The key to successful property investment, whether for living or ROI, lies in choosing the right neighborhood. Using Athens as a case study, we've developed a model to quickly assess its investment potential.
Renty team came to Greece drawn by its promising opportunities. A 2022 Ernst & Young report highlighted Greece's stable allure for investment. And we weren't the only ones who noticed: foreign investment in Greek real estate hit a record high of 1.975 billion euros that same year, a 68% increase from the year before.
The spotlight was on Athens. A January 2023 study by CIA Landlord Insurance showed that residential property prices in the Greek capital are among the most affordable in Europe. We confirmed this in practice: conversations with leading Greek real estate agents and lawyers revealed that the relatively low cost per square meter is attracting potential investors in Short-Term Rentals from around the world. We, at Renty, were among them.
The housing market in Athens is in sync with the country's positive economic indicators. Between 2022 and 2023, it experienced rapid growth due to several factors. We'll highlight the most significant ones: the lifting of COVID restrictions and geopolitical elements that had a significant impact on the European real estate market.
However, upon analysis, we don't believe this growth phase will continue for long. A slowdown in prices can be expected, followed by stabilization and a plateau.
"As the neighborhood, so the apartment." These words have become an internal slogan for Renty team. We understood that a city's investment allure can't be uniform. In our quest for the ideal investment opportunities, we analyzed hundreds of listings and built a financial model to calculate ROI. After several months of work, we had a working scheme to identify the most promising options.
According to our model, the real estate object profile starts with its location — neighborhood. That's why we developed an algorithm to assess it, rooted in historical market dynamics.
We made the decision to exclude the anomalous data from 2022-2023. This was essential for the long-term validity of our model as we aimed to build an investment business focused on lasting and stable profitability.
Certainly, Renty's approach can also be applied for evaluating neighborhoods in other cities.
Traditionally, most investors are interested in the prospects of renting real estate for either short-term (STR) or long-term (LTR) scenarios. Considering the significant differences in fees and taxes, we calculated rental ROI separately for STR and LTR — this is the key parameter of our model.
The main variable for analysis was the property's size. For calculating annual ROI in both long-term and short-term rentals, we used a two-bedroom apartment of 75 m2 as a standard.
Lastly, the most important and final metric for evaluation was the Gross Cap Rate. This reflects the income-to-cost ratio of the rental property. This index allowed us to quickly and effectively assess the investment prospects in STR and LTR real estate opportunities.
Note: The Gross metric doesn't include expenses for bills, taxes, or property maintenance. For instance, short-term rentals will require OTA platform fees (a revenue commission of 3% on Airbnb, up to 17% on Booking.com) and potentially management company fees (up to 20-30%) if the owner opts for outsourcing the property management.
Long-term rentals also have costs — like property taxes and utility bills. However, their total amount is generally lower due to the absence of platform commissions and lower management fees. Nonetheless, the annual ROI is also smaller.
Considering the balance of income and expenses, STR properties will still generate more profit for the owner. Even if the share of all operational percentages is higher than in LTR, short-term rentals remain more investment-friendly.
Before we delve into the ROI table for various Athens districts, let's pause for a quick math break. We'll examine the formula used to calculate the Gross Cap Rate for assessing investment prospects. This formula offers a basic understanding of the apartment's rental ROI in just a few minutes — no calculator or Excel needed.
The ROI outcomes for short-term and long-term rentals led us to conclude that short-term leasing offers a higher return on investment.
For example, let's say you're considering buying a 75 m2. apartment in the Monastiraki area. The property costs €380,000. Our model can help you forecast the ROI if you decide to put it up for rent.
In this case, the potential annual yield without management expenses for long-term rental would be around 3.65% of the property's value. For short-term rentals, it would be 7.47% per year.
Thus, Renty's calculations enable you to assess the average investment attractiveness of an apartment in various districts based on ROI.
Remember, your final decision should also account for additional details, such as the property's technical condition and extra costs for documentation and maintenance.
Discovering the right neighborhood in Athens is just the beginning. With Renty Select, we not only help you identify prime investment opportunities but also assist in property purchase and maximizing ROI. Ready to capitalize on Athens' thriving property market? Dive into Renty Select now.
At first glance, choosing a district for a good investment in Athens seems straightforward: look for apartments in the city center. That's always profitable, right? Well, not so fast. Starting from May 2023, Athens has set a minimum investment threshold of €500,000.
In practice, even before these new rules were implemented, it was challenging to find properties for less than €400,000 in tourist-popular areas. However, in satellite cities like Piraeus and towns on the Attica peninsula, the golden visa requirements remain at €250,000. Stay tuned for our upcoming article focused on these locations.
Rent prices in the historical center are high, which is advantageous for investors. However, the cost per square meter is also high, making property acquisition less accessible. Additionally, many buildings in the center are old and less reliable. As a result, apartments can be overpriced and may require maintenance, including costly plumbing and utilities repairs.
Asset value dynamics are essential for any investor. The period of active growth for apartments in the historical center seems to be behind us. The districts show figures below the Athens average. While there are still appealing investment options, it's increasingly difficult to find good properties amidst overpriced offers.
That's why we also recommend other city districts located relatively far from major attractions. Thanks to a growing influx of tourists, lower cost per square meter, and more available options, these areas have a potential for value growth.
So, where should you buy an apartment? We've identified several underappreciated Athens districts, according to Renty experts.
Koukaki holds a unique spot among Athens' urban neighborhoods. Nestled between the ancient hills of the Acropolis and the bustling Syngrou Avenue, it draws fans of both ancient architecture and contemporary culture. It's currently one of the fastest-growing districts in the city's central area, perfectly blending novelty and authenticity. This mix makes it attractive for both tourists and local residents alike.
The average growth rate for property values in Koukaki stands at 11.32%. Data analysis over the last five years confirms its promising prospects. Investment approaches may differ: one expert might advise you to buy when the market dips, while another might recommend buying during a rise. In this case, we give the district a positive rating precisely because of its excellent growth dynamics.
For locals, Omonia Square serves as a transportation hub, a meeting point, and an informal symbol of the city. It's more than that — it's a hub of cultural vibrancy that combines the quiet grace of the national theater, the endless buzz of the central market, the glitz of new hotels, and the culinary diversity of various restaurants.
Omonia is one of the city's oldest districts, and we're witnessing its transformation: from the square's reconstruction to the erection of new buildings. The growth rate for the district has reached a 7.8% mark. Meanwhile, the current cost per square meter in Omonia remains one of the lowest in Athens, at €1,934.
While it's hard to expect active growth in the old center near the Acropolis, it's here in Omonia — often referred to as the heart of Athens — where investments may be most promising.
Monastiraki exemplifies the balance of old and new that characterizes many districts in the Greek capital. Located right in the city's heart, Monastiraki Square serves as a popular gathering spot for Athenians. Nearby, you'll find two of Athens' main shopping streets: the cobbled Aeolou Street with its endless array of shops, and Ermou Street, the city's most famous shopping avenue named after the Olympian god Hermes.
Our analysis suggests that investing in a Monastiraki apartment could be a wise decision. Over the last few years, the area's real estate has seen a 6.67% increase in value.
Attiki is situated to the northwest of central Athens. The district and its central square take their name from the Attica Railways — a railway company that built the Athens-Kifisia-Lavrion line.
From 2016 to 2021, the average property value growth in the district was negative. As a result, current housing costs are lower here than in other parts of Athens. However, we believe that the district has weathered its worst years and predict a turnaround for Attiki. It's worth noting that this is an affordable district: the cost per square meter is €1,378, making it one of the lowest in Athens.
For the low property prices in Attiki, there are reasons: its proximity to the train station, the constantly changing flow of people, and graffiti on the walls. Instead of a boutique next door, you might find a tire shop or a construction company office. At the same time, Attiki is evolving from a short-term rental (STR) perspective. Alongside new tourist apartments, the neighborhood is changing — new cafes and restaurants are opening, and more travelers are appearing on the streets.
The occupancy rate in Attiki stands at 66%. While this might be a low figure for historical districts, it's quite satisfactory for a district that is somewhat remote from the center. It also remains an attractive investment due to the low cost per square meter, making property acquisition more accessible.
As of the writing of this article, there were over 1,100 properties available for purchase in Attiki. This offers a large opportunity for investment in terms of housing availability.
Given that the district is located away from the city center and attracts a diverse crowd, including students and company employees, it is less seasonally dependent than, for instance, the city center. Although the Average Daily Rate (ADR) in this area is predictably lower than in central districts, dynamic pricing and effective property management can ensure a stable income year-round for investors.
The investment appeal of the district is confirmed by AirDNA data: Attiki's rating on the platform reaches 95 out of 100 and holds a high A+ ranking.
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