European cities with the best real estate prospects for 2023 – Where does Athens rank?

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Athens ranks 23rd in Europe out of a total of 30 European megacities in terms of real estate market prospects for 2023, while the top 3 European megacities are London, Paris and Berlin. The position of the Greek capital remains stable compared to last year, just as the trio of the strongest markets also remains stable, even if, in general, the bar of expectations of the sector is clearly lower this year, as at least appears from the opinions expressed by the market.

The data comes from the annual survey for Europe "Emerging Trends in Real Estate in 2023" prepared every year by the Urban Land Institute in collaboration with the global consulting firm PwC, based on the responses given this year by the industry's top executives from the branches of management, consulting, development, investment, finance, etc.

While the branch executives who participated in this 20th edition of the survey (Emerging Trends in Real Estate Europe 2023) report a low, immediate impact on their real estate portfolios from Russia's invasion of Ukraine, the consequences of the war reflected in rising energy costs, historically high inflation and subsequently rising interest rates.

Seven out of 10 respondents believe that Europe will go into recession before the end of 2022, in stark contrast to last year's analysis, when there was still concern about the pandemic but also the expectation of a clear improvement in the business climate.

Overall in terms of real estate prospects in major European cities, although not much has changed compared to last year in terms of the strongest markets - London retains first place while Paris takes second place from Berlin - overall investment prospects and growth for all 30 cities covered by the survey are more unfavorable compared to last year's analysis.

Even Germany's usual investor safe havens of Frankfurt, Munich and Hamburg are not showing the consistently positive sentiment of previous years, reflecting the potential impact of inflation on Europe's biggest economy and its reliance on supplies Russian natural gas.

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For Athens, despite the fact that it ranks 23rd and is small in terms of real estate investment volume compared to other European markets, the Greek capital is considered to present, according to some market executives, good prospects in terms of rents and capital value.

There is still a shortage of modern building stock due to the very prolonged previous recession. Over the past ten years there has been some new development in commercial real estate, office and retail, but there are still opportunities in the market."

At a pan-European level, despite the prevailing uncertainty, new lease activity across Europe (and in Athens) has remained at a satisfactory level for much of 2022.

However, there is a widespread view that high energy prices and the recession will lead to a drop in rents and an increase in available business premises for rent.

As for the specific property categories with the best prospects for 2023, as a sign of the times, the top industry response is new energy infrastructure for the second year in a row, partly reflecting historically high energy prices and the prospect of shortages the winter.

This sector covers a wide range of real assets such as solar, wind, energy storage and electric transport infrastructure, reflecting a longer-term trend and the shift of investors in their holdings from the mainstream real estate market to alternative sectors that will benefit from major trends in demographics, climate change and technology.

It is also notable that various forms of housing dominate the top 10 choices for the property categories with the best prospects from respondents, with social housing, post-retirement housing, affordable housing, co-housing, student housing all in the top 12, along with others sectors such as data centers, logistics, storage areas, etc.

READ MORE: Bank of Greece: Apartment prices in Athens increased by 9.7% in 2022.