Greek minister casts doubt on Helliniko landmark land development project

A top Greek minister on Saturday cast a shadow over a massive real estate redevelopment project that’s one of a handful of landmark privatization and investment schemes that serve as a barometer to gauge the business-friendly climate in the country for major private sector ventures.   

Speaking to grassroots supporters of the ruling party on Saturday in the southeast coastal Athens municipality of Alimos, Transport and Infrastructure Minister Christos Spirtzis said he doubts whether any private investor can come up with the cash needed to move forward with the Helleniko venture.

The redevelopment project includes the large expanse where the former Athens airport operated along with several accompanying tracts of land, all in a prime coastal location. Several facilities built for the Athens 2004 are also on the site, but mostly abandoned.

Nevertheless, the current leftist-rightist coalition government has found itself in a quandary of sorts, as ruling SYRIZA was vociferously opposed to any private development when it was in the opposition. However, since assuming power in January 2015, the reality of managing a bailout-dependent state and recession-battered economy have greatly watered down its previously hard left ideology and “allergies” towards private capital.

“The government made efforts and improved, as much as it could, the concession contract,” Spirtzis said, before adding:

“…there isn’t a private investor that will take out eight to nine billion euros from his pocket … the government was pressured into moving ahead with the concession, and it went through. We won’t place obstacles (to the investment), but there’s not an investor that will put up so much money, we’ve seen this in Britain and Germany; and in the end the project passed to the state in order to be completed.”

Spirtzis, who switched over to SYRIZA from social-democrat PASOK before 2015, appeared confident the project would not commence as planned.

“If you see Lamda (Development) placing even one bulldozer in there for construction, then call me, so I can see it, too.”  

The investment plan

An international consortium, which is led by the Athens-based Latsis Group, has committed to plowing at least 4.6 billion euros into the investment, on top of 1.5 billion euros in related infrastructure for the 620-hectare site.  

Some 915 million euros, or 32.76 of the total sum, will be transferred to the Greek state as an upfront payment. Another installment will come after two years for another 51 percent of the shares.

Lamda Development will manage the project for the investment group, which is comprised of Chinese multinational Fosun, Abu Dhabi-based Eagle Hills and the Latsis group, which controls the majority of Lamda’s shares.

The master planner for the project is Foster+Partners.

Based on the investment plan, the concessionaire is obliged to make the investments euros over a 15-year period.

Projected revenue for the Greek state, based on a 25-year investment cycle that takes into account the initial construction and subsequent operation, is expected to total an impressive 13.5 billion euros -- i.e. taxes on profits, employees’ income taxes, social security contributions, property taxes, VAT remittances etc. The figure comes from a study unveiled by the Athens-based IOBE economic research institute.

Moreover, in a move that will please proponents of private initiative and a smaller state, the concessionaire assumes the maintenance, upkeep and security for the entire site, including the Central Park-sized green spaces.

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