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. 28/03 18:41

    Attica Region to channel 640 bln euros to services of vulnerable and disadvantaged groups

  2. 28/03 17:32

    Greece to auction three-month T-bills on April 3, 2024 in a book entry form

  3. 28/03 15:46

    Greece's Meteora Pyli Geopark added to UNESCO Global Geoparks network

  4. 28/03 14:44

    IPTO announces framework agreement tender for undersea power cables in Greece

  5. 28/03 11:49

    IOBE: Construction sector in Greece records robust growth and good prospects

  6. 26/03 23:51

    St. Thomas Hellenic School honors 1821 and the Feast of the Annunciation in NJ

  7. 26/03 21:59

    PM at Economic Club of Canada: Greece is an attractive investment destination

  8. 26/03 17:56

    Greek State budget primary balance reaches a surplus of 3,378 million euros

  9. 26/03 11:45

    Ancient Messene to get upgraded visitors' facilities after approval by Council

  10. 23/03 17:43

    New requirements for 'Golden Visa' program to kick in on March 31

  11. 23/03 16:49

    Athenians continue to head out of the Greek Capital for March 25 long weekend

  12. 23/03 16:47

    Greek Parliament lights to be turned off for Earth Hour 8:30-9:30 pm

  13. 22/03 21:54

    US President on Greek Independence Day: Alliance with Greece stronger than ever

  14. 22/03 19:51

    High diplomacy and geopolitics at Delphi Economic Forum IX in Greece

  15. 22/03 19:32

    Tax authorities enable payments with foreign bank cards in Greece

  16. 22/03 14:19

    Greece to take part in Earth Hour on Saturday

  17. 22/03 00:24

    Greece ranks first on list of countries with fastest business environment progress

  18. 22/03 00:02

    Hellenic Police acquires first electric VAN-type highway patrol vehicle

  19. 21/03 22:41

    Greek Finance Ministry tightens Golden Visa rules

  20. 21/03 15:33

    Unseen Museum presents "The stele of the twin babies" exhibition in Athens

  21. 20/03 22:48

    Health Minister: 95% of Greek hospitals to perform afternoon surgeries

  22. 20/03 21:52

    Greek Deputy Minister of Justice meets delegation from US Embassy in Athens

  23. 20/03 21:44

    Greek Interior Minister to visit United States and Canada on postal vote

  24. 20/03 20:55

    Philadelphia Icarians mark 85th Anniversary and organize Apokriatiko Dance

  25. 20/03 18:01

    Development Minister: We continue the battle against high prices in Greece

  26. 19/03 22:28

    President of the Hellenic Republic meets her Ethiopian counterpart in Athens

  27. 19/03 20:57

    Greek Tourism Minιster meets Hellenic Chamber of Hotels

  28. 19/03 20:25

    FinMIn: Moody’s analysis records significant progress in the Greek economy

  29. 19/03 11:15

    Sector chiefs report: Good news for Greek tourism in 2024 at ITB Berlin

  30. 18/03 22:20

    American Hellenic Educational Progressive Association honors Past Supreme President

  31. 16/03 13:01

    Greek Deputy Foreign Μinister meets her Slovenian counterpart in Athens

  32. 16/03 12:56

    Greek-Canadian Diaspora to welcome Greek Prime Minister to Toronto

  33. 16/03 11:28

    Greek Migration Minister visits refugee hosting facilities in Kavala, Drama and Serres

  34. 15/03 21:50

    Greek Minister announces conference on defence ecosystem in Athens from Lithuania

  35. 15/03 13:45

    PM: More than 80 hospitals and 156 health centres being upgraded in Greece

  36. 15/03 12:55

    Piraeus Port and Genoa Chambers of Commerce ink memorandum of cooperation

  37. 14/03 23:43

    President of Hellenic Republic meets Prime Minister of Slovakia in Bratislava

  38. 14/03 22:58

    American Express report highlights Global Travel Trends during 2024

  39. 14/03 22:52

    Four hospitals in Attica Region already organizing afternoon surgical procedures

  40. 14/03 22:49

    US Ambassador to Athens: More flights from the United States to Greece and Thessaloniki

  41. 14/03 22:43

    Greek archaeologists discover ten ancient shipwrecks off Aegean island of Kasos

  42. 14/03 19:32

    No new intubations for Covid-19 recorded in Greece for the first time

  43. 14/03 18:36

    Extra road safety measures adopted for Greek pre-lent carnival and Clean Monday

  44. 14/03 14:48

    HRADF eyes bidders for Lavrio Port majority share

  45. 14/03 12:54

    Electric buses to be deployed on the streets of Athens and Thessaloniki by May

  46. 13/03 22:23

    Chairman: 2023 was an exceptional one for AEGEAN Airlines

  47. 13/03 20:11

    Prices of basic lenten products either lower or equal to last year's in Greece

  48. 13/03 19:15

    US Ambassador to Athens: Greece secures NATO readiness via Alexandroupolis

  49. 13/03 17:19

    Greece shines at 1st European Cruise Exhibition

  50. 13/03 12:26

    Greece shows new costumes for revamped Olympic Flame-lighting ceremony

  51. 12/03 22:46

    Epirotes Society of Philadelphia ‘Omonia’ organized 16th Annual ‘Tsipourovradia’

  52. 12/03 21:38

    The President of the Hellenic Republic to visit Slovakia on March 13-15

  53. 12/03 20:29

    First afternoon surgeries in Greece kick off at Papageorgiou Hospital in Thessaloniki

  54. 11/03 23:58

    Greek Foreign Minister: We stand behind Montenegro's European perspective

  55. 11/03 23:47

    Visa Express for Turkish citizens to commence on five Greek islands in March

  56. 11/03 19:40

    Amadeus acquires travel payments expert Voxel

  57. 11/03 18:49

    Microsoft Data Center construction kicks off in Spata next to Athens Airport

  58. 11/03 17:53

    Dodecanese Federation marked 76th Anniversary of Unification with Greece

  59. 09/03 22:23

    The future of travel planning is multimodal and interactive

  60. 08/03 14:27

    Prime Minister: Radical change in Greek education and a brave reform for growth

  61. 08/03 14:24

    Traffic restrictions expected in Athens mid-morning to evening on Friday due to protests

  62. 08/03 14:24

    Applications to out-of-court settlement more than doubled in Greece in February

  63. 08/03 13:18

    Metro station 'Maniatika' near Piraeus Port to be closed on Saturday and Sunday

  64. 07/03 14:12

    Athens wins World Travel Award 2024 as the top city-break destination in Europe

  65. 06/03 22:51

    WTTC data show Greece and Portugal lead league for growth in tourist arrivals

  66. 06/03 20:28

    Greek Tourism Minister at ITB: 2024 will be another excellent year for sector

  67. 06/03 19:47

    Greek Foreign Minister to meet UAE Minister of Industry and Technology on Friday

  68. 06/03 18:43

    European Union actions of 274m euros to support cultural heritage in Greece

  69. 06/03 16:37

    'Odontotos' rack railway temporarily stopped until landslides issue is resolved

  70. 06/03 14:40

    Minister: Bringing about the return of Greeks abroad 'a moral duty'

  71. 05/03 14:28

    Archdiocese of America Eparchial Synod to meet on March 14-17 in Florida

  72. 05/03 14:21

    The 'Lent Basket' to be launched in Greece on March 13

  73. 05/03 14:11

    ITB BERLIN 2024 opens with excellent bookings after global rise in travel in 2023

  74. 05/03 12:24

    Greek PM at Athens supermarket: Consumers 'can already see lower prices on the shelf'

  75. 04/03 22:02

    Greek Health Minister: Afternoon surgeries at state hospitals to begin shortly

  76. 04/03 21:47

    Holy Cross Greek Orthodox Whitestone Community marks 49th Anniversary

  77. 04/03 20:27

    Labor chief: Greece to train 500,000 workers in digital, green skills by 2025

  78. 04/03 19:44

    Foreign Ministry to organize event on 'Women, Peace, and Security' on Friday

  79. 04/03 15:12

    Athens Riviera | The summer experience with Athens as a background

  80. 29/02 22:54

    Consumers to see price cuts up to 18.1% in 3,000 Greek supermarket products as of Friday

  81. 29/02 21:44

    Greece and Germany set up Working Group on shipping cooperation

  82. 29/02 21:30

    Wyndham Rewards’ Member Month offers 5 weeks of deals, discounts, and bonus points

  83. 29/02 21:03

    Temple of Poseidon at Sounion near Athens to get new lighting system

  84. 29/02 21:02

    Greek Tourism Minister meets with Ambassador of Qatar

  85. 29/02 20:47

    Greece is represented by 60 firms at GULFOOD 2024 exhibition

  86. 29/02 19:58

    Greek government gives 1+1 month extension for cash register-integrated POS terminals

  87. 29/02 19:49

    Archangel Michael Church Dance Program shines at Folk Dance Festival in SF

  88. 29/02 15:39

    'Renovate-rent' programme to be launched, Minister tells Greek Parliament

  89. 29/02 12:39

    Rio-Antirrio ferry line in central Greece closed due to strong winds

  90. 28/02 21:34

    Weather with heavy rain and storms in Greece as of Sunday night

  91. 28/02 17:31

    CEO: The goal is for PPC to become a leading player in Southeast Europe

  92. 28/02 17:04

    New Wyndham Hotels Market Managing Director of Central and Eastern Europe

  93. 28/02 12:21

    Minister: Transactions with the Greek State will be further simplified in 2024

  94. 28/02 11:57

    24-hour strikes halt trains and ferries in Greece

  95. 27/02 17:25

    UN Tourism hails Saudi Arabia's historic milestone of 100 million tourists

  96. 27/02 15:00

    Greek Prime Minister: Relations with Armenia can become even more productive

  97. 27/02 14:26

    Wyndham: New growth cycle in Greece for the largest hotel chain franchise in the world

  98. 27/02 13:15

    Price cuts of up to 15% in important product categories in Greece after March 1

  99. 27/02 12:46

    Athens taxi drivers' protest rally in progress from Athinon avenue to Messogion

  100. 26/02 18:30

    Annual Summit of Women Political Leaders (WPL) to be held in Athens in April