Toxic Spiral: Greek Office Vacancies Soar As Tourism Industry Implodes

While the theatrics of the Greek parliamentary elections are all good and fine, keeping the masses distracted, and will most likely provide an encore performance in just about one month as no government will likely be formed under the current configuration of elected parties, the reality is that unless something drastically changes for the better in the Greek economy, the political situation will only get more and more chaotic until finally the country succumbs to outright anarchy, and possibly far worse. Unfortunately, as history has shown us, economic depressions usually become toxic death spirals where absent major external shocks, there is no hope of recovery. Sure enough, the latest news of Greece confirms just that. As Ekathimerini reports, the real news is that while superficially change may be coming to Greece, beneath the surface absolutely nothing is improving and in fact things are getting worse as measured by two key indicators: i) vacant Athens office space, which has soared to 20% in Q1 2012 compared to 15.5% a year earlier, which means far less corporate tax revenues and business spending, and ii) the lifeblood of the Greek economy - foreign tourism - is drying up, plunging by 12.5%, as foreigners suddenly have better things to do than go to countries better known for the Syntagma Square riot cam than the beaches of Santorini. Not surprisingly, the biggest source of foreign tourists, Germany, has seen its share dry to a trickle from 15% to just 3% - one can't imagine why those called Nazis by the neo-Nazis would have reservations about spending 2 weeks in the former tourist haven. The result: far less tax revenues, far greater reliance on debt as source of cash, and an economic collapse in 2012 that will put 2011 to shame. So much for the IMF estimate of an unchanged GDP print in 2013 on which the entire second Greek bailout package was based...

From Kathimerini:

Athens has the highest rate of empty office space in Europe, according to data for the year’s first quarter presented by BNP Paribas Real Estate.


Its report on the course of the European office market showed that the availability rate in the Greek capital soared to 20 percent in the January-March period from 15.5 percent in the same period last year.


This clearly illustrates the blow that the recession has inflicted on the country’s business activity, resulting in a major drop in demand for the lease of office space.


High-standard offices in the city’s main business districts have an annual lease rate of 216 euros per square meter, against an average of 264 euros/sq.m. last year. Athens’s rate is on a par with those of The Hague, Bucharest and Lisbon.

And even worse:

Online tourism bookings from abroad are pointing to a 12.5 percent decline for this year, according to the Airfasttickets travel agency.


Nikos Koklonis, head of the company that owns the agency, says that the biggest drop in bookings for Greek destinations this year is from the German market, which last year accounted for 15 percent of all bookings. Its share has now shrunk to just 3 percent.


Surprisingly, most bookings from abroad this year originate from Italy, followed by Britain, Spain, France and Austria. One in four clients the agency handles chooses Greece as its destination.


Association of Hellenic Tourism Enterprises president (SETE) Andreas Andreadis expects receipts from tourism to drop below 10 billion euros this year, after climbing to 10.5 billion in 2011.

Well, at least Santorini has not erupted yet...