By Eleni Botas
Large investments in our country have entered the grip of inflation, with a large increase in costs and an extension of their completion time.
As Capital.gr had written The explosive increase in energy costs has brought about a freeze on investments that had been launched in important sectors of real estate, while it has put under the “microscope” investment agreements that had been closed without being signed yet.
As he stated, on Monday during the presentation of the new On Residence hotel in Thessaloniki, the founder and President of Grivalia Hospitality, George Chrysikos, the large increase in construction costs has derailed the budget of the projects, while at the same time has extended their implementation schedule.
An illustrative example is Asteria Glyfada where initially as it became known, it would be completed within 2022, however it has been postponed for the first half of 2023.
This development for most projects in the country, according to real estate market executives is expected, as most investments are on hold, both due to the launch of building materials and the lack of materials observed in the Greek market.
“Everyone is waiting to see what will happen in the coming months. At what point will prices stabilize, in order to have planning for each real estate company or each implementing body for the plan and strategy that will follow. Today with the situation to “It remains fluid and prices are subject to complete destabilization, there can be no clear timetable,” they said.
Budgets are derailed
Most investment budgets have been derailed as well building materials have increased by up to 140% increasing by 40% construction costs.
It is indicative that the cost of the investment of Grivalia Hospitality in Thessaloniki from 16 million euros, finally rose to 20 million euros, while the construction cost has increased the budget of the investment in Asteria Glyfada from 115 million euros (initially it was announced that it would be EUR 60 million) to EUR 145 million.
Under such conditions, most projects stop or do not start work until the situation normalizes, although no one can at this stage predict when this will happen.
They are unable to make offers
Not only in public works, but also in private, contractors can not bid at such prices that exist in the market, as they can not budget their costs. Indicative is the case of construction of a large hotel complex in Mykonos, with a budget of over 50 million euros, for which, according to information, large construction groups were recently invited to bid.
Involved in the tender process, they stressed in the capital: “what offer can one give for this investment, at these prices?”.
The above situation was acknowledged a few days ago by the president of the Association of Greek Tourist Enterprises (SETE), Giannis Retsos, who stated that in some cases contractors and construction companies do not even give offers to those who ask for them, citing inability to budget their costs due to continuous increases. in materials such as concrete, aluminum frames, copper and others.
… and the fear of rising money costs
Asked by capital to the head of Grivalia Hospitality, G. Chrysikos whether the problem of investments today is the increase of construction costs, the impending increase of money costs and the reduction of return on investments, he answered “yes to all three” .
Referring to the increase in the cost of money, he stressed that inflationary pressures are raising interest rates, dragging up any form of lending.
According to real estate market executives, the rise in inflation has already increased the operating costs of businesses by 30%, while the increase in interest rates will have an adverse effect on the real estate sector, which after a decade of crisis, had begun to recover.