Construction down 62 percent (on the basis of construction licences) from 2010 levels.
Expected number of transactions to sum up to less than 50,000 Euros in 2011.
Expected number of transactions to sum up to less than 50,000 Euros in 2011.
Showing posts with label real estate. Show all posts
Showing posts with label real estate. Show all posts
Monday, June 27, 2011
Monday, May 2, 2011
Athens Greece Real Estate Prices for 2011
This article concerns itself primarily with the most probable changes in real estate prices in the Athenian basin. The results are drawn from a market survey encompassing about 2000 successful real estate transactions (Triad Real Estate Group, Athens) and follow a Medium Gaussian Price Risk Probability pattern.
Even though each real estate negotiation between buyer and seller (through a real estate broker or middleman) which resulted in successful or unsuccessful transaction was considered as starting from ground zero (On Negotiating, McCormack: Dove books, 1995) a pattern nevertheless emerged showing in many cases a significant price reduction from the originally listed retail price.
Private Ownership Prices
Prices of apartments and residences that are 15 years or older are expected to decline by 25 to 30 percent from current 2010 retail list prices.
Housing properties around 10 years old will most likely experience a price discount of 10% to 15% from the 2010 list price.
The price erosion of new flats will depend on the current supply and demand of new flats which is area-related.
For example in areas such a Egaleo newly constructed flats have fallen in 2010 about 20% (Newspaper, TA NEA, 17th of April 2010) while as reported by Triad Real Estate, new flats in Agia Paraskevi have shown a 5 to 8 percent discount off the retail price. Some have even increased in price in order expand the supplier negotiating range.
Construction Company Supply Prices
Price negotiations for construction company-owned flats will experience a variable overlap of realistic target positions depending on the area supply and demand curves as well as the constructor’s financial health.
Major real estate firms report that construction companies that are highly leveraged or exposed due to, or because of, the public sector may be offering bargains of more than 100%. This means that a residence in a high-class district such as Ekali that has a retail list price of 1,000,000 Euros may eventually be successfully sold for at most 500,000 Euros.
Past market conditions resulted in narrow realistic target position overlaps due to the price inflexibility of construction companies and strong consumer demand. This situation is definitely shifting in favor of the buyer whose negotiation ardor strongly depends on the length of the construction crisis presently overshadowing Greece.
Unsold stocks owned by construction companies from 2006 and later are subject to VAT (23%) which is payable after 3 years. Such unsold stocks are expected to have a discount range of up to 20% before the VAT payment due in 2011.
The Greek Economy
From a macroeconomic perspective, the Greek Ministry of Finance reported that the overall Greek economy shrunk about 2% in 2009 and was expected to shrink a further 2% in 2010.
Deutsche Bank reported early in February that the Greek economy would retreat about 4% in 2010 (the Greek Ministry of Finance reports a retreat of 2.5% in the first quarter of 2010) and market forecasts speculate that the economy may shrink 5% by the end of 2010.
The Greek government’s austerity measures (which include those imposed by the International Monetary Fund and the European commission) require that debt is reduced by at least 3% of current GDP by 2012.
Even though each real estate negotiation between buyer and seller (through a real estate broker or middleman) which resulted in successful or unsuccessful transaction was considered as starting from ground zero (On Negotiating, McCormack: Dove books, 1995) a pattern nevertheless emerged showing in many cases a significant price reduction from the originally listed retail price.
Private Ownership Prices
Prices of apartments and residences that are 15 years or older are expected to decline by 25 to 30 percent from current 2010 retail list prices.
Housing properties around 10 years old will most likely experience a price discount of 10% to 15% from the 2010 list price.
The price erosion of new flats will depend on the current supply and demand of new flats which is area-related.
For example in areas such a Egaleo newly constructed flats have fallen in 2010 about 20% (Newspaper, TA NEA, 17th of April 2010) while as reported by Triad Real Estate, new flats in Agia Paraskevi have shown a 5 to 8 percent discount off the retail price. Some have even increased in price in order expand the supplier negotiating range.
Construction Company Supply Prices
Price negotiations for construction company-owned flats will experience a variable overlap of realistic target positions depending on the area supply and demand curves as well as the constructor’s financial health.
Major real estate firms report that construction companies that are highly leveraged or exposed due to, or because of, the public sector may be offering bargains of more than 100%. This means that a residence in a high-class district such as Ekali that has a retail list price of 1,000,000 Euros may eventually be successfully sold for at most 500,000 Euros.
Past market conditions resulted in narrow realistic target position overlaps due to the price inflexibility of construction companies and strong consumer demand. This situation is definitely shifting in favor of the buyer whose negotiation ardor strongly depends on the length of the construction crisis presently overshadowing Greece.
Unsold stocks owned by construction companies from 2006 and later are subject to VAT (23%) which is payable after 3 years. Such unsold stocks are expected to have a discount range of up to 20% before the VAT payment due in 2011.
The Greek Economy
From a macroeconomic perspective, the Greek Ministry of Finance reported that the overall Greek economy shrunk about 2% in 2009 and was expected to shrink a further 2% in 2010.
Deutsche Bank reported early in February that the Greek economy would retreat about 4% in 2010 (the Greek Ministry of Finance reports a retreat of 2.5% in the first quarter of 2010) and market forecasts speculate that the economy may shrink 5% by the end of 2010.
The Greek government’s austerity measures (which include those imposed by the International Monetary Fund and the European commission) require that debt is reduced by at least 3% of current GDP by 2012.
Greek Real Estate Market Prices for 2011
For the first time in decades, the Greek Real Estate market may be undergoing price erosion.
From a macroeconomic perspective, the Greek Ministry of Finance reported that the overall Greek economy shrunk about 2% in 2009 and was expected to shrink a further 2% in 2010.
Deutsche Bank reported early in February that the Greek economy would retreat about 4% in 2010 (The Greek Ministry of Finance reports a retreat of 2.5% in the first quarter of 2010) and market forecasts speculate that the economy may shrink 5% by the end of 2010.
The Greek government’s austerity measures (which include those imposed by the International Monetary Fund and the European commission) require that debt is reduced by at least 3% of current GDP by 2012.
Real Estate Market Characteristics
The Greek real estate market has up to now demonstrated impressive price insensitivity when compared to foreign real estate markets. The reason for this price inflexibility even in times of economic crisis is due to the financial independence so far enjoyed by most real estate owners (Active Real Estate, Thessaloniki). A good segment of real estate owners consists of pensioners, construction companies and permanently employed civil servants.
The latest measures taken by the Greek government have chewed into pensions and civil servant salaries, and have generally introduced an element of uncertainty to traditional real estate owners, uncertainty that has lead to price flexibility. Buyers’ expectations have also become to a large extent unreasonable, mainly because of a two year continual media buyer conditioning of an eminent collapse in real estate prices.
Price Erosion Pressures Mounting
The year 2010 has been pivotal for Greece; the inclusion of the country under the auspices of the International Monetary Fund and European Support Mechanism; the new austerity measures, the crackdown on tax evasion, the continuing cutbacks in personal income which for the first time affect pensioners and the massive Greek civil service; the uncertain future of the civil service; the unavailability of loans and drop in the supply of money; the rapid decline of real estate transactions and ensuing collapse of the real estate and retail markets, the general negative buyer psychology and negative spending propensity has put enormous pressures on real estate prices, pressures that are now becoming evident.
In addition, the government’s plans (in 2011) to further increase the real estate objective or taxable value in stepwise fashion until the objective value is close or equal to the market price - and associated indirect increase in transaction overheads and indirect taxes - will put a further strain on the real estate market supply side, which may result in further price erosion pressures.
Expected Real Estate Prices for 2011
A recent study shows that the Greek real estate market will recover only when a significant price correction is experienced on the supply side and more reasonable demands per euro are eventually forged on the demand side.
For the first time in the last couple of years, sufficient information exists as to how much this expected price erosion will be, and which supply segment will experience it.
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