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Real Estate Economy in Greece Grows in Multiple Sectors

View of Athens as seen from Lycabettus hill
A Proprius statistic claims the Real Estate Economy in Greece appears to have grown in three different sectors, office, retail, and logistic. Crtedit: Flickr/ Milos Golubovic CC BY 2.0

The recently released Cushman Wakefield Proprius Marketplace Real Estate report demonstrated a significant growth in the Real Estate economy of Greece. The economy grew in all three different sectors, namely industrial, retail, and office.

The Growth of the Economy of Greece

The Greek economy’s overall health contributes to this sector’s growth. Unemployment is falling. According to the report, in September, it reached a fourteen year low at 10 percent. This drop from 11.3 percent in Q2 2023 indicates an improving job market.

Employment growth maintains momentum, growing by 1.6 percent year-on-year. A healthy job market supports consumer spending. This, in turn, boosts demand for logistics services.

Logistics Real Estate

The report noted that the logistics real estate sector in Greece is thriving. This reflects the nation’s broader economic growth. A key factor is the 2.5 percent growth projected this year. Greece’s growth in 2024 is expected at 2 percent. These rates surpass Eurozone averages. S&P Global’s upgrade of Greece to investment grade boosts market confidence. This stability is vital for logistics real estate expansion.

Businesses require more operational space, driving demand for logistics facilities. Greece’s industrial property market, especially in Attica, witnesses significant investments. The commerce sector’s evolution impacts this demand. It shifts towards a blend of online and physical stores. This change necessitates improved logistics capabilities. About 120,000 square meters of industrial space was absorbed in Q3 2023. This absorption rate exceeds previous years, indicating strong market demand.

The office and retail sectors in Greece also show positive trends. The tech sector’s growth, particularly in Athens, suggests a robust business environment. Furthermore, this growth supports the logistics sector indirectly. In addition, retail is experiencing an increase in transactions. Stable rental values in retail are supported by tourism and consumer spending.

A shift towards sustainability is reshaping the logistics market. Investors and occupiers are now focusing on ESG criteria. This trend is leading to more sustainable, efficient logistics spaces. The logistics real estate market’s growth is multi-dimensional. It’s influenced by economic expansion, e-commerce rise, and sustainability trends.

Increased demand and construction costs are driving rents up. The market is showing maturity signs, with average yields decreasing. This situation offers opportunities and challenges in the logistics sector. Stakeholders must navigate these dynamics carefully.

The PMI index, however, shows some challenges. In September, it closed at 50.3 points. This is down from 52.9 points in August. Reasons include rising input costs, new order decreases, and supply chain delays. These factors could impact logistics operations.

Office Real Estate

The office sector’s performance also impacts logistics indirectly. Q3 2023 saw a take-up of 50,000 square meters in offices. This level is stable compared to the previous quarter. It’s one hundred percent above the same period in 2022. The aggregate total for the first three quarters of 2023 is 40 percent higher year-on-year. As noted above, the technology sector is driving demand in Athens. Office investment volumes recorded €90 million in Q3 2023. This is 25 percent higher compared to last year.

Noticeably, investors remain cautious due to rising financing costs. The prime yields stayed stable across all sectors in the third quarter. In contrast with the yields, the prime rent in offices rose to €28 per square meter per month. Some deals exceeded €30 per square meter per month. Building quality significantly influences rent levels. Hence, within the same area, rent trends may vary.

Athens Acropolis from Plaka night view
Athens sees Growth in construction and demand for Real Estate spaces. Credit: Flickr / Thierry Massonth CC BY-NC-SA 2.0 DEED

Retail Real Estate

Retail saw fifty-two transactions in different markets this quarter. This is 30 percent higher than the previous quarter. It’s 25 percent higher year-on-year. Stable rental values on high streets were noted, and the summer period’s tourist presence helped. Retail investment volumes were around €40 million.

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