by admin Incentives for the reconstruction and utilisation of properties are requested by executives of the real estate market
The thousands of “orphan” properties in Greece, which, according to the latest estimates, amount to 770,000, are recording a significant increase in the last decade and are characterised as a ticking bomb that is ready to explode. In fact, information from the tax authorities indicates that the closed and unelectrified properties may reach as many as 900,000 (15% of the total). Characteristic are the statements of real estate market officials who point out that an infinite amount of time has already been wasted with superficial solutions. While rents remain unreasonably high and have become an unaffordable burden and financial noose for much of the population, hundreds of thousands of houses/apartments remain vacant, driving sustainable development away.
The inventory
Speaking to the newspaper Vima, Theodoros Mitrakos, former deputy governor of the Bank of Greece, points out that after 15 years of frozen construction activity, the total stock of aged and low energy class buildings has reached 5.5 million, while at the same time the percentage of houses in relatively good condition is constantly decreasing. As he emphasises, there are approximately 770,000 vacant houses, with 60% of them located in Attica, while at the same time, approximately 600,000-700,000 properties with a total value of 90 billion euros have been given as collateral for Non-Performing Loans. Housing costs in Greece continue to increase rapidly since 2019, with this trend not diverging to date, following an opposite course compared to the global market, where everything indicates that the decline of the housing market continues and even worsens. Of course, the demand, which still remains high, shows opposite paths compared to abroad.
Need for motivation
In particular, as noted by Theodoros Mitrakos, since 2018 the Greek real estate market has followed a significant upward trend, having covered 80% of the losses of the crisis; however, property sale prices have increased by 10% and by 13% in new homes, while rents increased even more. According to data from the Bank of Greece, in the last quarter of 2022 in Athens prices increased by 13%, in Thessaloniki they reached 11.2% and in the regional centres the increase was 7.4%. More specifically, the average nominative rent price in Athens is currently 10.2 euros per sq.m., in Thessaloniki at 6.6 euros per sq.m. and in Patras at 5.5 euros per sq.m. With 100,000 properties currently needed in the market, the issue of vacant homes is of the utmost importance and a proposal is needed to bring them to life. According to the former deputy head of the BoA: “Most of these properties are outdated and in need of renovation. Short-term rentals have brought some forgotten properties onto the market in recent years, but a lot of work is still needed. Some sort of incentive is required, such as the cost of reconstruction or reduced taxation for future years. It will reduce the demand pressure and supplying a number of properties will definitely alleviate this imbalance.”
The market’s needs
From his side, the president of the Association of Real Estate Agents of Attica, Lefteris Potamianos, confirms the increased number of vacant houses and also the need to bring more houses into the market. “We have too many houses that are vacant and that’s something we know from our practice, from the market that we tend to go out and notice properties locked. For example, above my own office in Kolonaki, a property has been taken over by a fund and has been shut for many years,” he notes. Based on this picture, he underlines that there are many categories of shut-property cases: “One is the inheritance, where – for example – there are two parties who have inherited a property, the argue over it and go to court, which a time-consuming process, so the property remains closed and inactive. A second category is the properties seized by funds, which cannot be exploited and are left aside or are sold through packages from one fund to another. Another category, which is also the smallest, concerns properties that their owners keep them purposely locked for their own purposes – such as not to deal with tenants, or because they live in the countryside and just want a property in the city for whenever they visit, or because they currently cannot renovate it for exploitation”.
The public bodies
According to the president of the Association of Real Estate Agents of Attica, “in addition, there are many institutional properties which are locked and various committees are late to meet and do not start the process of utilising them. Finally, there are also thousands of unused properties of public bodies. Recently, National Social Security Agency made a serious effort and now its properties are out in public auctions, however the procedures need to be shortened.” As published by the newspaper NEA (issue 24/3/2023), after several years of stagnation, the National Social Security Agency decided to begin the exploitation a series of top-class properties in the centre of Athens and Thessaloniki, which are expected (unknown when), through the special purpose company created by the Agency, to enhance its income. The Agency’s portfolio included at least 400 properties throughout the country, with a total objective value of over 1 billion euros, while properties housing offices, shops, services or even hotels, with a total area approaching 20,000 sq.m., were promoted for further development.
Motivation
As Lefteris Potamianos emphasises, the majority of closed properties are those owned by owners who have inheritance problems and legal disputes or those that belong to funds. As far as possible utilisation of the “orphan” properties is concerned, the president of the Real Estate Agents Association of Attica is clear: “When someone owns a property and has it locked for one reason or another, all you can give is motivation. You cannot make binding proposals. Are you forcing him to put the property on the market when he doesn’t want to? It can not be done. So, yes, the goivernment incentives to renovate properties are strong for those who haven’t had them renovated and don’t have the money to do so. Secondly, swift legal procedures are needed to unblock these properties. Thirdly, a more thorough control over the funds is necessary, regarding expired loans and real estate collateral. The only thing that is certain is that you cannot put a knife to the throat of someone who has a closed property and does not want to put it out in the market.” He then concludes, “strong government incentives are needed to renovate and redevelop properties that require works before going into the market. Not initiative such as “here’s 3,000 euros to rebuild an apartment”. This is not possible as there are many ruined properties, which have been like this for ages. The market needs housing real estate, especially residential properties.”
A new housing policy model is needed
The president of the Panhellenic Federation of Property Owners (POMIDA), Stratos Paradias, points out that the big problem is that the locked properties require modernisation with money that does not exist. “The big thorn is that the building stock of the country is old and the demands of the European Union – and also of reality – for energy upgrading are huge. The Greek family had the money required in the 60s and 70s, when they were building such houses, but they don’t have it in 2023 when these need repairs,” he suggests. “A large part of the stock is properties that were rented for years and when -for whatever reason- the tenants have left, the owners are left with an old house that requires immediate renovation. That technically means that they have to tear everything down. Therefore, adding up the costs required to fix the property, they finally decide to lock it up, sit down and do nothing about it. In reality, there is no solution and the government should intervene in this matter. There is a government Renovate and Rent Scheme but it has not been effective. As a Federation, we have said many times that there is no need to narrow the criteria down that much, i.e. up to one residence up to 100 sq.m. only, or up to 40,000 euro income, etc. When you narrow a renovation scheme that much, in the end no one is allowed to use it,” says Stratos Paradias.
The acute housing problem in Greece is also recorded in a research by diaNEOSIS, which notes that the crisis seems to be quite deep and that it will not be easily overcome. Against the background of the current situation and taking into account the sudden death of the Workers’ Housing Organization (OEK) in 2012, the housing policy in Greece fell into vacuum. Historically, state measures for housing have been limited in scale and always applied on the margins. They rarely led to the development of cities and only concerned specific groups of the population. But, according to the Agency, there is a need to restart housing policy in a sustainable way, make use of empty buildings where possible, further regulate the operation of short-term rental platforms and apply changes to the Golden Visa scheme. As the dialogue on housing policy in Greece has reopened, however, a key issue is to create from scratch a new model of housing policy that will be self-financed and sustainable, so that it does not depend on the allocation of development resources or on the annual government budget. That needs to be a new model that will incorporate the new challenges brought by more modern ways of exploiting real estate and will ultimately alleviate inequalities, without stopping the development of the real estate market.
Source: Zoom in on Vima, 5/9/2023
Coordination: Angelos Skordas
Written by: Iliana Danezi, Petros Konstantinidis, George Mourmouris, Panagiotis Sotiris, George Fokianos