for investment purposes shortly after the pandemic started as there was a prospect that prices would fall and in recent months it has peaked and as a result property prices in many premium areas of the capital’s wider geographic area have shot up. Demand is mainly from high-income Greeks and developers who have emerged very strongly after years, while foreign buyers who were expressing and making purchases before the pandemic are holding back as they cannot keep up with selling price levels. Alexandros Demertzis also estimates that there will be strong mobility for urban properties in the areas where redevelopments will start, such as in the area of Elliniko, both from Greek and foreign buyers.

Waiting attitude from foreigners

Mr Demertzis attributes the waiting attitude of foreigners to the fact that especially in the smaller properties that are targeted at visa buyers, they cannot travel, especially the Chinese who used to make up a large share of the market.

Some, but few in number are moving into virtual viewing purchases but certainly this market is expected to see a “spring” effect when air travel begins at a normal pace rather than the current tight restrictions. There is also a large increase in demand in the market for beachfront homes of all categories on islands in particular, as after the experience of the pandemic many are seeking safer holidays in their own homes. Here too, the ‘spring effect’ will work for the same reason as the return to normality in air travel.

More generally, he points out that there has been an upturn in property sale prices. As he points out, Exarchia tends to get Colonaki prices and Omonia prices before the pandemic. The question and the question mark is whether these prices set by sellers can be met and for how long by prospective buyers. He identifies that in about six months to a year from now the trends will have taken a clear path.

Demertzis also emphasizes the cooperation that all parties must have in the process of buying and selling a property in order for it to be completed successfully. Prospective buyers and sellers should be consulted by professional real estate consultants in order to keep price levels at reasonable levels and not be driven to excesses that are not in the best interest of either party.

Sale agreements are being implemented – differentiating recovery depending on the property

For his part, Konstantinos Georgiakos, General Manager of Intrum REO, notes that the first signs in the real estate market indicate that interest remains significant with notable sale agreements that have been initiated being implemented while remaining focused on specific types of properties and in specific areas, particularly in urban centers.

Referring to the individual sectors of real estate development, Georgiakos notes that “the impact of the pandemic on the entire real estate market is not uniform and recovery rates will vary depending on the type, location and characteristics of the properties”. He also points out, among other things, that “we see that although the pandemic has shown that many people can work from anywhere, both people and businesses still want to be close to basic infrastructure, social activities and easy access to healthcare. Interest is therefore turning to housing of modern standards in the suburbs of the big cities, Athens and Thessaloniki, which are more sparsely populated and have a higher ratio of common areas and green spaces per inhabitant.”

“There is still strong interest in smaller logistics buildings with proximity to cities to serve immediate (last mile) distribution needs. The future of quality logistics, which bring together good location, accessibility and size characteristics, is looking positive on the foreseeable horizon with AIFs having already made significant placements. Currently, annual returns for prime logistics are approaching 8.5%. Against this backdrop, we believe that rising demand combined with a limited supply of modern warehousing space will accelerate further price appreciation.”