The first large shopping mall
in Athens opened only 18 months ago, but the city's retail property
landscape already is changing fast, with more than 10 similar projects
expected to built around the capital in the next few years.
Those projects will add 382,000 square meters, or more than 4.1
million square feet, of retail space by 2010, according to figures
provided by CB Richard Ellis Danos & Associates, real estate
consultants based in Athens.
Developers and real estate agents are confident the market can
absorb the extra space as Greece now ranks near the bottom of all
European Union countries when it comes to the amount of shopping
center space per resident. In 2006 there were 50 square meters of
shopping center space for every 1,000 people in Greece, according to
IOBE, a nonprofit research organization based in Athens. The average
for all 25 EU countries is more than 150 square meters.
And the interest is there on the developers's side as well. "There
is plenty of liquidity in the market looking for the right investment,"
said Gikas Hardouvelis, chief economist at EFG Eurobank, one of
Greece's largest banks.
But the ultimate success of malls here really depends on whether
Greeks decide to leave downtown areas behind in favor of shopping
For now at least, downtown rental rates remain high. For example,
properties along Ermou Street in central Athens, which include some of
the city's largest stores, rent for as much as €265, or $353, per
square meter per month, the tenth highest downtown rate in the world.
And, "we don't see rents going downwards, there is large demand,"
said Philip Evans, partner and head of retail services at Cushman
& Wakefield real estate agency in Athens.
In comparison, monthly rents in Greek shopping centers, which are
not in city centers, average €39 per square meter, according to CB
Richard Ellis real estate agency in London. That rate is among the
lowest in the European Union; the monthly rate in Spain averages more
than €63 per square meter although it is €25 per square meter in
Among the mall projects that have been announced for Athens, two
are conversions of sites built for the 2004 Olympic Games.
The Galatsi Olympic Hall, where table tennis and rhythmic
gymnastics events were held, will be turned by the end of 2008 into a
€78 million shopping center, a joint venture of Acropole Charagionis
and Sonae Sierra of Portugal. And a multistory building in northern
Athens that was built for Olympics broadcasting is to be turned into
40,000 square meters of shopping space by 2009 by Lamda Development of
It was Lamda Development's earlier project, The Mall Athens, that
started the city's mall spurt. When the development opened in November
2005, it introduced Athens's four million residents to the convenience
of having 200 stores, restaurants and movie theaters under one roof. (Greece's
first major mall opened in October 2005, just a month earlier, in
Thessaloniki, the country's second largest city.)
Located in the northern Athens suburb of Marousi, The Mall Athens
covers more than 58,000 square meters and has 2,065 parking spaces, a
strong lure for shoppers in a city with traffic problems like Athens's.
Also, "the ability to choose from lots of products in the same
area is one of the basic factors that have contributed to its success,"
said Nikos Xethalis, general manager at ECE Lamda Hellas, the company
that manages the property.
Over all, Greece's strong economic growth and high private
consumption rates are helping fuel retail activity. The country's
gross domestic product is expected to expand by 3.9 percent this year,
one of the highest growth rates in the euro zone. Increases in credit
and a drop in unemployment rates have helped keep household spending
The robust economic activity - and increasing availability of
retail space - has been drawing interest from foreign retailers eager
to enter the market.
This year Leroy Merlin, the French-based do-it-yourself retailer,
and Hennes & Mauritz, the Swedish clothing giant, opened stores
while Ikea of Sweden and Zara of Spain say they intend to expand their
operations in the country.
Developers, however, say dated laws, zoning restrictions and costly
bureaucratic procedures cause costly setbacks.
Also, the country's property transfer tax of 9 to 11 percent is
among the highest in the EU and, because it is paid by the buyer, it
does deter growth, developers say.
"The largest problem for any developer in Greece is the red
tape vis-à-vis permit acquisition. This is a result of land-use
legislation," said Demetra Pallis, marketing manager at Developer
Reds, a subsidiary of Greece's largest construction group, Hellenic
Technodomiki-Aktor. Developer Reds is joining with Société
Générale Immobilier Espagne to build the largest of the planned
malls, a 100,000-square-meter shopping complex in Kantza, east of
Zoning restrictions limit which properties can even be considered
for mall development and, developers say, as many as a dozen different
ministries and government bodies can have the authority over permits
for an average project.
Foreign investors, like Sonae Sierra, have dealt with the confusion
by teaming with a local partner who has leverage with local
authorities and a better understanding of building and tax laws.
"This helps split planning risks with someone that has local
knowledge," said Anna Nazou, head of international business at