In the Athenian residential real estate market house prices increased 10.3% in the first quarter of 2024 compared to the same quarter of 2023, although this increase is lower than the 17.39% rate observed last year. In the 2nd quarter of 2024, prices increased by 12.4% compared to 2023.
Piraeus recorded the largest increase this quarter, with a 28.9% year-on-year increase. From March 2023 to February 2024, private construction activity across the country increased by 13% in the number of buildings compared to the previous year. Meanwhile, the prices of building materials continue to rise.
According to Mrs. Korina Saia, managing director of Premier Realty Greece, real estate values in the big cities continue to increase at a strong pace. Despite rising costs, demand from international buyers remains strong. Foreign investors are particularly attracted to luxury homes, betting on future capital gains. In 2023, foreign real estate purchases reached 3 billion euros. The real estate sector contributes about 20% to 35% of the country's total foreign direct investment every year. In addition, prices are expected to rise in the short term, while significantly high inflation, escalating construction costs and sustained high interest rates are likely to negatively impact long-term property investment margins.
Greece performs better than other European countries in terms of house rents. According to a Global Property Guide report for March 2024, average gross rental yields in Greece fell to 4.82% in the first quarter of 2024, from 5.22% in the third quarter of 2023. However, yields vary by with the location - for example, a one-bedroom apartment in Patision offers a yield of 7.5%, while in Platia Amerikis 6.9%. In general, smaller apartments yield higher rental yields compared to larger units.
Offices
The managing director of Premier Realty Greece notes that over 60% of global real estate investors have incorporated ESG criteria into their investment strategies. In Greece, the lack of "green" buildings, a result of the decade-long crisis and the COVID-19 pandemic, presents significant growth potential, likely to be extended for at least another decade. By 2026, 380,000 sq.m. are expected to be added to the Greek market. new green office spaces. The return on investment for modern, green office buildings averages around 6% for Class A properties, 7% for Class B properties in prime locations and 8% for Class B properties in secondary locations. Green buildings can have rental prices of more than 30 euros per square meter, with these prices being 30% to 40% higher than conventional office properties. Since 2019, office prices per square meter have increased by 47.3% in the center of Athens, by 40.6% in the Eastern Suburbs, by 49.9% in the Southern Suburbs and by 33.3% in Western Athens.
Student housing
Premier-Realty executives estimate that many investors are focusing on student housing, which offers a yield of about 7 percent. Across Europe, student housing has become a top real estate trend. State university dormitories house about 5% of the student population, prompting investors to buy unfinished buildings or renovate older properties near universities and metro stations. The aim is to create furnished studios with private bathrooms and communal facilities such as laundry facilities, entertainment areas and common areas. The areas with the greatest demand in Athens are Zografou, Goudi, Neo Kosmos, Kallithea, Petralona, Neapoli and Ilisia.
Logistics
Investment interest from both Greek and foreign companies is also focused on logistics properties and industrial properties, with expected returns of around 7%. Greece plays a key role in connecting Europe with Asia, which increases the demand for modern, energy-efficient logistics facilities, especially in areas such as Oinophyta, Magoula, Aspropyrgos and Elefsina. Over 250,000 square meters of new logistics facilities are expected to be completed by 2024.
Hotel investments
In 2023, hotel investments in Greece reached €3 billion, reflecting a 23% increase over the previous year. This trend has continued over the past five years, with hotel investments showing an annual growth rate of 10%-15%. A report by Travelworks Public Relations states that 40% of the new hotels set to open will be operated by international commercial schemes, while the remaining 60% will be managed by domestic companies. A global survey conducted by CBRE places Greece among the top five preferred investment destinations for hotel properties in Europe. For the first time, Athens entered the list of the top 10 metropolitan destinations for hotel investment in Europe, occupying ninth place. In conclusion, according to estimates by Premier Realty Greece, the Greek real estate market presents many promising investment opportunities.
