Bank of Greece publishes its commercial property price and rent indices

ATHENS, 4-3-2015 — /EuropaWire/ — In the context of its systematic effort to monitor and analyse developments and prospects in the Greek real estate market, the Bank of Greece publishes today, for the first time, its commercial property price and rent indices. This effort aims at supporting transparency and information in the real estate market.

In order to construct the indices to monitor and analyse the commercial property market, the Bank of Greece Real Estate Market Analysis Section compiles, on a biannual basis, data from credit institutions (Bank of Greece Executive Committee Decision 23/26.07.2013) and Real Estate Investment Companies – REICs (Bank of Greece Executive Committee Decision 9/10.01.2013) active in Greece, as well as data from other sources, e.g. private real estate consultants, portfolio managers, real estate developers, real estate brokers and public sector entities. The data also include valuations, rents, transactions, investments and yields of commercial property and relevant portfolios.

Indices are published twice per year (base year: 2010). They concern office and retail uses, refer to price and rent levels of prime investment property and cover the period from the first half of 2010 up to the first half of 2014. Especially for Athens, the availability of earlier data enabled the publication of indices from 2006 onwards. It should be noted that price indices are valuation-based rather than transaction-based and they are therefore expected to show a relative lag, especially in cases of negative changes.

1. Office Indices

Office price index

According to provisional data the cumulative drop in the prices (in nominal terms) of prime office premises in the country as a whole averaged 31.6% in the first half of 2014, compared with the first half of 2010. The decrease was similar in Athens (31.7%), Thessaloniki (31.8%), and the rest of the country (31.5%). Particularly in the greater Athens area, the cumulative decrease in the prices of prime office premises from their peak before the onset of the crisis up to the first half of 2014 is estimated at 38.7%.

It is estimated that office prices (in nominal terms, provisional data) for the country as a whole decreased by 6.9% in the first half of 2014 in relation to the first half of 2013, a rate of decline lower than in the first half of 2013 (-11.7%) and the second half of 2013 (-9.0%). The respective change for the greater Athens area is estimated at -10.0% (2013 H1: -11.2%, 2013 H2: -12.5%).

Detailed data on the evolution of prime office prices for the country as a whole and broken down for Athens, Thessaloniki and the rest of Greece are presented in Table 1.

Office rent index

According to provisional data, in the country as a whole, the cumulative decrease in prime office rents (in nominal terms) averaged 26.9% in the first half of 2014 compared with the first half of 2010, while the respective rate for the greater Athens area is estimated at 29.6%. The total fall in office rents came to 22.4% for Thessaloniki and 24.8% for the rest of Greece in the respective period. Particularly in the greater Athens area, the cumulative decrease in prime office rents, from their peak before the onset of the crisis up to the first half of 2014 is estimated at 36.5%.

In the first half of 2014, prime office rents declined in the country as a whole by 10.7% in relation to the first half of 2013. This rate – in contrast to that of prices – has accelerated in comparison to the two previous halves (2013 H1: -6.5%, 2013 H2: -8.9%). The respective change for the greater Athens area is estimated at -13.2% (2013 H1: -7.4%, 2013 H2: -10.4%). The considerable acceleration of the rate of decline in office rents in the first half of 2014 is possibly associated with more intense efforts of tenants to renegotiate active leases as well as with the further shrinking of business activity, which leads to increased supply of competitive spaces.

Detailed data on the evolution of prime office rents for the country as a whole and broken down for Athens, Thessaloniki and the rest of Greece are presented in Table 2.

2. Retail indices

Retail price index

According to provisional data, in the country as a whole, the cumulative drop in prime retail prices (in nominal terms) averaged 28.8% in the first half of 2014 compared with the first half of 2010. The corresponding rates for Athens, Thessaloniki and the rest of Greece are estimated at 30.5%, 31.4% and 25.3% respectively. Particularly in the greater Athens area, the cumulative decrease in prime retail prices from their peak before the onset of the crisis up to the first half of 2014 is estimated at 37.3%.

In the first half of 2014, prime retail prices (in nominal terms, provisional data) for the country as a whole declined by 9.1% in relation to the first half of 2013 (2013 H1: -4.6%, 2013 H2: -12.0%). The respective change for the greater Athens area is estimated at -8.0% (2013 H1: -5.3%, 2013 H2: -12.6%).

Detailed data on the evolution of prime retail prices for the country as a whole and broken down for Athens, Thessaloniki and the rest of Greece are presented in Table 3.

Retail rent index

The cumulative decrease in prime retail rents, in Greece as a whole, in the first half of 2014 averaged 31.0% compared with the first half of 2010 (provisional data), while the respective rate for the greater Athens area is estimated at 31.6%. Over the same period, the total decline in retail rents came to 28.9% in Thessaloniki and 30.5% for the rest of the country. Particularly in the greater Athens area, the cumulative decrease in prime retail rents from their peak before the onset of the crisis up to the first half of 2014 is estimated at 44.5%.

In the first half of 2014, prime retail rents for the country as a whole decreased by 9.5% compared with the first half of 2013, a rate of decline slightly lower than before (2013 H1: -10.1%, 2013 H2: -12.4%). The respective change for the greater Athens area is estimated at -6.7% (2013 H1: -12.8%, 2013 H2: -15.0%). The remarkable deceleration of the rate of decline in retail rents in the greater Athens area is in line with increased activity observed over the first half of 2014, a fact also noted by market specialists.

Detailed data on the evolution of prime retail rents for the country as a whole and broken down for Athens, Thessaloniki and the rest of Greece are presented in Table 4.

Related link: Commercial property indices – Tables

Please contact the Real Estate Market Analysis Section of the Bank of Greece (sec.realestate@bankofgreece.gr) for all relevant information.