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Greece - Market Report


According to World Bank Greece is the 26th largest economy in the world among 180 countries, with a GDP of approximately USD360,031 million. The country is part of the EU since 1981 and part of the Monetary Union since 1, January 2002while it is part of NATO ever since 1952.
Greece has a population of 11,2 million people and a land mass 131 940 km², comparable to that of England. Administratively, it consists of thirteen peripheries subdivided into a total of fifty-one prefectures. Its territory includes more than 2,000 islands in the Aegean and Ionian seas, of which only 170 or so are inhabited. The capital city of Greece is Athens. Almost half of the population of the country lives in the capital city, while more than 50% of Greek industry is located in the Greater Athens area. Athens stepped into the global spotlight when the Olympic Games returned home in 2004. The games bequeathed a great inftastructure inheritance to the city and transformed Athens into a modern capital. Other major cities in Greece that have business interest include Thessaloniki, Patras, Heraclion, Larissa and Volos.

Political Overview

Greece is a parliamentary representative democratic republic, whereby the Prime Minister is the head of government of a multi-party system. Legislative power is vested in both the government and the Hellenic Parliament. The Judiciary is independent of the executive and the legislature. The Greek governmental structure is very similar to the French and German models. The prime minister and cabinet play the central role in the political process, while the president performs some executive and legislative functions in addition to ceremonial duties. The prime minister is elected by the people and he or she is usually the leader of the party controlling the absolute majority of Parliament members. He or she is the most powerful person of the Greek political system and he or she recommendates to the President the appointment or the dismissal of the ministers. Voting in Greece is compulsory but is not enforced.
There are around 25 political parties in Greece and only five of them are currently represented into the paliament. New Democracy and the Panhellenic Socialist Movement are the two dominant parties that govern the country the last 30 years. On 7 March 2004, Kostas Karamanlis, president of the New Democracy party, was elected as the new Prime Minister of Greece, thus marking his party's first electoral victory in nearly 11 years. Karamanlis took over Government from Kostas Simitis (ex. president of Panhellenic Socialist Movement), who had been in office since January 1996.
As far as the country’s international disputes is concern, Greece has long been at odds with its close neighbour, Turkey, over territorial, maritime complex and air disputes in the Aegean and the divided island of Cyprus. Relations warmed after both countries suffered earthquakes in 1999 and offered each other practical help. Although the disputes remain unresolved, the Greek government gives strong backing to Turkey's EU bid. It sees dividends to be gained from the increased regional stability that it believes membership would bring.
The other big international dispute is with the Former Yugoslav Republic of Macedonia, a dispute that concerns the name of Macedonia. Greece contends that the use of the name Macedonia by the neighbouring country implies a territorial claim over Greece's own region of the same name. The UN is involved in continuing mediation efforts.
Despite the forthmentioned disputes, Greece is linked with the overall stability, security, and development of the South East Europe. The country undertakes a series of diplomatic and humanitarian initiatives to restore peace and stability to the region. Furthermore, it supports the prospect of a European Balkans and encourages the investment in the region which has spectacularly increased.


The world economic crisis does not allow optimistic projections for any European economy, including the Greek economy. After a long period of strong and uninterrupted growth, above the European zone average level, Greece is today at a critical crossroad. The country has not the luxury to ignore any further a number of issues, such as the confrontation of the persistent inflation, the account deficit which is about 15 percent of GDP and the public debt which is almost equal to Greece's national output. According to Mr. Provopoulos president of Central Bank of Greece, “the size and persistence of these imbalances shows that the breadth and depth of structural changes the latest governments attempted, was not enough to face such big problems”.
Based on government projections, the grown rate for year 2009 is expected to slow down to 2.7 percent, a percentage that is still above the EU average. Furthermore, the 2009 forecast includes a 2% deficit, 3% inflation and 3.5% wage growth. The targets appear to be optimistic, due to the fact that until now high growth rates have been driven by strong domestic consumption and investment, both of which are in declining now, and the budget revenue and expenditure projections appear tenuous. The government expects a significant boost from new taxes such as the harmonization of the special consumption tax on heating and motor fuels, plus special arrangements for settling arrears.
On the other hand, the Greek banking system seems to have been escaped by the possible crisis as it was the case with several developed countries all over the world, for a number of reasons. First of all, the local banks have been remained underexposed to high-risk investments (U.S. real estate related debt). Also, the spread between the cost of money for the banks and the rate at which they loaned it has been historically one of the largest in the EU, making them very profitable indeed. On the top of that, the government offered a support package of 28 billion euros to the major local banks of the country (National Bank, Alpha Bank, Eurobank, Pireus Bank, ATE Bank).
The government and the banking system are now better equipped than ever before to handle a financial crisis. But this may not prove enough of a safety margin and it has been accomplished by drawing liquidity and buying power from the average consumer, creating some of the conditions necessary to create a purely Greek crisis within the international crisis. Therefore, it is important to adopt an "economic policy mix" that will boost productivity, foreign investor confidence and secures credit market stability.


Greece is in the process of completing its vast programme of infrastructure projects with EU support. As a result every level of transport and communication is being upgraded on a profound scale. In parallel, the liberalization of the energy and telecom market leads to the modernization of the existing network and provide new opportunities for development. The major infrastructure projects already completed or under development are the following:
• Highways and motorways: 1) Egnatia Highway (just completed) (980km), links the northern port of Igoumenitsa to Alexandroupolis at the Turkish border via Thessaloniki, with nine vertical connections to the Balkan countries and links to five ports and eight airports. 2) Ionian Motorway is the western axis which connects Rio-Antirio with the port of Igoumenitsa and Egnatia Highway. 3) Attiki Odos (completed): Is part of Athens peripheral ring road. It is the main link of airport, ports, railway stations, urban train stations, metro, coach stations and heavy transportation stations. 4) Rion-Antirion Bridge connects the southern peninsula with Peloponnese.
• Railway: Hellenic Railways Organization has a 3,245 billion investment plan for the expansion and modernization of the railway infrastructure.
• Ports: Greece has 123 cargo or passenger ports. With the financing of the EU, 50 ports will be upgraded with a total expenditure of 300 million Euros. The most important ports are those in Piraeus, Thessaloniki, Volos, Patras, Alexandroupoli, Elefsina, Igoumenitsa, Iraklio, Kavala, Kalamata, Lavrio and Chalkida
• Airports: Greece has 39 international airpots many of which have been upgraded or rebuilt during the last years. The principal international airports are Athens International Airport, Heraclion, Rhodos, Corfu, Thessaloniki, Kos, Chania, Zante, Samos, Myconos, Thira.
• Metro: Athens has a ultramodern metro which is expanding continually. Thessaloniki’s metro is under construction.
The infrastructure of Athens has been developed very fast within the last 10 years with new highways, a new airport, new metro lines, a new tram line, a new Suburban railway, international standards shopping centers, stadiums and sport centres and the port of Piraeus has been developed to one of the most important ports in the Mediterranean. Due to this new infrastructure and the quick access by rail ,metro and car a kind of dis urbanisation has began in Athens as many Athenians prefer to live out side of the city centre in suburbs and areas that a few years ago were holiday resorts.

Greece’s Office Market

The majority of Greece’s economic activity is concentrated in two cities: Athens and Thessaloniki. In these two major locations, we can find the major companies operating in Greece to be local or international corporations.
The Greek office market didn’t remain unattached by the international financial crisis. Office market in general is the most sensitive sector of commercial real estate market, in conditions of financial recession, since it reflects the business behavior and their defensive lines against the crisis. After a long period of stability the previous months, the rental levels finally faced a decline approximately 8% to 10% while at the same time yields increased. This decrease in rental prices was caused primarily by an extensive drop in demand. Currently, the demand for office space is very limited while companies seem very reluctant in moving into new premises. Furthermore, cases of office extension are almost nonexistent. Old - less efficient office properties face a bigger decrease in rental values than more modern properties. The few available potential tenants prefer higher quality properties that they can find now in lower prices.

The average price for a class A office building on a prime business location in Greece is 17€-22€/sq.m. The basic business districts in Athens are Kifisias Ave., Syngrou Ave. Vouliagmanis Ave., Mesogeion Ave., National Road, Attica Road, Athinon Ave. etc

Vacancy rates slightly increased over the last quarter reaching 9.00%. Central business areas are still the main focus of attention for potential occupiers and transport links, especially the metro, remains an important factor for businesses when they are looking for new offices. With relatively subdued demand in the letting market, speculative developments are scarce with developers choosing to have the safety of pre-let agreements or a built-to-suit requirement before commencing construction.

The outlook for the office market in Greece is mixed. Occupier activity is expected to decrease further in the following months with take-up mainly limited to business consolidation measures rather the new entrants to the market.

Investment activity in the office sector is very limited over the quarter due to the shortage of financing. As a result, the few investors with liquidity are much more price conscious and they demand more secure products that provide them higher yields. Currently, yields for class B office properties ranging from 7% to 8% while yields for class B office premises are starting from 7.5%. The final yield level depends on the quality of the tenant, the length of the lease agreement and the number of years that the agreeme