With “guide” investments in residencesthe recovery of the country’s construction and building industry continued in 2023, even though it still falls significantly short of the performance achieved in the years preceding the economic crisis.
According to yesterday’s weekly economic development report, investment in housing increased by 33.7% in 2022 and by 40.2% in the nine months of 2023 on an annual basis, while investment in other construction recorded a rise of 9.4%. and 5.5%, respectively.
Overall, during this period of 2023, investments in construction approached 84% of all investments that had been made in 2022, while in a direct comparison (9 months 2022 – 9 months 2023) an increase of approximately 16% is observed. However, according to Alpha Bankdespite the upward trajectory of investments in housing, they are still lagging behind in relation to the period before the financial crisis, while in addition there is also a reversal of investment mix in constructions.
Specifically, from 2012 onwards, residential investments correspond to approximately 26% of all construction investments, while during the first nine months of 2023 this percentage approached 37% of the total. However, during the period from 1995 to 2011, the boom period of the real estate market, residential investment accounted for 61% of all construction investment.
It should be noted that during that period the great cycle of development of the construction of public works took place, with the organization of the Olympic Games. Overall, despite the recovery of recent years, the gross value added (APA) of the construction sector increased by 17.1% in the nine months of 2023 and 11% annually in the two years of 2021-2022.
In the same period, at the level of the European Union, a slowdown in the growth rate is observed, from 2.8% in 2021 to 1.3% in 2022 and only 0.5% during the first nine months of 2023. However, in Greece the GPA of the sector was formed at €3.4 billion in 2022, or 1.8% of GDP, compared to €12.3 billion and 5.3% of GDP in 2006.
In 2017, which was also the lowest year, construction GPA had fallen to just 2.7 billion euros, or 1.5% of GDP. However, it is positive that during the 9th month of 2023 there was a new increase to 2.1% of GDP and 89% of the total performance of 2022, as GPA is estimated to have reached 3.026 billion euros. The course of the production index in constructions is also of interest, which shows a slowdown in the growth rate, as during the nine months of 2023 it stood at 13.4% on an annual basis, against an increase of more than 24% in 2022. In 2023, the production of construction of projects increased by 16.7%, while the production of civil engineering works related to public works increased by 11.3%.
However, the employment in the sector records an increase of 9.4% on an annual basis during the nine months of 2023. This development goes hand in hand with the significant increase in the registrations of new companies active in construction during the same period, based on the most recent data from ELSTAT.
Finally, during the nine months of 2023 private construction activity has increased by 18% based on volume, already accounting for more than 80% of all 2022 activity.
Meanwhile, a “fatigue” of demand can be recorded lately, especially for used houses older (e.g. more than 25 years old), however the interest in new constructions remains high, especially if the small deviation in their prices from the corresponding used ones in the same area is taken into account.
According to Mr. Alexios Vandorosmanaging director of the real estate company Wealth Avenue, “in the major urban centers there is still a large gap in the development of new apartments, as a natural consequence of the ten-year crisis, during which there was almost no rebuilding. This gap is exacerbated by the great interest in residential real estate investments by foreign individuals and investors.”
According to Mr. Vandoros, the above data, combined with tax incentives, such as the exemption of new homes from VAT, but also the high demand for golden visa permits, as well as certain geopolitical factors, are expected to maintain the high rate of investment in new homes in 2024 as well.
Wealth Avenue has recently started the development of a new residential project in Pylaia, Thessaloniki, while for the next period it is planning new projects in Athens, Maroussi and Porto Rafti.
