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. 05/08 15:51

    Foreign ministry issues phone lines for Greeks affected by Beirut explosions

  2. 05/08 14:38

    Media reports: Greek woman dead and two injured in Beirut explosion

  3. 05/08 12:17

    More than 100 killed in two massive explosions in Beirut of Lebanon (videos)

  4. 05/08 11:44

    121 new Covid-19 cases and no fatalities reported in Greece

  5. 04/08 15:25

    New IATA’s Customer, Financial & Digital Services Senior VP

  6. 04/08 15:20

    Greece plans to make property buying easier for foreigners

  7. 04/08 15:17

    77 new Covid-19 cases and two fatalities in Greece during last 24 hours

  8. 04/08 15:12

    Press conference on COVID-19 scheduled in Greece today at 18:00

  9. 04/08 15:05

    Greek government cabinet reshuffle focused on improving functionality

  10. 04/08 14:51

    GNTO presents outdoor campaign to boost Greek tourism

  11. 04/08 14:05

    EU: Restrictions within states not necessarily accompanied by travel restrictions

  12. 04/08 09:27

    Despite coronavirus concerns, Greece allows cruise ships not coming yet

  13. 03/08 23:33

    "CHANIA: Always Pure" advertising campaign launched

  14. 03/08 20:29

    Face masks mandatory on decks of passenger ferries in Greece

  15. 03/08 19:33

    Greek museums and sites open on Monday night for August full moon

  16. 03/08 19:18

    Rescheduling of summer transport helps congestion in Greek capital of Athens

  17. 03/08 17:23

    Measures adopted at Cyprus' airports to reduce passenger congestion

  18. 03/08 15:07

    Greek PM: EU must be on high alert until Covid-19 vaccine is found

  19. 03/08 13:45

    Greece's national strategic plan for the Recovery Fund presented in October

  20. 03/08 12:51

    Media: Secret island getaway of Andros near Athens in Greece

  21. 03/08 11:13

    UNWTO, ONCE Foundation and ENAT call for reopening of tourism

  22. 02/08 21:01

    Recovery Fund dominates Greek cabinet's last meeting before summer recess

  23. 02/08 20:55

    World’s top swimmers at The Authentic Marathon Swim in Evia island

  24. 02/08 20:43

    AP: Cyprus make mask-wearing compulsory in big indoor spaces

  25. 02/08 16:51

    110 new recorded Covid-19 cases in Greece during last 24 hours

  26. 02/08 13:06

    IATA: Airlines and airports issue stark warning to European Prime Ministers

  27. 02/08 12:07

    Glyfada Maritime Golf: New tournament for shipping community in Greece

  28. 02/08 11:33

    Bank of Greece projects extra growth rate of 2% for the period 2021-26

  29. 02/08 11:26

    Mandatory use of face masks in all indoor public places in Greece

  30. 02/08 09:49

    myKEPlive: 114 Greek citizens booked appointments on platform's first day

  31. 02/08 09:37

    Greek government: 'Greece's international alliances bring results'

  32. 01/08 14:18

    Greek Parliament closes for summer, having passed 95 acts of legislation

  33. 01/08 12:33

    Greek tourism's new promotion campaign: "More Than a Destination"

  34. 01/08 12:26

    Greek government tightens up restrictions for coronavirus pandemic

  35. 01/08 11:52

    AP: Venice Film Festival reveals selections for September fete

  36. 01/08 11:34

    Survey: Greeks European Union's most religious zealots and God believers

  37. 01/08 11:28

    United Kingdom presents info campaign for British nationals in Greece

  38. 31/07 21:55

    78 new confirmed Covid-19 cases and three fatalities recorded in Greece

  39. 31/07 16:41

    Frequency of services in Athens Public transport network increases

  40. 31/07 15:06

    Emergency rules for Muslims observing Kurban Bayrami in Greece presented

  41. 31/07 14:33

    Pizza Hut chain announces its departure from Greece due to Covid-19

  42. 31/07 14:26

    Mask defiance results in slight rise of COVID-19 cases in Greece

  43. 31/07 13:54

    Greek government: Imported cases not a big problem at the moment

  44. 31/07 12:34

    The 16th Festival of Classical Music on Greek island of Syros

  45. 31/07 12:18

    Parliament-funded construction of Greece's biggest ICU ward to begin shortly

  46. 31/07 12:18

    Passenger traffic rises in the Greek port of Piraeus

  47. 31/07 11:24

    Tensions between Greece and Turkey are de-escalating in the Aegean

  48. 31/07 11:02

    AP: Sarajevo's landmark hotel faces hard times amid Covid-19 pandemic

  49. 30/07 23:21

    Βank of Greece issues three GDP forecasts for 2020 from -4.4% to -9.4% for 2020

  50. 30/07 22:17

    August full moon free events across Greece

  51. 30/07 22:06

    Greece welcomes cruises again but wants proof passengers are COVID-19 safe

  52. 30/07 21:36

    Space Tourism: Virgin Galactic gives peek at spacecraft cabin with a view

  53. 30/07 21:30

    Greek government: We reacted with calmness, determination and confidence

  54. 30/07 21:15

    UNWTO: Tourism restarts as 40% of destinations ease travel restrictions

  55. 30/07 20:02

    65 new official Covid-19 cases and no fatalities recorded in Greece

  56. 30/07 18:23

    Greece restarts voluntary migrant returns suspended due to the pandemic

  57. 30/07 18:17

    Suburban railroad service restored after Aspropyrgos fire in Attica

  58. 30/07 17:51

    National Hellenic Society’s program features ‘Reflections on Greek-America’

  59. 30/07 16:04

    Greek PM urges experts not to hesitate sounding Covid-19 alarm, if needed

  60. 30/07 15:01

    Greek elected officials call on U.S. to rebuff decision for Aghia Sophia

  61. 30/07 14:44

    Environmental divers clean up HMS Perseus to protect marine life in Ionian

  62. 30/07 13:44

    Greece's Culture Minister visits Epidaurus Asclepeion in the Peloponnese

  63. 30/07 11:11

    National Theatre in Athens presents 'My Mother's Sin' in English

  64. 30/07 02:15

    EU warned that actions against Greece will impact relations with Turkey

  65. 30/07 02:02

    Monastery of Panagia Soumela reopens in Pontos of Turkey

  66. 30/07 01:44

    Greece records 57 new Covid-19 cases and no fatalities on Wednesday

  67. 30/07 01:17

    New study: Ancient Greek temples designed with accessibility in mind

  68. 30/07 01:05

    Travelers from the United States need online form and QR code to fly to Greece

  69. 29/07 22:50

    Use of masks extended to all retail stores, pharmacies, hair salons in Greece

  70. 29/07 19:27

    FinMin: Greek government drafts new regulatory framework on debt settlement

  71. 29/07 19:24

    Greece dominates Travel + Leisure’s list of top-20 islands in Europe for 2020

  72. 29/07 18:59

    BoG chief: Greece will get major boost from European Union recovery fund

  73. 29/07 17:56

    New coronavirus mask measures and island parties crackdown in Greece

  74. 29/07 16:12

    Greece raises €812.5 million in six-month T-bill auction at lower cost

  75. 29/07 16:10

    EMBCA organizes online discussion about Aghia Sophia on August 9

  76. 29/07 15:27

    Greek athlete Tsiklitiras honored at Navarino Challenge 2020 (video)

  77. 29/07 15:11

    Greek Shipping ministry receives tablets for use with beach safety platform

  78. 29/07 13:43

    Unblocking financial relief essential for survival of air transport in Africa

  79. 29/07 13:20

    Coronavirus vaccination will be mandatory in Cyprus

  80. 29/07 11:35

    IATA calls for harmonized approach to relaunch aviation in the Middle East

  81. 29/07 02:36

    Domestic tourism: Most Greeks skipping holidays this year due to COVID-19

  82. 29/07 02:32

    New hotel development projects of €630 million get Greek state approval

  83. 29/07 02:29

    Greek government: Turkey's decision to de-escalate tension a 'positive action'

  84. 29/07 02:06

    One and a half ton of feta cheese donated to US and Greek churches

  85. 28/07 23:17

    Spanish FM attends signing for Cervantes Institute Thessaloniki branch

  86. 28/07 22:27

    Greek Foreign Minister meets with visiting Spanish counterpart in Athens

  87. 28/07 21:36

    51 forest blazes burning across Greece between Monday and Tuesday

  88. 28/07 21:22

    UNWTO: Impact of the coronavirus on global tourism made evident

  89. 28/07 21:12

    Greece extends mandatory face-mask use to more venues from Wednesday

  90. 28/07 20:49

    Greece registers 52 new Covid-19 cases and one fatality during the last 24 hours

  91. 28/07 17:17

    Greek doctors throw out the first pitch at Mets Home Opener in New York

  92. 28/07 15:09

    IATA Director General's remarks during media briefing on COVID-19 on July 28

  93. 28/07 14:12

    Rocked by the coronavirus, Cyprus has no backup plan for tourism

  94. 28/07 13:58

    EMBCA event on Greek Bicentennial of 1821 and Genealogy Tourism

  95. 28/07 13:56

    Aviation recovery delayed as international travel remains locked down

  96. 28/07 12:00

    Hellenic Writers’ Group publishes ‘Glimpses of Our World’ in DC

  97. 28/07 11:42

    Air cargo recovery continues during June but at a slow pace

  98. 28/07 00:41

    Greece could get coronavirus vaccine by warly 2021 with no shots required

  99. 28/07 00:24

    Minister: Chania airport fully ready to receive first visitors from abroad

  100. 28/07 00:04

    Tesla hiring in Greece with electric car subsidies offered for buyers