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Danos | International Property Consultants & Valuers: Thessaloniki Market Report

Danos | International Property Consultants & Valuers: Thessaloniki Market Report

Greek Economy Overview

Greece had to face the outcomes of a ten year economic crisis, which officially came to an end in 2019. Before yet witnessing the increases in macro figures, Covid-19 has trashed all hope for positive macro numbers in 2020. Recession in 2020 due to the pandemic has hit Greece hard and the unavoidable lock down measures and restrictions have worn out the Greek economy. In 2020 the fall in GDP was at 10% with the published figures so far. The slow down and shrinking of the economy is evident in all relevant indicators The economy is expected to bounce back in 2021 and get into even more optimistic numbers by 2022.

The coronavirus pandemic is taking a strong toll on the Greek economy. The economy contracted by -14.2% in the second quarter of 2020 as economic activity was constrained to stop the spread of the pandemic. The services sector was hit particularly hard also during the summer season due to the importance of international tourism. While the increase in the unemployment rate has been relatively muted so far, partly on account of the protection schemes put in place timely by the authorities, employment has suffered more markedly in view of the lower demand for seasonal workers. The slack in the economy, as well as falling energy prices, are expected to lead to a temporary decrease in consumer prices in 2020.


Thessaloniki Office Market

The pandemic may affect the completion of the agreements or in some other cases the pause of demand until traveling restrictions are lifted. However, the characteristics of the demand have changed, as now, having the experience, larger areas per employee are required and open plan spaces are probably not preferred by the companies. The demand for green buildings, which will ensure the best working conditions as well as the reduction of fixed costs along with the need for parking spaces, connections to public transport etc., has favored the areas outside the city center. The main demand comes from pharmaceutical companies, technology and energy supply companies.

For the first time in years, the construction activity for office buildings returned, as developers have bought land with signed contracts for large office spaces or even entire buildings. As eastern Thessaloniki has already been developed during the last decade, western Thessaloniki is now attracting considerable interest. Regus, which already operates in the center of Thessaloniki, is exploring the market of Thessaloniki for additional space in western and eastern side. That fact makes clear that the demand is getting higher.


Thessaloniki Retail Market

Any forecast for the Retail Sector is very difficult at this period. Small business in local markets struggle to survive (areas such as Pylaia, Toumba and Evosmos). In the high streets such as Tsiimiski street and Mitropoleos street the process of stabilization of the market depends on the vaccination schedule – the faster the population have it, the better for the market. It appears, that the retail sector is the category, which will suffer the largest losses.

Although the values of the stores in high streets, such as Tsimiski, remain high, there are many owners who are now willing to reduce the asking rent, as there are some vacant retail stores on the street. Due to the increased e-commerce activity, there are some international brands, which examine to minimize their presence to the commercial streets of the town and remain present only with smaller spaces, due to the increasing performance of their e-shops. The retail market during the previous years and especially during 2018-2019 was one of the most successful markets, that gathered the investor interest as well. At the present time the demand for retail investments has decreased and there are not many transactions, which were finalized. The deals, that took place in previous time are continuing, taking into account further negotiationsfor the rental terms. The secondary retail markets, such as Evosmos and Pylaia suffered more, as the interest remained low during S2 2020.


Logistics Real Estate Market

Logistics market is increasing its figures and gathers the attention of investors. Because of the Covid-19 the e–shops have been more popular and a lot of consumers are expected to follow this trend also in the future. Thus, the demand for logistics centers is expected to be higher the following months. Companies are interested to lease or to buy such properties. The surface sizes for rent range between 1,500-3,500 sqm in relatively urban areas. In some cases customers need office space as well.

The lack of a specialized logistics market was clearly depicted during the boom of e-commerce in the Lockdown period. Most courier and transport companies are willing to develop adequate logistics centers and last mile logistics so as to cut down transport times and handle larger volumes of products. Important investments are expected by the major transportation firms.



The prices of the apartments in Thessaloniki’s city center remained high for the last semester. The demand was focused mainly for properties in the city center of Thessaloniki and also in the east side of the city. On the other hand, the demand for summer houses was low because – due to the situation with covid 19 the priority for Greek people was not to buy a property next to the see. Moreover, the potential buyers, for such properties, from abroad (e.g. Bulgaria, Serbia, etc) could not visit the houses because of covid 19.

In Thessaloniki’s residential market, over the last semester, there was a high demand from investors, who want to buy flats in the city center, with surface from 50 sq m – 70 sq m. As long as the banks have started to give loans in order apartments to be bought, the specific sector is doing well in Thessaloniki. Many new apartments have started to be build over the last semester, mainly in the east side of Thessaloniki.


Thessaloniki Hotel & Tourism Market

The tourism and hotels sector in Halkidiki and Thessaloniki remains in the radar of foreign investors, as it presents real investment opportunities in relation to other competitive destinations. In the short run (until the end of 2021), investors are expected to be on a wait-and-see attitude, waiting to reach potentially better deals. The lack of target clients coming from Russia and the Balkans has shut several units in Chalkidiki and especially in Kassandra. This summer the trend, as it appears for many properties in the holiday home category, is going to be single tenant for the entire season or for at least one month (the property will not be available for lease for a short period of time. e.g. one week). Some analysts do refer to examples of the previous crisis (2008- 2009 Economic Crisis), in order to measure implications and predict results, however the nature of this crisis is enormously different, since people were forced to isolation, psychological distress and phobia creating an invisible psychological factor, hard to measure, that will either bring tourism to be a priority for households or hold back until they feel psychologically stable and willing to travel far from the security of their home.

The third Wave of COVID–19 might delay the rebound in the sector. Greece is one of the countries, which will be expecting a tourists’ flow during this year’s summer holiday season, and in conjunction with its relatively favorable epidemiological characteristics, is expected to claim a significant market share in tourism. This would also be the case for Halkidiki. A Turn to local customers is also expected to be targeted the next summer Experts believe that full recovery is yet to delay till 2022-2023.


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