Greek Real Estate: How sales prices and rents for offices and shops will move in 2023

Thousands of commercial properties are being sidelined as the gap widens between modern and legacy offices (categories B and C), as well as between shops in popular markets and those in secondary ones.

The vast majority of people in the real estate market, at a rate of over 50% and above, estimate that the sales and rental prices of offices and shops will remain stable during 2023 compared to 2022.

Increasing demand for office space is driving up prices

The only exceptions are quality office spaces where 52% of real estate market players predict that this year the rental interest will move higher (including 43% estimate that there will be stability), as well as stores in the main markets, with 49% believing that there will be an increase in demand for rentals against 43%, who believe that there will be no changes.

These result, among other things, from the annual analysis conducted by the Research and Analysis Sub-Directorate of Cerved Property Services (CPS) and concerns the Greek real estate market and in particular the commercial sector.

More than 200 real estate industry professionals took part in the survey-questionnaire, geographically covering most of the country. The CPS partner network includes both appraisers and real estate brokers.

All in… on green

In Attica, major new projects in the office sector are already underway for the next five years, attracting new players and new developments of modern office spaces that meet ESG criteria and will meet the increased current demand.

In 2022 as in 2021, almost exclusively, real estate developers and institutional investors were the protagonists in the office sector.

A new trend that is being observed is the radical renovations of old independent commercial buildings in the city centers and the big bet will be their upgrading and reuse.

The office market generally moves at different speeds depending on the quality characteristics of the property. Remote working has favored the new generation of newly built offices, increased the quality requirements of users and intensified the need for housing in safe, flexible, comfortable, bioclimatic and high-standard spaces.

Modern companies are mainly looking for “green” buildings and investors are interested in sustainable real estate portfolios. The prices of these offices are rising, the increased demand is maintained, their yields are shrinking, their occupancy is guaranteed and consequently, the gap between the B or C class stock and modern offices is widening, as shown by the annual survey of CPS .

It is typical that only 9% of the survey participants answered that the leasing interest for the older offices (B or C category) will increase, while the corresponding percentage for the purchasing interest was even lower, at 5%.

E-commerce is turning the tide

Online sales are undercutting physical store prices. High demand for buying and renting them is recorded only in prime locations, according to the survey.

The reduction in disposable income of Greeks due to the energy crisis and inflationary pressures created pressures on the retail trade, where sales volumes shrank with turnovers maintained at elevated levels due to inflation. However, tourism boosted sales in popular tourist destinations and central Athens, although it did not fully offset losses from Greek households.

E-commerce in Greece is now firmly established, maintaining high growth rates. Online sales play an essential role and intensify the upward trends recorded on an annual basis in recent years. The younger generations are emerging as an increasingly powerful driving force for e-commerce, which does not seem to be slowing down, despite the global crisis.

Consumers now want to enjoy the advantages of physical stores as well as online shopping. This shift from brick-and-mortar stores to e-commerce has affected the store market, turning investor and tenant interest almost exclusively to prime locations, CPS research findings show.