Positive estimates for the dynamics of the real estate and construction market remain

The momentum that the real estate market has gained in Greece, both in terms of sales and construction, is expected to continue despite new uncertainties and challenges arising from developments in the energy sector and increases in materials, as well as from the war in Ukraine that creates new conditions in the international economy, according to converging estimates that see the light of day. In any case, as categorically stated by financial analysts and real estate professionals, it is premature to make safe assessments, as we are still in an evolving course of events. In this case, however, the crisis may still be an opportunity, say industry professionals

The dynamics of the real estate market to date

According to data released by the Bank of Greece, a significant increase of 9.8% was recorded in the prices of new apartments in the past year. In particular, it is estimated that in the 2nd quarter of 2021, apartment prices (in nominal terms) were on average 9.1% higher than in the corresponding quarter of 2020. More specifically, the price increase in the 2nd quarter of 2021 compared to the corresponding quarter of 2020 was 9.8% for new apartments, i.e. up to 5 years old, and 8.6% for old apartments, i.e. over 5 years old. For 2021, the average annual rate of price growth for new apartments was 7.4%, compared to an increase of 4.9% in 2020, while the average annual rate of growth for old apartments was 6.9% in 2021, compared to an increase of 4.2% in 2020.

Various studies and estimates that see the light of day also predict a dynamic recovery, with the most recent being the research of Cerved Property Services (CPS) for the Greek real estate market. As reported, 2021 has been a strong year for the Greek housing market, while the first half of 2022 is predicted to be even stronger, with 61% of CPS's network of partners predicting the market will be on the rise, with 37% predicting the market will remain stable, while just 2% expecting a contraction. CPS partners predict different trends for each property sub-category. As D. Papastamos, Research and Valuations Director of Cerved Property Services, tells APE-MPA, the recent geopolitical developments in Ukraine and the consequent economic impact internationally, are likely to adversely affect the expected course of the Greek real estate market mainly in terms of the degree of implementation of new construction and the possible heterochronism of international investors' decisions regarding new rafts in Greek real estate. He stresses, however, that many times this volatile environment can be easily reversed and lead to an improvement in the market.

Construction - Perspectives in energy construction despite the difficult times

As Joseph Arampatzis, CEO of Epikyklos Construction, points out to APE/MPE, «if the question is what is the best time to buy property in Greece, the answer is yesterday». «Whoever didn't have time to position themselves yesterday, then the best time is today. We believe that in the coming months, prices in many areas of Greece will trend upwards,» he adds. He cites three main reasons:

-Greece is one of the countries with the lowest prices in Europe especially if you take into account the good quality of construction in a large part of the properties offered.

• The amount of licensed projects together with whatever project is currently under consideration is far in excess of the country's workforce, even if some projects are temporarily frozen due to the war in Ukraine.

-The upcoming pollutant tariffs in Europe due to the goals for a greener world, starting with the energy price crisis, and with the ensuing multitude of regulations, certainly costly to build.

As he points out, despite any developments, Epikyclos is continuing with all the planned investment construction projects. A series of energy self-sufficient apartment buildings with a number of new generation apartments that in a future penalty rating based on pollutants in real estate, these would be exempted as modern of a future world that is ahead of us. Such properties in the construction sector are estimated to be one of the best investments even in these challenging times, he adds.

The coming months will determine developments - The real estate sector has the advantage of a delayed reaction

As the Senior General Manager of Piraeus Bank, Georgios Kormas, Managing Director of Piraeus Real Estate, Piraeus Bank Group, said, speaking at the «Prodexpo North» conference in Thessaloniki, «the real estate sector has a strategic advantage, as it reacts to crises with a time lag of about eight to ten months, depending on the property category. If in the meantime the crisis subsides, we will avoid the downturn and there will be a bridge between before and after. In case things don't go well and we have a recession necessarily, this will also affect Greece, which before the Russian-Ukrainian crisis was a hot spot for international investors, who saw it as an investment destination,

Answering the question whether the strong inflationary pressures will result in costs being passed on to the construction of public sector projects and how their implementation will be affected, Mr.Kormas estimated that «for the projects that will be put out to tender now, it would be good (the auctioning authorities) to listen to the side of those who will construct them», noting that a company that will sign a contract today, in six months will have different data in front of it, so there needs to be some clauses. «The increases cannot be absorbed by the construction part, they will be passed on to the next day.».

The optimistic scenario for the economy still prevails

A first comprehensive assessment of the impact of the war in Ukraine was made by the Economic Analysis Department of the National Bank of Greece. The conclusions of the analysis note that «we could argue that the new shock implies limited losses for economic activity in Greece in 2022, which are expected to be reversed over a three-year horizon». A view shared by Greek bank executives speaking at a major banking conference last week, as they acknowledged the major new challenges arising from the new uncertainties, and assessed that the positive scenario for the Greek economy is still the dominant one.

Al.Lidorikis