Energy modernization of real estate: a big bet for the next 4 years, which, in order to win, the country will have to spend many billions of euros. There can be no inaction as Europe prepares to adopt a Community directive that will set strict deadlines for improving building “ratings” and, of course, “penalties”. Properties with a low energy class cannot be sold or rented out. For a country with 4.5 million buildings, of which 6 out of 10 are older than 40 years from the date of building permits, achieving the target is considered extremely difficult, and the process could even lead to a mass change of ownership.

The bet that the country should win is that the necessary upgrades to real estate to reduce energy consumption are not being carried out at the expense of the lowest income owners. Several billion euros have been allocated in recent years through the Excoonamo programs to achieve the goal. However, results are still limited. The number of facilities in which modernization has already been completed is very small compared to the country’s building stock. In fact, for bureaucratic reasons, subsidies have not yet been paid for every third application of the Save-Autonomous program, which began to be implemented three years ago. And the problems don’t end there. In addition to the small number of properties included in energy modernization subsidy programs and project delays, the rising cost of money is entering the equation, forcing banks to be even more cautious in lending to low-income owners to cover “peer participation” in energy modernization programs. .

The text, adopted last week by the European Parliament, stipulates that emissions of gaseous pollutants from buildings must be reduced by 2030 and brought to zero by 2050. To do this, it is necessary to continue energy modernization. From 2028, all new buildings will be required to be zero-emissions, while the schedule will be stricter for buildings that will house public services. As far as the old real estate fund is concerned, by 2030 all buildings must be classified as at least category E and by 2033 category D. This renewal can be done in one way: through investment.

Several billion euros have been disbursed over the past few years through Excoonamo programs with little result.

The text of the European Parliament is not yet binding, and all member states already seem to be making serious objections. Greece has hundreds of thousands of properties with special characteristics that should be examined to see if they should be included in energy modernization programs under the sword of Damocles of no sale or rent. Cottages, for example, are likely to be vacated. The competent government official also applies to other categories of real estate. Such as properties by the sea, for example, which have clearly better energy performance than properties in other areas, so investment in energy upgrades may not “pay off” economically or may not contribute significantly to reducing gas emissions. One challenge is figuring out exactly which building stock will fit into the tight modernization schedule. But there are others:

1. Investment financing. Particularly the poorest households also have limited access to the banking system, especially in an environment of elevated interest rates. The specific problem is solved either by generous subsidies or by the provision of guarantees to pay the required amounts.

2. Providing public funds to reduce the “bill” for the owners. Over the next period, Greece will request additional loans of 5 billion euros from the remaining funds of the Recovery Fund, and it is expected that most of this money will go to energy modernization programs.

3. Elimination of bureaucratic barriers and more efficient distribution of investment funds. We have another bet: with hundreds of millions of euros allocated for a photovoltaic installation, electricity will be produced from the sun, which will reduce the use of fossil fuels. The question is whether vulnerable households will participate in the program, or whether more affluent households will be able to cover the costs of the same participation in the amount of several thousand euros. Accordingly, future energy retrofit programs for buildings may need to change targets (so far the target has been at least three levels higher) to reduce the cost of intervention per building and increase the total number of beneficiaries.

55% were built before 1980.

The country’s real estate census, according to the latest available data in 2021, is expected to record about 4.3-4.4 million properties, of which 55% were built before 1980, that is, a period of major reconstruction.

There are clearly less than 400,000-500,000 objects younger than 15 years old, while the 10-year crisis of the memorandum had a strong impact on the statistics, since during this time the construction activity practically collapsed. And although the country returned to high growth rates after the end of the pandemic, which was reflected in the revival of construction, an inflationary crisis set in, which drove up the prices of building materials and added new headaches. How does all this translate into practice? The country has a huge stock of real estate with… more than 50 years of age. Buildings that were built with completely different specifications compared to today, which also means higher heating and cooling needs. Under the European Union’s sword of Damocles – restrictions on the sale and even renting of properties with a low energy rating and very high maintenance costs for unprotected property – millions of owners will be asked to make a decision about the future of their property. They will sell or invest in energy upgrades to either reduce housing costs in their family budget or generate higher rental returns on their property. Both decisions lead to the “mobilization” of tens or even hundreds of thousands of euros in real estate, not being sure that all these investments will pay off financially or even contribute to reducing carbon emissions.

The older the property, the higher the cost of its energy modernization. Buildings older than 30-40 years require radical renovation to upgrade the energy class, such as replacing the framing, external thermal facade, replacing the heating system, installing a solar water heater, possibly and a photovoltaic system to generate electricity that will be consumed by the sun. Property inventory data also shows the potential number of those that will need to be refurbished:
• 154,000 buildings built up to 1919.
• 324,700 properties were built between 1919 and 1945.
• 573,250 properties have building permits issued between 1946 and 1960.
• 639,475 properties were built between 1961 and 1970, and the “production” of new buildings increased to 704,340 in the decade from 1971 to 1980.

All of these facilities, built to old earthquake protection standards, obviously need an energy upgrade to limit emissions. Obviously, some of these properties may have already completed updates. However, especially since 2010, this activity has been significantly reduced due to the multi-year recession. The new real estate census to be published by Statistics Greece in the next period of time (it will be completed along with the population census) will also reflect a significant reduction in the number of new buildings in the period 2011-2016. and 2016-2021 compared to the previous 10 years. In particular, over the 5-year period 2011-2016, it is estimated that there will be a sharp decline.