Alpha Bank: commercial property prices return to levels of a decade ago

Despite the challenges arising from rising construction costs, geopolitical developments, and changes to the regulatory framework, the real estate sector remains one of the most dynamic pillars of the Greek economy.

According to an economic analysis by Alpha Bank, the recovery of Greece’s commercial real estate market has now fully offset the losses of the previous decade, with Athens maintaining a clear advantage over Thessaloniki and the rest of the country. The concentration of business activity in the Attica region, combined with stronger foreign direct investment and sustained economic growth, continues to support demand for high-quality commercial space.

The latest data from the Bank of Greece show that, in 2025, prices for prime office properties increased by 5.1%, while retail property prices rose by 4.8%. In Athens, office prices grew by 7%, exceeding their 2010 levels by approximately 15%, while retail property values now stand 17.7% above those recorded in 2010.

By contrast, Thessaloniki and the rest of Greece recorded more moderate price increases, highlighting the market’s growing geographical divergence. In the retail segment, the recovery witnessed over the past decade has been driven by stronger private consumption and the continued strong performance of Greece’s tourism sector, both of which have sustained demand for retail space in prime locations.

Construction Activity Continues to Strengthen

Construction activity in the commercial real estate sector continues to recover, with the number of new office building permits now almost three times higher than in 2019. In 2025, the number of new office permits increased by 38%, although the overall volume of construction declined, suggesting that new developments are increasingly concentrated in smaller-scale projects.

At the same time, significant activity has been recorded in the retail, industrial, and hospitality sectors. The volume of new building permits for industrial facilities has nearly doubled compared with pre-pandemic levels, while construction activity in the hotel sector has remained consistently strong.

The positive momentum continued into the beginning of 2026. During the first two months of the year, new building permits for commercial properties increased by 25% in number and by 84% in construction volume, with particularly strong growth recorded in retail developments, educational facilities, and serviced accommodation.

Emerging Investment Opportunities

Alpha Bank notes that the market is expanding beyond traditional office and retail assets, with substantial investment being directed toward logistics facilities, tourism-related properties, data centres, and specialised residential asset classes, including student housing and short-term rental accommodation.

At the same time, the qualitative characteristics of real estate assets are becoming increasingly important. Energy efficiency, modern technical specifications, and location are playing an ever-greater role in determining both property values and investment decisions.

Strong Investor Interest in Logistics and Hospitality

According to the Bank of Greece’s Commercial Real Estate Survey for the second half of 2025, investor interest remains particularly strong in Grade A logistics facilities, industrial properties, and hotels.

Office assets continue to represent a significant investment category, accounting for 17% of investment allocations, while retail properties account for 9%.

Prime office yields in Athens’ central business districts currently range between 6.0% and 6.8%, with vacancy rates varying from 5% to 9%. A similar picture is observed in prime retail locations. Although logistics yields have compressed in recent years, they remain higher than those of most other commercial real estate asset classes, standing at approximately 8%.

Challenges Accompanied by Positive Long-Term Prospects

Despite the market’s positive outlook, significant challenges remain. Participants in the Bank of Greece’s survey identified geopolitical tensions, elevated construction and energy costs, and the continued increase in building material prices as the principal risks facing the sector.

Nevertheless, business expectations remain positive, particularly for Grade A logistics facilities, hospitality assets, and urban regeneration projects. Significant opportunities are also emerging through the redevelopment of former industrial sites and the expansion of specialised commercial real estate asset classes, which are expected to become key drivers of market growth in the years ahead.