REAL ESTATE BUYING – THE RENOVATIONS SECTOR: THE COST AND VALUE THAT THEY CREATE
The growth of the construction activity continues at a steady pace, which now consolidates the final exit of the construction sector from the crisis it experienced in the last decade. In particular, according to the latest data of ELSTAT in the nine months January – September 2021, the total construction activity in the whole country shows an increase of 26.8% in the number of building permits, an increase of 60.5% in the area and an increase of 55, 6% in volume, compared to the corresponding nine months of 2020. The building permit refers to all types of permits: for new construction or addition, repair, renovation, demolition, walling, legalization, revision and modification of a building. Apart from the new constructions, however, the renovations of apartments in large urban centers as well as in smaller cities are flourishing, as well as the renovations of business premises from a wide range of sectors of economic activity such as tourist accommodation of all categories, retail stores and offices.
According to an article by APE-MPE, as reported by professionals, the severe lockdown in the first phase of the pandemic gave the opportunity to owners and managers of business premises as well as homes to proceed with renovations. Significant impetus to the renovations have been given by the “Save” programs that subsidize part of the costs and at the same time provide the possibility of financing on favorable terms, contributing to the energy upgrade of older properties, adding added value.
But at what prices is the cost of renovating a house calculated? Where should the household pay attention when deciding to renovate the house?The cost of a radical, and not partial, renovation of a house starts from about 550 euros per square meter and has as a final result its transformation into a modern house with all that entails, in addition to the aesthetic result, both for the rise of living level of the household, its safety, energy savings and its adaptation to the new data brought by the revolution in technology, says George Koutzis, who maintains a technical office, to APE-MPE. At the same time, as he points out, it also adds value to the home.
The basic works of a renovation, which requires a small-scale permit, include the dismantling and remodeling of the spaces based on modern living needs, the replacement of all plumbing and electrical installations, bathrooms and kitchens, the replacement of windows as well as its energy upgrade and detachment from oil, with all the work it entails, says Mr. Koutzis. It is reminded that based on the new climate law that is being consulted, it is provided that for buildings the installation of oil burners where there is a natural gas network is prohibited from 2023, from 2025 the installation of oil burners is generally prohibited in new buildings, while from 2030 the use of oil burners.
The renovation process at each stage, emphasizes George Koutzis, presupposes the planning and supervision by a competent engineer, in order to comply with all the prescribed procedures during all phases of the project and especially at the beginning of the dismantling, in order not to put any issue in terms of statics of the building, etc. The duration of the completion of the renovation of a house of 100 sq.m. starts from three months, but depending on the individual issues that may arise on a case by case basis and the contractor who will undertake it, they can greatly increase the delivery of the project.
New technologies are changing the data
The revolution in new technologies brings to the gates the “smart” home, which already gives the ability to control all home appliances, lighting and heating and a number of other functions of a home in a way that ensures, among other things, savings in the field energy, security but also great living facilities for the residents of the apartments. The creation of a “smart” house, says Mr. Koutzis, makes imperative the need to change the electrical installation even in 15-year-old homes, in order to be able to fully respond to the new data and applications that can be adopted by a modern home, says Mr. Koutzis.
Renovation: Does it add value to the home?
A renovated and energetically upgraded house with interventions accepted by the majority, gives added value to the property owners in case they want to go for sale, and much more when they want to go for rent. The amount of goodwill depends on a number of factors. According to Alexandros Demertzis, a real estate consultant, the renovation adds value especially to an average property, as the prospective buyer in most cases when he buys it does not make radical changes, for a number of reasons, so he wants to get it in good condition. A medium value, old property that is for sale, can be transformed with a renovation, something that the owners do not have the experience to realize, with the result that if they go for sale in bad condition, with humidity, etc., they lose in value.
On the other hand, in premium properties, with a unique view of expensive areas of Athens and our country (island Greece), as Mr. Demertzis states, the renovation is not crucial in the sale as the potential buyers of high income class. in most cases they proceed with renovation, change of premises, etc. based on their own preferences, even in properties that are in excellent condition. The added value that the renovation of a house gives depends on the economic cycle in which the real estate market is located and mainly on the medium-term market prospects, Mr. Demertzis estimates. If the outlook is down and estimates point to price reductions in the coming years, a prospective seller who wants to sell his property immediately has no interest in renovating it because he will not be able to reap the added value.
Otherwise, in the upward phase of the market, the renovation and the cost for a potential seller can be covered by the higher selling price, due to the upward price cycle. Renovated houses are also preferred by foreign buyers, as they do not want to get involved in renovations in a foreign country that may not be permanently inhabited and do not know procedures, workshops, etc.
Renovations: “Saving” and banking system
The “Save” programs, which subsidize a significant part and lead a large number of households to make the decision to proceed, also give impetus to the renovations that are experiencing great growth, as a large number of apartments in the greater Athens area and the urban centers of the region have been renovated. radically more than 3 to 4 decades. In this way an average household reduces the final cost for the renovation and energy upgrade of their home. Along with the “Save” programs, the sector of mortgage credit, which includes repair loans, is also on the rise, with low-interest loans. As the banks have announced, having now got rid of the great challenge of “red” loans as one after another they announce a single-digit index of non-performing loans, they are now focusing on financing the Greek economy, which includes mortgage credit, of which it is a part repair loans.