Thessaloniki Residential Property Market

Thessaloniki Map

General

Over the last decade, a significant increase in construction activity is occurring within the greater urban designated area of the City of Thessaloniki.

The following factors have attributed to this:

Increase in population, is noted mainly within the central city district, consisting mainly of tertiary students, financial migrants and rural migration.
The acquisition of a residential property has and is viewed as "a lifetime dream" for the majority of people. It is also the major preference for investors. It must be noted that during the last five years, small and middle class investors have also turned to investing in a variety of different property types which include retail properties, office space, logistic properties and warehouse facilities.
The increased availability of funding offering attractive terms through financial institutions.
The incorporation of land within the General Urban Plan, such as the suburb of the "Trohiodromikon", district of Charilaou on the boundary of the Municipality of Pylea, and the 5th Municipality Department of the Municipality of Thessaloniki, the area of Agios Ioannis of the Municipality of Kalamaria, land parcels in close proximity to the internal Ring Road of Thessaloniki - Municipality of Evosmos.

The increased construction activities in conjunction with increased private investments have created a strong market place comprising of various factors, being:

The development of apartment buildings upon land under the method of joint ventures "antiparohi". The developments are assumed to be in the form of a joint venture. This joint venture involves the development of the site by a contractor who undertakes the responsibility to finance and complete the project and instead of a monetary payment receives a percentage of the finished product. It is the common practice for landowners in Greece and has been in wide use since the mid 1970's. The percentage varies according to the local market trends at the specific time period and remains the major type of land development for residential properties. In general the percentage is relatively high for areas which are currently being developed and extremely high for developed areas i.e. Eastern Thessaloniki.
The interest in purchasing residential property continues to remain at a high level with a preference for newly constructed apartments and used apartments.
The implementation of Value Added Taxation (V.A.T) on all apartments constructed with building permits issued from 1-1-2006 has produced a repressive factor in the acquisition of a newly constructed residence. This in turn has caused a greater demand for residencies that have been constructed during the past five to ten years.
The accelerated creation of new residential areas recently inducted within the general Urban Designated areas, which offer adequate street planning and very good access.
The quality of the residential construction by developers has improved due to the entry of new professionals within this sector leading to increased market competition.

City Centre

The Urban Designated areas of the City of Thessaloniki boundaries are September 3rd Avenue, Lagadas Street, Nikis Avenue and Olympiados Street. Its dynamic is retained with the parallel presence of a variety of building types, maintenance standards and age of construction.

All these features have maintained the high level of interest for property within the centre of the city. Property values remain at reasonable levels for older properties and relatively high levels for newly constructed properties.

In Detail:

The traditional commercial business district of Thessaloniki does not offer any significant residential development activities, resulting in:

The availability of few residential apartments within the central business district. The majorities of apartments are old and in the best of cases are either refurbished for their sale or lease. This factor assists in maintaining the high level of interest, in turn maintaining high sale and rental values.
The apartments located on Nikis Avenue are a specialty, due to the views they offer of the Thermaikos Gulf. The demand and sale value of these apartments remains very high despite their age, as most were constructed over than forty years ago
In most cases apartments located on primary arterial roads have been converted into office facilities due to the lack of modern office facilities available. Substantial amounts of floor space along the streets Alexandrou Svolou, Mitropoleos, Tsimiski, Egnatia, have been converted into office facilities. This has created circumstances where one building accommodates a variety of uses being retail units operating on the ground floor level and all remaining floors housing either offices or residencies.

Surrounding the 1st and 2nd Municipality Department of the Municipality of Thessaloniki, i.e. the traditional business center, are the Municipalities of Ampelokipi, Neapolis, Sykies and Agios Pavlos.

They can be characterized as follows:

The availability of land parcels for development is scarce resulting in the low level of construction activity.
Most of the apartments available are older and not in high demand.
The sale values of the apartments, taking into consideration the age of the apartment and the maintenance works undertaken, remain consistent.

Western Thessaloniki

Construction activity within Western Thessaloniki's Urban Designated Area, during the last ten years, has increased dramatically. Western Thessaloniki incorporates the Municipalities of Evosmos, Efkarpia, Stavroupolis, Eleftherios Kordelio, Neapoli, Ampelokipi and Polihni.

The high levels of construction activity are due to:

New land parcels being included in the General Urban Designated Areas (i.e. Evosmos, Nea Politia, Efkarpia, Polihni etc.)
The construction of infrastructure works, emphasizing mainly on the creation of roads and motorways, examples being the new western Entry to the City of Thessaloniki, The Egnatia Motorway (connecting the National Road Thessaloniki - Athens with the National Road Thessaloniki Kavala).
Other infrastructure works include the construction of the Papageorgiou Hospital (the largest hospital in SE Europe) and the 424 Military Hospital along the internal Ring Road of Thessaloniki, within the Municipality of Efkarpia. The Municipality of Evosmos is a characteristic example, as along the entire length of the internal Ring road of Thessaloniki, spanning from the Monastiriou Exit up until the Stavroupolis overhead bridge, a significant amount of residential apartment buildings exist, most of which have either just been completed or are currently being completed.

The residential properties within this Urban Designated Area are representative of the following:

During the past 10 years the western districts have been transformed completely. In the past residential apartment building coexisted with industrial buildings and warehouse facilities. Now these districts are occupied only by residential apartment buildings housing either retail units or car parking facilities at the ground floor levels.
The urban blocks located in close proximity to the internal ring road accommodate newly constructed apartment buildings, none being over 10 years old. The older apartment buildings are located closer to the Municipality's city center.
The majority of apartment buildings within these areas are multistory and of standard construction type. In general the ground floor areas have been configured as either retail units or car parking facilities- for the occupiers of apartments within the building. All remaining floors are for residential use.
Construction activities are still occurring within the area, as there are still land parcels available for development. The demand for residencies is at high levels, mainly consisting of low and middle-income households, as the sale values within these areas is relatively lower than other areas within the Urban Complex.
The street planning for the areas recently inducted within the Urban plan are very good as they have allowed for wide roads.

Eastern Thessaloniki

The Eastern section of the Urban Designated Area of Thessaloniki is traditionally considered the "prime" area of the city. This section has not undergone major transformations as it was initially developed as residential area and has maintained this characteristic. Eastern Thessaloniki consists of the 4th and 5th Municipality Departments of the Municipality of Thessaloniki, the Municipality of Kalamaria including the suburb of Agios Ioannis and the Municipality of Pylea.

In reference to purchasing property within these areas, characteristics are as follows:

The availability of land parcels for development is scarce resulting in the low levels of construction activity within these Municipalities. Excluded from this general over view are the areas that have just been included in the General Urban Designated Area, which are currently experiencing significantly high levels of development activities.
The demand for residential properties within these areas is high and has remained that way for years. This is not only applicable to newly constructed apartments but also for older apartments. When discussing the average sale value for residential property within the Eastern Thessaloniki Urban

Designated Areas the follow are applicable:

The average sale values are relatively high for either new or older apartments. Excluding Agios Ioannis and a section of Pylea, which have recently been inducted within the General Urban designated plan, this section of the City is fully developed and has fulfilled all expectations. The newly inducted areas are undergoing very high levels of construction activity and current sale values are extremely high.
We are not awaiting a significant change in the values for residencies only slight variances that will stabilize the market trends.

Peripheral -Residential developments

Peripheral residential developments surrounding the Urban Designated Area of the City of Thessaloniki have been developed within the last 10 -15 years. These residential developments are characteristic due to the high standard of construction and architectural design.

They consist of either maisonette complexes or private detached dwellings. In specific the peripheral residential developments are: Panorama (N571), Neo Risio, Tagarades, Souroti, Pefka, Filiro, Retziki, Oreokasto, Paliokastro, Ano and Kato Perea, Agia Triada, Asvestohori, Hortiati, Thermi and Triadio.

It has been noted that, within the past seven years, a significant amount of residents have moved out of the General Urban Designated Area of Thessaloniki to peripheral developments.

The peripheral residential developments consist of the following characteristics:

Considerable residential development and construction activities
Continuous increase in the demand for new residencies, mainly consisting of middle to high-income households.
The development of quality designed and constructed maisonette complexes and private residencies.

The residential developments have encountered the following problems:

Lack of arterial roads providing access towards the traditional commercial and business district of Thessaloniki.
The non-existence of basic infrastructure works, ie. water supply, drainage, and waste management facilities.
Problems with vehicle parking. This is mainly because land parcels have been over developed i.e. have exceeded their building density coefficient or lack the provision for common spaces.

The sale values for residencies in residential developments mentioned above can be characterized as follows.

Within older suburbs, such as Panorama and Oreokastro, prices remain stable at high levels. These residential developments were the first to be constructed as they offered excellent panoramic views.
The remaining peripheral residential developments have experienced stable yearly increases in sale values, ranging between 3% and 4%, which now are indicating they have reached their highest levels.
Demand remains at high levels despite the evident problems. Interest is show by middle to high-income households, especially when referring to interest within Panorama and Oreokastro. The interest in remaining areas is shown mainly by middle-income households resulting in the continuous increase in sale values.
The newly constructed residencies are in high demand and supply is at high levels. This is due to continuous interest by developers and investors. Supply does not meet the demand, which allows for the market prices to increase continuously.

STUDIO Apartments

Studios apartment developments are a new type of residential development for the Greek market, which has evolved over the last 5 years. These developments are attracting substantial interest within the City of Thessaloniki.

Studios are mainly located within the center of the City, where in either office buildings or apartment buildings the elevated ground floor levels have been configured into studio apartments. Interest in studio apartments is shown by buyers that will self occupy them and investors who are interested in dependable investments within the Urban Designated Area of Thessaloniki.

The potential investors purchase studio apartments with the intent to lease them mainly to Tertiary students. Thessaloniki has a substantial amount of university students, approximately 100.000, due to the two large Tertiary facilities namely the Aristotle University of Thessaloniki, the Makedonia University of Thessaloniki both located centrally and the Upper Technological Educational Institute of Thessaloniki (A.T.E.I.T) located within the area of Sindos.Within the area of Sindos a significant number of new studio developments are located in close proximity to the A.T.E.I.T.

The sale values of studio apartments within the central city of Thessaloniki range between €1.800/m² and €2.250/m² and for studio apartments within the area of Sindos range between €1.250/m² and €1.600/m². The aforementioned prices ranges are dependable on the state of construction, location, placement within the building and age of construction.

Source: Lambert Smith Hampton