The increase in rental prices in Athens is evident, and even the government is preparing programs to assist those in need who cannot afford the payments.
Let’s try to understand the reasons behind this growth.
Among the properties we purchase for our portfolio and our investors, the average purchase price increased by 23% in 2022. Of course, we focus only on the centre of Athens and we play in budget/medium segment, and during 2022, we handled slightly fewer than 100 properties. This is not the entire market, but it provides some statistical insights.
Materials used in construction also saw a price increase of 25-30%. Interestingly, in the budget segment, finishing materials and interior items jumped by 35-40%, while in the medium segment, the increase was 10-15%. Our statistics cover the 9 months period March to December 2022.
The rental market is considered more inert and lags behind the property purchase market by 6-9 months. The cost of housing in Athens has been growing annually by 10-15% since 2019 (with a break due to Covid).
In the LGF (Lower Ground-Floor apartments) segment where we operate, rental rates increased by an average of 23-25% in 2022. Long-term tenants can still enjoy the “old” prices, but sooner or later, they will need to renew their rental agreements, and Landlords do not extend them at the “old” rates.
In addition to these factors, there is currently a shortage of rental properties in the market, and tenants are willing to pay more just to secure a rental. This fact is further supported by the fact that, for example, our apartments are rented out within 5-7 days.
It’s hard to do any specific forecasts, but the factors that influence the market are as follows:
- The investment attractiveness of Greece is growing. There haven’t been many good investments here for a long time, and they are just starting to come back. Greece’s rating has been raised to BB+ by Fitch.
- The rise in purchase prices leads people to buy less and rent more, resulting in increased demand for rentals and rising rental prices.
- The rental market in the budget/medium segment is quite empty of competition (few properties in good renovated state).
- The market has great potential. According to local tax authorities, there are 7,500 unused properties in Athens that can gradually be developed and released onto the market.
Overall, the real estate market in Athens and Greece is experiencing growth, and the outlook is very positive.
