Real Estate Returns: Profit Margins Squeezed Amid New Regulations

The era of high profit margins in real estate appears to be nearing its end, as the new regulatory framework and the elimination of construction bonuses through Urban Planning Decisions reshape urban redevelopment landscapes. Over the decade (2016-2025), the average increase in land prices has shaped up to 40.25%. The Ambelokipoi area records the highest market growth at 46%. Today, construction agreements are approached with greater caution, as returns are compressed and terms of profit-sharing are changing. It is estimated that profit margins have declined by an average of 4%–5%, while in some cases they approach the lowest levels in a decade. In Paleo Faliro, where profit margins once reached 56%, new agreements are being made at 33%–40%. In Ambelokipoi, margins may drop from 40% to 32%–35%, and in Marousi, traditionally around 43%, estimates now hover closer to 38%. This shift isn’t just numerical—it’s qualitative. Developers must balance performance with societal pressure for added-value projects, such as social housing, schools, daycare centers, or energy communities. Meanwhile, the cost of acquiring plots continues to rise. According to Geoaxis research, the average land price in Attica has increased by 40.25% from 2016 to 2025. Ambelokipoi leads in price hikes, with an increase from €1,784/sq.m to €2,605/sq.m (46%). Paleo Faliro follows with a steady 36.5% increase, maintaining its appeal as a high-quality coastal area. Marousi sees a 34.4% increase, making it attractive for those seeking dynamic areas without premium central features. Holargos and Peristeri also show significant increases due to proximity to metro lines and affordable living options. Rising land costs combined with increased construction expenses further squeeze developers’ profit margins. The ELSTAT index for construction materials recorded a 5.1% increase last year, while loan interest rates remain high (5%–5.5%), raising capital costs for new projects. Despite these challenges, demand persists, driven by housing needs, the obsolescence of old stock, and real estate’s return as an investment tool.