Construction firms take fresh interest in projects in Greece

By Nikos Roussanoglou

The country’s major construction groups are gradually turning their attention back to the local market as they look forward to big project contracts with the Greek state, including Crete’s new airport at Kastelli, Iraklio, as well as smaller projects concerning highways. At the same time they have been strengthened by contracts that have recently been secured abroad and which form a major part of their activity.

Sector officials say that most companies are turning toward the Greek market as profit margins at home are much bigger than abroad, where the cost of borrowing remains particularly high despite Greece’s successful return to the bond market. They add that the need to complete works on major highways within the next 18 months dictates where the construction firms’ priorities should lie and that they will have to accelerate their activity in this direction.

Besides Iraklio’s new airport, domestic groups are anticipating tenders by state railway project coordinator ERGOSE to complete the upgrading of the country’s railway network, as well as tenders for highway projects such as that for the national road linking Patra with Pyrgos, budgeted at 350 million euros, and works to finish off the Proastiakos suburban rail network.

Over the last few years the big construction companies have been living off the proceeds of contracts secured in other countries, with projects abroad accounting for almost half of their planned activity. Such is the case for both Ellaktor and J&P Avax, which have undertaken a series of new projects in the Persian Gulf since the start of the year.

A few weeks ago Ellaktor signed the biggest deal a Greek constructor has ever secured abroad with its 32 percent stake in the consortium that has undertaken the 3.2-billion-euro Gold Line Underground project for the Doha subway in Qatar. J&P Avax has also signed a number of new contracts for projects in Qatar as well as for the second stage of construction of Jordan’s new international airport. The projects are budgeted at 1.22 billion euros and J&P Avax’s participation is estimated at 322 million euros.

GEK Terna has also managed to add to its planned projects, which grew by 2.7 billion euros within 2013, although its foreign-based share is just 15 percent given that most projects are in Greece.