Athens's Next 'Goldmine The Area with the Highest Investment Returns

The real estate market in Greece has seen remarkable growth as of 2024, and forecasts suggest that 2025 will bring further increases across most regions, particularly along the Athenian Riviera.

The spotlight is primarily on residential properties in certain Athens neighborhoods experiencing rising demand due to their strategic locations and inherent potential. Concurrently, interest in holiday homes, especially in popular tourist areas and islands, remains high.

In Athens and its surroundings, surprise areas are often linked to infrastructure development, urban redevelopment, and revitalization efforts. Rising sales prices and returns have directed investors toward neighborhoods previously deemed undervalued, which are now experiencing rapid growth and appreciation. Key market drivers include steady tourism influx, infrastructure changes, and the growing demand for short-term rentals.

One standout area in Athens is Hellinikon, where the first smart green city in Europe is being constructed from scratch, exemplifying a fascinating case study in real estate.

Hellinikon represents a flagship project in Athens, aiming to transform the area into a model of urban development, merging smart technologies with sustainable practices. This development is expected to positively impact the broader Attica real estate market and further position the region as a significant investment hub.

Which areas in central Athens, however, distinguish themselves in terms of investment returns? How are prices moving? What are the trends in the vacation home market?

Top-Performing Areas in Athens for Investment

Research by Protio identifies newly emerging neighborhoods in central Athens and its suburbs as leading investment destinations, driven by increasing demand for properties that yield good returns. This trend is underscored by active movements in income property markets and new opportunities stemming from infrastructure upgrades, revitalization, and increasing tourism and investment demands.

Athens areas highlighted for high-return real estate investments confirm the market’s dynamic growth and the rising demand for income properties. Top areas identified include:

• Ano Dafni and Amerikis Square: Boasting the highest returns in Athens at 7.1%, these areas highlight rising rental prices and sustained demand growth.
• Polytechneio: Maintaining a 7% return, this area benefits from its central location and developing adjacent neighborhoods.
• Aigaleo: With a 6.9% return, this neighborhood continues to attract investment interest due to transportation access and proximity to central Athens.
• Larisis Station – Vathis Square: Offering a 6.6% return, the area's upgrade and redesign make it appealing for rentals despite its previous lesser reputation in Athens.
• Korydallos: Maintaining a 6.5% return, this area draws investors keen to renovate properties for rental purposes.
• Kypseli: A historical area with a 6.4% return, known for long-term investment value.
• Peristeri: With a 6.3% return, this large Attica area offers diverse options for those interested in income properties.
• Paradisos Marousi: Returning 6.1%, it highlights the growth potential of the northern suburbs, attracting investors.
• Kato Chalandri: With a 5.6% return, it presents as an emerging choice with promising development potential.

These neighborhoods present opportunities for investors seeking long-term returns by leveraging rental increases and trends in property renovation and utilization.

According to Protio's analysis, these areas indeed introduce a "breath of fresh air" to real estate investment. They offer numerous opportunities for renovating old properties and upgrading energy infrastructures, key to maximizing returns.

Property owners and investors can enhance their asset value through strategic interventions like:

• Renovations: Updating interiors and improving property functionality to attract more tenants or buyers, achieving higher rents or sales prices.
• Energy Upgrades: Installing modern energy systems, such as insulation, solar panels, and smart heating/cooling systems, increases property appeal and reduces operational costs for tenants.
• Infrastructure and Revamps: Upgrading local infrastructure paired with urban development projects enhances neighborhood value and attracts new residents and investors.

These strategies offer higher returns than traditional real estate, providing opportunities for diversification and increasing investment portfolios’ value. Investors focusing on such areas stand to benefit from continued demand for quality, energy-efficient properties.

Comparing Returns: Ano Dafni vs. Kolonaki

The term "highest return" refers to the percentage of annual income generated from renting a property, relative to its purchase value. This metric is crucial for assessing a real estate investment's efficiency, indicating how quickly one can recover their invested capital through rental income.

For instance, if Ano Dafni yields a 7.1% return, an investor purchasing a property there can expect annual rental income to equal 7.1% of the property’s purchase cost. For a property bought at 100,000 euros, this translates to around 7,100 euros in annual rental income.

This method allows investors to compare different areas and properties based on investment efficiency. Areas with higher return rates are viewed as more attractive, signaling better potential ROI through rental income.

Specifically, for a 70 sq.m property:

• Ano Dafni's selling price per sq.m is about 2,409 euros, with an average monthly rent of 14.3 euros per sq.m.

Calculations:

• Selling Price: 70 sq.m x 2,409 euros/sq.m = 168,658 euros
• Monthly Rent: 70 sq.m x 14.3 euros/sq.m = 1,001 euros
• Annual Rental Income: 1,001 euros x 12 months = 12,012 euros

Calculate the return:

• Return = (12,012 / 168,658) × 100 = 7.1%

In contrast, Kolonaki's return is notably lower, around 3-4%, due to high property values reducing the rent-to-purchase ratio. Despite its appeal driven by prestige and demand, Kolonaki's return is more subdued compared to areas like Ano Dafni or Amerikis Square.