The impressive benefits of the Hellinikon investment project

Α Decrease font Enlarge font
The impressive benefits of the Hellinikon investment project

Only one great investment project such as Hellinikon can change the prospects of the Greek economy, with multiple positive effects on GDP growth, government revenue and employment, according to a report titled “The economic impact of the development of the Hellinikon area” that was published by the Foundation for Economic and Industrial Research (IOBE) in September 2016. 

The report assesses the impact of developing the area of Hellinikon on the Greek economy, by analyzing the effect both in the wider renovation area (microeconomic impact) and on the Greek economy overall (macroeconomic impact) and concludes that the completion of the investment will boost the country's GDP by 7.42 billion euros (+2.4%).

The impressive findings of the report include:

The investment in renovating the Hellinikon area will generate significant economic activity. According to the estimates in the study, the operating revenue (turnover) that the use of the Hellinikon facilities is expected to generate, reaches €2.4 billion towards the end of the 25year period (i.e. in 2041) or €1.4 billion per year on average for that period. Most of the revenue over the 25-year period under examination in the study is expected to come from the operation of shopping centres and offices (76%), while the recreation activities and the operation of hotels are also expected to represent a significant revenue share (12% and 7% respectively). 

The fiscal revenues of the project are not limited to the proceeds from the acquisition of the shares of Hellinikon S.A. but extend to inflows from the direct and indirect taxation of the economic activity and the wealth that is expected to be generated by the project. The tax revenues from the construction activity and the operation of the various facilities are expected to total €14.1 billion overall in the 25-year period (€563 million per year on average). The largest source of fiscal revenue is the Value Added Tax (VAT), with 57% of the total expected fiscal inflows, followed by social security contributions (16%), property transfer tax (14%) and corporate income taxes (11%). The proceeds from personal income taxation and property ownership taxes are estimated to contribute about 1% of the total fiscal revenues.  

The extent to which the microeconomic benefits from the operation of the facilities will contribute fully to the overall economy, or substitute in part existing activity elsewhere, will ultimately depend on whether the facilities will attract visitors who would have otherwise preferred to go to other destinations abroad. It is not feasible to determine in advance the ability of the planned facilities to generate new demand, but installations such as a modern conference centre, healthcare and education services, casino and marina, have the capacity to activate part of the unutilised potential of the country and of Athens in particular in the development of alternative forms of tourism, such as MICE (Meetings, Incentives, Conferences and Events), health and city break tourism. This can generate the new demand that is required in order to consider the above microeconomic impact as a net benefit for the national economy in its entirety.  

Macroeconomic effects from the construction and operation of the project 

At the macroeconomic level, the investment activity and the synergies from the utilisation of the area of the old Hellinikon airport strengthen the infrastructure, construction activity and production capacity of the economy, boost output with both an autonomous and an endogenous permanent increase of private consumption and, lastly, improve the balance of payments with the corresponding inflow of private capital. 

In order to assess the macroeconomic impact of the project, we have applied the approach of a comparative evaluation of alternative scenarios, which were built using the econometric model of the Greek economy maintained at IOBE. The IOBE model is a standard medium-sized macroeconomic model of aggregate supply and demand, which describes the basic interconnections of the Greek economy. It is used for making projections and for the empirical analysis of economic policy issues. 

The demand factors, related to the construction and operation of the project (execution of the investment programme, generation of income from the project operation, additional foreign tourism revenues) are expected to stimulate the Gross Domestic Product (GDP) of Greece throughout the project’s construction period. At the end of the period under investigation (2016-2041), the demand factors are estimated to drive GDP to a level higher by €5.4 billion or 1.7%, compared with the GDP level under the counterfactual scenario of no concession deal. The project has a particularly notable contribution to the fiscal consolidation effort, boosting the primary surpluses and reducing the public debt-to-GDP ratio, due to both surpluses from stronger activity and nominal GDP growth. In addition, the supply factors, reflected in higher productivity growth and enhanced productive potential of the economy, are expected to boost GDP by €2.0 billion (+0.6%) in 2041. Overall, the Hellinikon investment project, apart from the significant positive intangible effects (credibility, culture, etc.), is expected to drive GDP to significantly higher levels throughout the examined period. In 2041, the GDP of the Greek economy is expected to be higher by €7.42 billion (2.4%), compared with the GDP level under the no-investment scenario. 

In employment terms, the number of employees expected to be hired for the construction and operation of the facilities of the Hellinikon – Agios Kosmas Urban Hub is growing over time, as the planned facilities open for business, while the construction activity carries on. The employment in the area is expected to exceed 25,000 people in mid-2030s. In the following years, with the gradual conclusion of the construction activity, but also with more business activities in full operation, the number of jobs maintained in the area on an annual basis is estimated at about 21,000. These are permanent jobs that would largely be covered by residents of the neighbouring municipalities and, to a lesser extent, of other areas of the broader Athens metropolitan area. Taking into account the wider macroeconomic interactions, the impact of the renovation project on total employment in the Greek economy is expected to exceed 90,000 jobs in 2041, of which 75,000 jobs are generated from the impact of the demand factors and 15,000 come from supply factor effects. 

Assessment of the impact of outright public debt reduction 

The sale of the share of Hellinikon S.A. to Hellinikon Global I S.A. provides the Hellenic Republic with funds that can be used for an outright reduction (repurchase) of public debt. This transaction prevents the adoption of an equivalent contractionary fiscal policy of debt reduction which necessarily would have had a recessionary impact on the economy (i.e. loss of income and jobs). 

The assessment of the impact of an outright public debt reduction is also performed with a comparative analysis of alternative scenarios. However, the scenarios were built in this case, using the multi-country, multi-sector general equilibrium model GIMF (Global Integrated Monetary and Fiscal Model) of the International Monetary Fund, calibrated for Greece at IOBE. This model is more suitable for the analysis of fiscal policy issues, compared with the macroeconomic model used in the previous assessment. 

According to our estimations, the sale of the shares of Hellinikon S.A. to Hellinikon Global I S.A. prevents the loss of 10,000 jobs and a reduction of GDP by about 0.2% (€0.3 billion) during the first year of implementation of the agreement (when the shares are transferred to their new holder), from the equivalent contractionary fiscal policy that should be adopted in order to cover the gap in public debt. Subsequently, smaller yet notable negative effects are observed over a period of 15 years. 

Therefore, the Hellinikon project is expected to contribute to the development of the Greek economy, the fiscal consolidation effort and the sustainability of public debt. Meanwhile, the investment project boosts not only the primary surplus, but also the nominal GDP – both of these factors drive down the debt-to-GDP ratio. In particular, the debt –to-GDP ratio declines by 15 percentage points of GDP at the end of the period under examination in the investment implementation scenario. 

Conclusions 

One of the key problems that the Greek economy is facing today is the lack of domestic savings to support an investment programme that could secure satisfactory growth rates while meeting the ambitious fiscal consolidation targets. The inflow of funds from abroad is a necessary condition to set the country’s economy on a sustainable growth path and to achieve its definitive exit from the crisis. Therefore, the key next step under the current economic conditions is to strengthen the credibility of the country as a safe destination for investment. 

The sale of the shares of Hellinikon S.A. to Hellinikon Global I S.A. and subsequently the development of the area could have a catalytic contribution in this direction, sending a strong signal that Greece is a safe and attractive investment destination. The area of the old Hellinikon airport, due to its size, the length of its coastal front and its proximity to the Athens city centre, is a particularly advantageous and rare asset, both at the national level and globally. Its development is expected to have multiple positive effects on the domestic economy and society. 

The Hellinikon project is expected to strengthen the growth rate of the Greek economy, to contribute to its fiscal consolidation and to reduce its public debt. In addition, it is expected to have a significant contribution to the overall advancement of the cultural life, touristic infrastructure and environmental protection in the Attica region. 

 

Tornos
  1. 21/08 21:16

    Big investments planned in new Greek malls

  2. 21/08 15:08

    Greek PM receives head of US House Appropriations Committe Nita Lowey

  3. 21/08 13:56

    Foreign Ministry: Bank of China to open branch in Greece

  4. 21/08 11:04

    Greek coast guard intervened in 208 incidents with 5,608 foreign nationals in July

  5. 20/08 22:21

    New Piraeus cruise terminal and shopping mall discussed by Greek PM and port's mayor

  6. 20/08 22:15

    Young Cretan man’s quest to tour the world on 26-foot sailboat (video)

  7. 20/08 22:01

    New tender by central government for Athens and Thessaloniki bus systems

  8. 20/08 21:53

    Private helicopter crashes in sea off Greek island of Poros

  9. 20/08 21:36

    Coast guard rescues seven Israeli tourists from stranded yacht on fire

  10. 20/08 21:26

    First museum education dog in Greece as Cretan summer camp assistant

  11. 20/08 21:14

    Greek island of Samothrace to get port upgrade, stricter contracts for ferries

  12. 20/08 16:31

    Νew international exchange opportunity for Greek students by SNF

  13. 20/08 14:02

    Greek Ministry of Culture reiterates legal claim to artifact vs. Sotheby’s in NY

  14. 20/08 12:56

    Greece's Paros to become first plastic waste-free island in Mediterranean

  15. 20/08 11:14

    Greek Tourism: +15.3% travel revenues in H1 2019 despite marginal arrivals' drop

  16. 19/08 21:42

    Qatar's traditional boat Al-Mubaraki docks at old port of Corfu in Greece

  17. 19/08 21:38

    Investments on agenda of Greek and French leaders meeting on Thursday

  18. 19/08 16:36

    Research: One in 10 Brits missed out overseas holiday due to Brexit uncertainties

  19. 19/08 16:25

    Speed boat operator arrested off Greek island of Spetses for drunken driving

  20. 19/08 16:13

    2,1% rise in Cyprus tourist arrivals during July 2019

  21. 19/08 15:37

    Inscription found in Paleochoria links goddess Artemis to Amarynthos sanctuary

  22. 19/08 15:03

    Two massive petrified tree trunks discovered on Greek island of Lesvos

  23. 19/08 14:51

    Studies: Culture Tourism attracts visitors to Greek islands

  24. 19/08 12:45

    Greek Prime Minister to have series of trips abroad in the next period

  25. 19/08 10:28

    Two Greek government meetings on Samothrace's island ferry service

  26. 18/08 20:31

    Greek Investment Ministry to accelerate public-private projects for 2020-2023

  27. 18/08 20:20

    Greek Development Minister tours Afandou in Rhodes with investor

  28. 18/08 20:10

    Three bidders left for Hellenikon Casino investment in the Athens suburb

  29. 18/08 19:50

    Andros Jet to link Samothrace island with Alexandroupolis for two more days

  30. 18/08 19:26

    Exhibition opening on the Mosaic of Aegina in Greek island near Athens

  31. 18/08 19:15

    Aegean Regatta sets sail across Greece on Monday

  32. 18/08 19:05

    Impressive triangular home constructed in olive grove west of Athens

  33. 18/08 13:59

    New art director of Greek Festival

  34. 17/08 18:58

    Lighthouses open to public across Greece on August 18

  35. 16/08 23:23

    Full moon events at archaeological sites to conclude in Greece Sunday

  36. 16/08 23:12

    Greek Ministers to meet on Monday on Samothrace island transportation issue

  37. 16/08 21:47

    Greece records impresssive primary surplus of €1.779 billion in Jan-July

  38. 16/08 21:28

    Greek hospital worker fined 100 euros for violating smoking ban

  39. 16/08 20:59

    Cyclades International Classical Music Festival on Greek island of Syros

  40. 16/08 16:38

    Full moon shining bright over Koroni castle in southern Greece

  41. 16/08 15:26

    Greek island of Kos installs tsunami alert amid complaints from local hoteliers

  42. 16/08 12:40

    No active firefronts on Evia island but authorities still on alert

  43. 15/08 23:04

    Greek Prime Minister attends August 15 liturgy in island of Tinos

  44. 15/08 20:25

    Real estate report: Strong demand for office space in Greece

  45. 15/08 19:53

    Dormition of Virgin Mary celebrated across Greece on August 15th

  46. 15/08 14:38

    ENFIA property tax bills to be posted on Taxisnet in Greece by August 31

  47. 14/08 22:28

    AP report: Shard unveils how Cyprus' ancient kingdoms managed economy

  48. 14/08 20:43

    Expert: Greek forests expanding over last 20-30 years despite fires

  49. 14/08 17:00

    Greek flight safety expert to win sector's top international distinction

  50. 14/08 16:14

    Urgent measures to reduce flight delays at airports in Greece during peak season

  51. 14/08 15:22

    Passenger traffic in Greek airports soars 4.7% during first seven months of 2019

  52. 14/08 13:29

    Two ferries to arrive at Greek island of Samothrace on Wednesday

  53. 14/08 11:07

    Strong winds to temporarily subside in Greece

  54. 13/08 22:01

    AP: Kevin Spacey offers poetic tribute to Greek statue at Rome Museum (video)

  55. 13/08 21:56

    Greek Culture Minister meets with Chinese Ambassador to Athens Zhang Qiyue

  56. 13/08 21:56

    Two Greek beaches among world's top-50

  57. 13/08 17:24

    Media report: Secret ‘rooftop beach’ opens in the heart of Athens

  58. 13/08 13:13

    Visitors and revenues of Greek museums and ancient sites rise in April 2019

  59. 13/08 11:31

    Wildfire raging on Evia creates smoke cloud visible from Attica

  60. 13/08 09:42

    Schinias and Marathonas beaches out of bounds in Attica on Tuesday

  61. 12/08 19:28

    US Ambassador welcomes NBA MVP Giannis Antetokounmpo in Athens

  62. 12/08 18:52

    Mayor: Elafonissos island in Greece is a safe tourist destination

  63. 12/08 18:42

    Full moon events at archaeological sites in Greece to conclude Sunday

  64. 12/08 17:59

    Unique intact Hellenistic tomb found in Kozani of northern Greece

  65. 12/08 17:34

    Minister Theocharis: New strategic plan for the development of Greek tourism

  66. 12/08 14:24

    Wildfire on Mount Hymettus of Attica Region under total control

  67. 11/08 22:18

    Perseid meteor shower to peak on Greek sky on Monday

  68. 11/08 22:13

    Greek Prime Minsiter calls for shipowners to register their fleets locally

  69. 11/08 22:06

    Temperatures up to 40C to continue across Greece on Monday

  70. 11/08 22:01

    Building permits in Cyprus record big annual rise during first five months

  71. 11/08 21:47

    Greek island of Santorini becomes a global destination for parkour (videos)

  72. 11/08 21:29

    "Snakes of Virgin Mary" appear again in Greek island of Kefalonia (video)

  73. 10/08 18:32

    Media report: Roofless room in Greek island of Crete available on Airbnb

  74. 10/08 17:52

    First traditional Greek ‘Kafeneion’ opens up in the heart of Paris

  75. 09/08 21:03

    Fifth annual Molyvos International Music Festival opens in Lesvos

  76. 09/08 18:21

    Interest grows for 'last chance' debt settlement scheme in Greece

  77. 09/08 18:15

    French Finance Minister Le Maire meets with Greek officials in Athens

  78. 09/08 17:58

    Global Health Tourism figures honored in Ithaca, the island of Odysseus in Greece

  79. 09/08 17:53

    Ecumenical Patriarch Bartholomew wins 2019 ECOS Environmental Award (video)

  80. 09/08 17:48

    New PM reaffirms commitment Eldorado Gold's investment in Greece to proceed

  81. 09/08 17:41

    Window on Greek olive oil world marks 3rd anniversary

  82. 09/08 17:26

    Greek Minister visits beach for persons with disabilities in Voula suburb of Athens

  83. 09/08 16:43

    Greek Minister: Decisions unlocking Elliniko development project within August

  84. 09/08 16:36

    Turkish Rixos Hotels to operate all-inclusive resort on Red Sea Riviera

  85. 09/08 16:32

    Greek government abolishes 'written justification' clause by employers for firings

  86. 09/08 14:53

    Popular Chinese Travel Show films on Greek Islands of Santorini and Kefalonia

  87. 09/08 14:12

    Renowned Greek sculptor Takis passes at the age of 94

  88. 09/08 12:48

    Exquisite Classical Era grave steles discoverd at cemetery on Greek island of Tinos

  89. 09/08 10:16

    Athens city opens eight airconditioned spaces on Saturday due to heatwave

  90. 08/08 21:35

    Greek Health Minister meets British ambassador to Athens Kate Smith

  91. 08/08 20:49

    Law on return of critical executive powers to mayors passed by Greek Parliament

  92. 08/08 19:31

    Cyprus Antiquities Department on collapse of Venetian Walls in Nicosia

  93. 08/08 18:23

    British travel series comedy ‘The Trip’ comes to Greece

  94. 08/08 18:01

    Parliament Budget Office: Improvement in liquidity for Greece's four systemic banks

  95. 08/08 17:57

    ”Taste of the Danforth” Street Festival in Toronto’s Greektown on August 9-11 (video)

  96. 08/08 17:23

    Athens municipality and government discuss major upgrades in Greek capital

  97. 08/08 17:14

    1st Energy Ministerial Meeting in Athens promotes environmental co-operation

  98. 08/08 13:58

    Concession agreement for marina on Greek island of Chios signed

  99. 08/08 12:49

    Greek shipping expands dominance in European Union and the world

  100. 08/08 10:17

    New 6th century BC finds by excavation works on Despotiko island in Greece