Stores and offices hit by drop in values

The second quarter of the year is believed to have inflicted a 15% decline on the value of stores, while that of office spaces is believed to have taken a 12% blow compared to last year’s record highs, the Real Estate Value Index compiled by Inventio Consulting showed.

Although transactions in the property market were next to zero over that period, the real estate consultancy firm used a number of general assumptions based on the state of the economy and business sentiment in order to assess the course of prices.

In this context, regarding the market for retail spaces, the Inventio analysts note that since the start of the year commerce has again taken a blow and investor interest is restricted to supermarkets, the only sector not to have suffered as a result of the coronavirus.

In March and April most stores saw their cash flows run dry – with the exception of those doing business online – which combined with limited bank funding is likely to lead to more shutdowns or at least to a significant reduction in the number of points of sale.

What’s more, as a result of the reduction of gross domestic product this year and possibly in 2021, the increase in unemployment and the fresh decline in household purchasing power will result in a new drop in private consumption and market demand. Therefore, “in the short term, rental rates and the occupancy of retail spaces are projected to decrease, with the price index maintaining a declining course until the economy returns to normal,” Inventio notes.

Notably, the company’s value index for retail spaces stands about 60% below the 2008 level, while it is close to its historic low in the first quarter of 2013.

Regarding the office market, Inventio points out that the pandemic has brought about the freezing of investments in property acquisition, both by domestic and foreign institutional investors. The sustainability issues many Greek enterprises are facing due to the recession and the increasing trend toward remote or rotating shift work systems have begun to put pressure on office building rental rates and certainly their occupancy. Consequently the property consultancy argues that a future rebound of returns (due to a drop in values) is inevitable.