The Wall Street Journal published an extensive article on “Athens’s long-disused airport, Hellinikon” mentioning that the redevelopment plan includes the construction of hotels, shopping centers and creation of thousand of new jobs.
The article mentions that the redevelopment of the former Athen’s airport will cost €8 billion emphasizing the size of the area which is nearly twice the size of New York’s Central Park and includes 2 miles of coastline.
The makeover plan includes the construction of 1,000 room hotel units, high-rise residential tower, offices, shopping center, marina, aquarium and giant park.
Odysseas Athanasiou, CEO of Lamda Development which acquired the site for €915 million this year from the government, told WSJ that the “The first on-site work in the 15-to-20-year project could start as early as 2016”.
Nevertheless, says the article, the money has not been transferred yet, the area of the airport remains dusty and abandoned and Lamda – the only developer submitted a bid for the project this year, since the other bidders withdrew their proposal – has probably many years of bureaucratic hurdles ahead before starting the construction works.
“The risks are enormous,” said Ana Vukovic, managing director of Greece and Serbia for U.S.-based property firm Colliers International. “But there is a lot of opportunity.”.
As it is pointed out, the project will contribute 1.5% to 2% of country’s GDP each year through 2025 and create 50,000 new jobs, according to Lamda.
Overall, Greece hopes to raise €50 billion by selling assets and about four-fifths of that will come from real estate. Up to date, it has raised less than 10% of the overall targeted amount.
According to Mr. Athanasiou, investors – including the Latsis family group that controls Lamda, the Chinese firm Fosun International Ltd. and Abu Dhabi-based investors Al Maabar – have committed €700 million and aim to raise additional funds as the project develops.
“More investors from Europe and the U.S. might want to participate in the future, but no other groups have confirmed any commitments” Mr. Athanasiou said.
However, the article points out that the redevelopment of Hellinikos still must be approved by the court of audit, which is expected to be done within a month, according to Andreas Taprantzis, executive director of Greece’s privatization fund. The approval has been delayed for seven months, despite the fact that this project will create new jobs.
“The consortium has committed to €1.25 billion for infrastructure investment, including the park, roads and clearing the existing airport. Funds from investors will be bolstered with debt financing,” added Mr. Athanasiou.
“This is a key project that the Greek banks, and maybe some international banks working in Greece, taking into consideration today’s conditions, would definitely support,” said Konstantinos Vassiliou, head of group corporate and investment banking at Greek lender Eurobank Ergasias SA. “And considering other [real-estate] projects in Greece at the moment, this is one that in my view will attract significant appetite.”
Greek government authorities are the biggest risk to the development in the form of delays, said Mr. Athanassiou. “If things were working the way they did before the crisis, I would have said we could start work in 2015 instead of 2016”, he said.
This was a big reason that Israel’s Elbit Imaging Ltd., one of the final four bidders, withdrew their offer, said Oren Kolton, Elbit’s country director for India and Greece.
“I told [Prime Minister Antonis] Samaras I could not take risks that were not business risks,” like a change in government or finding ruins” Oren Kolton, Elbit’s country director for India and Greece told to Wall Street Journal.
