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Upside seen in capital value, rentals of Athens property

Athens ranked in position number 23 in an assessment of 30 European cities based on its real estate prospects, though there is upside potential seen in the city’s property market, according to an annual report prepared by Urban Land Institute.

In a report titled “Emerging Trends in Real Estate Europe”, ULI prepared a snapshot of Europe’s property sector in cooperation with PwC. More than 1,000 experts from across Europe were questioned on how they perceive the upcoming year amidst growing uncertainty in economies and markets.


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Concerns grow in European markets

The war in Ukraine, surging energy costs, historically high inflation and increasing interest rates have pushed investors onto the back foot, prompting a rethink of strategies and a switch to more defensive decisions.

“Even investors’ customary safe havens in Germany, Frankfurt, Munich and Hamburg, do not enjoy the same unwavering positive sentiment as previous years, reflecting the potential impact of inflation on Europe’s largest economy and its dependency on Russian gas supplies,” said ULI.

Topping the list is London and Paris rose to second place, nudging Berlin into third spot. Athens was unchanged in position number 23.

Price gains possible in Athens

“Despite its ranking at 23 and the relatively small size of its investment market, Athens is well regarded by some interviewees for its rental and capital value prospects,” the report points out.

It goes on to cite a regional fund manager who says that “there’s still an under supply of prime stock because of the very protracted recession.”

“Over the last 10 years there have been some developments in prime offices and retail, but opportunities are still there,” says the fund manager in regard to Athens.

This is in sharp contrast with Istanbul, where the same manager believes that “things are going to get worse before they get better,” adding: “You’re talking about triple-digit inflation, even though the economy keeps growing.”

Madrid property shines

Rising to fourth place, from 6th position previously, is the Spanish capital, one of the fastest growing cities in Europe.

Urbanisation is continuing at a fast pace in Madrid, seemingly unhindered by the pandemic, due to inward migration from elsewhere in Spain and from overseas.

Spain is also set to benefit from strong growth in wind and solar power over the next few years, potentially insulating the economy from energy disruption and helping move real estate towards net-zero, the report adds.

Residential investment in particular is viewed as promising given a perceived shortage of supply.

One developer was cited as saying that prices are rising as a result of the scarcity of ready-to-build or fully permitted land.

“The pricing dynamics for those that have land and can build are good and will remain good,” the developer highlighted, adding that dynamics are reinforcing the office and logistics sectors in the city.

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