Thessaloniki – a city for perfect city breaks
The real estate market in Thessaloniki, the second largest city in Greece, has behaved like the real estate market in Athens during the crisis years. In some locations there had to be accepted price cuts of up to 60%, although in average the prices fall approximately by 40% (cumulative in period: 2007 – 2016). What happened in 2017? And what is the outlook for the current year?
2017 was – as already assumed for the whole country – also for Thessaloniki a relatively ‘hypotonic’ year, but with a turnaround in the last quarter of the year, and – for the first time after years – with an easy increase in prices.
According to REMAX’s analysis, for Thessaloniki in the case of older buildings in 2017 an increase of prices of 1.1% was observed, while the new buildings had an increase rate of 1%. With Thessaloniki, in this article, it is not meant only the city center, but also the surrounding districts.
It should be noted, that 98% of the transactions concerned residential units, i.e. apartments, single-family houses and maisonette houses. At the peak of demand of buyers were housing units older than 25 years. New buildings (with age up to 5 years), however, were preferred by only 5% of buyers, especially for price reasons. Most of the apartments (43%) were in the size category ’71 – 110 square meters’. Priced, the old housing units were depending on the location and condition between 350, – Euro and 1.200, – Euro per square meter; only at prime locations, such as at the ‘old Paralia’ (beach mile in the old center), where no new buildings are existing, the prices were up to 6,000.- Euro per square meter. In the new buildings, however, it went in the west of the city at 650, – € per square meter, and in Kalamaria (east) were sold real estate for 2,200, – € per square meter, and only on the ‘nea Paralia’ (new beach mile in the area of the hotel Makedonia Palace) the top prices were at 3,500, – Euro per square meter.
A considerable part of the residential units sold was in the old city center of Thessaloniki itself or in the surrounding districts. This is certainly due to the fact that the center of the city has always been attractive, but also that Thessaloniki is increasingly establishing itself as an international location for city breaks. For the latter reason, the inner-city apartments have become very interesting also for short-term rentals for tourists, such as via AirBnB or booking. Many apartments have been explicitly purchased and refurbished in recent months, and dedicated to this new function. One can certainly assume that this new use of housing units has also contributed to the increase in real estate prices. The increase in the number of tourists (nearly 2 million in 2017, and the upward trend for 2018) is certainly due to the stabilization of the general situation in Greece, but the increase in capacity at the airport (due to privatization) also contributes immensely to the good figures and the positive trend. Incidentally, the Qatar Airways is also flying four times a week to Thessaloniki. The conditions at competing locations are mentioned here only parenthetically.
Through the privatization of the commercial port but also through the creation of other highlights, such as the new Jewish Museum of Thessaloniki, whose foundation stone was laid a few weeks ago, but also the extension of the international airport (Makedonia-Airport) of Thessaloniki, there will be provided further impetus for even more city visits by tourists. Accordingly, a continuation of the already established trend for 2018 is to be assumed. For the sake of completeness, it should be mentioned that according to the current status in 2020, the Thessaloniki metro will be put into operation. It can therefore be assumed that this will lead to further price rises in real estate prices, especially in the center of Thessaloniki, in the central station area but also in the districts served by the Metro.
Chalkidiki – the holiday region near Thessaloniki
A few kilometers away from Thessaloniki is the peninsula of Chalkidiki, which due to its three-finger shape may be known from the aerial photography. The location is touristically very well developed, and there are in addition to a large number of hotels many holiday homes. The regional infrastructure has been further improved in recent years and has therefore further enhanced the location. In addition, particularly on the first finger (Kassandria), large-scale hotel projects of the luxury segment have been realized in recent years, which have made the region internationally more interesting. Here are exemplified Sani Dunes, Ikos Olivia, Pomegranate Wellness Spa Hotel, Mirragio Thermal Spa Resort and Eagles Villas. There are also five other major hotel projects in the pipeline, as the region has seen an increase in the number of tourists for some time now (read our article for Hotel investments in 2017 in Greece).
Also in Chalkidiki, for the first time in 2017, slight increases in real estate prices can be observed. For housing units depending on location, age and condition prices per square meter from 450, – Euro to 2,000, – Euro were found. Primarily, however, the cheaper housing units were in demand here.
The increase in prices depends to a large extent on the fact that holiday real estate – due to the general stabilization of the situation in Greece and the favorable prices – is in large part in demand again from foreign investors. In Greece, for holiday home units – acquired by foreign investors – compared January – July 2016 to January – July 2017, an increase of 72% was recorded; the trend in demand is increasing. Domestic demand has also risen somewhat, especially as the Greek state is currently earmarking funds for the establishment of small tourist units, and for some investors this was an incentive to engage in the tourism sector. This funding program encourages small investments up to 50%.
The above-mentioned circumstances, combined with the generally very positive forecasts for 2018, will probably lead to a further increase in demand. The prices will surely reflect this, although in my opinion there will be no ‘explosion’ in 2018. However, Chalkidiki has also noted a trend towards online short-term leases in 2017, which – if it expires this year – will affect prices accordingly.
It is now out of the question that the lowest prices both for Thessaloniki and Chalkidiki are a thing of the past. Even if we do not expect an explosion of prices for the current year, someone should not wait too long if a real estate investment in Greece is interesting because prices are rising again. In addition, there are currently existing good real estate objects with promising conditions for investment – not for own use. Due to the possible yields, Greece is already an “oasis” compared to other low-yield countries. And you certainly know what can happen if you do not stop at oases. Will you still wait?
(The original article has been published on our site in german language).
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