According to the data processed by the Geoaxis Observatory the trend of the decade clearly shows that we are in an upward phase of the cycle, perhaps close to a new peak.
Land values are at their highest levels in a decade, with asking sales prices increasing by an average of 29.2% over 2015 across the five local markets. Plots with a building factor of 3.6 in Ampelokipis recorded the biggest increase of 34.6%, since in 2015 the price per square meter did not exceed 1,825 euros. The trajectory for Paleo Faliro is also increasing, where it "starred" in the benefits in previous years with a building factor of 1.4. The smallest increase is recorded in Peristeri (24.42%, from 7733 euros to 912 euros) with S.D. 1.8 and Holargo with a building factor of 1.2.
According to the figures processed, in all Attika areas, an increase in the potential sale prices of plots of land is recorded for the sixth year in a row. For the second quarter of this year, the average increase reached 8.97% compared to the corresponding quarter of 2023 and 14.76% compared to 2022, which also shows the dynamics of this market.
The largest increase of 11.11% is registered by the plots with a Building Factor of 0.8 in Marousi with the median potential sale price in the second quarter of 2024 being €900/sq.m from €810/sq.m last year . As the data of the Observatory show, the area of Palaio Faliro follows with a SD of 1.4 and an increase of 10.90%. The average sale price stands at €1,547 / sq.m from €1,395 / sq.m a year ago. In third place is the area of Peristeri with plots that have a SD of 1.8 and an increase of 7.80% in the considered period. In this area the average sales price reaches €912 / sq.m from €846 / sq.m.
The prospects
According to Geoaxis, plots of land, together with apartments, student residences, warehouses, logistic centers, data centers and retirement homes have proven to be the most resistant properties to the reduction of values in a pan-European context. Despite the low returns they offer, plots will be added as an asset to investors' portfolios in the coming years. The rise in values is expected to continue over the next 12 months, but with less intensity. In no case is the market experiencing bubble conditions, as the imbalance between supply and demand of newly built apartments maintains construction activity. Big bets are the possible redefinition of the percentages of benefits and the recovery time in the values of plots of land in the northern suburbs.
The trends
The following trends are observed in the residential land market:
Builders and contractors are reassessing their investments in light of recent State Council decisions, rising construction and borrowing costs, and the potential recession, and are discussing higher benefits
- Licensing and construction activity are on the rise as pre-war construction in Ukraine and Palestine is completed and energy costs rise
- The picture in the southern suburbs is clearly more encouraging than in the north
- Northern suburbs likely to be slow to register significant rise, but rebound is a given
Since the beginning of 2018, buildings are being erected again which are mainly located in medium and high profile markets (Agia Paraskevi, Paleo Faliro, Glyfada, Voula), where plots were bought cheaply during the crisis and the compensation rates when agreed upon were not prohibitive. These new infrastructures have a common characteristic that they are largely self-financed and provide high standards of housing in constructions of special architecture, mainly in terms of their views and energy footprint.
As stated in the analysis, the negotiation between developers and land owners is getting tougher as the increase in the selling prices of apartments is offset by the increase in construction and financing costs. Today, an average lending rate is in the range of 6%, while the cost of raw materials for new construction showed an increase of 6.6%, in the twelve months of April 2023 - March 2024.
Those landowners who retained their plots after 2006 are still the big losers as the total cost of building on a consideration plot has increased significantly with the introduction of VAT from 1/1/2006 on new build deliveries. In general, compared to what was valid until 31/12/2005, today the tenant will receive almost a small apartment less, in any case of a plot larger than 1,000 sq.m. Until 2005, the compensation rate exceeded 50 % (e.g. in Maroussi and Cholargo), while today it hardly approaches 40%. Especially after the decisions of the CoE on building heights, a compression of the rate is expected.
