Lamda Development is currently locked in difficult and detailed negotiations with the Greek state over the division of the plot of the former Athens airport at Elliniko.
This demanding process will determine which parts of the 6-square kilometer area in southern Athens will be under the full ownership of the contractor and which parts the Lamda-led consortium will only have the right of use, administration, management and utilization to before they return to the full ownership of the state after the 99-year concession.
The final agreement on this matter will be imprinted on a topographic diagram that is necessary in order for for the transaction to be completed and the concession to begin with the development of the old airport. However, the three sides – i.e. the investor, the state privatization fund (TAIPED) and the state – have different approaches to various points and the entire procedure is set to last quite some time. Although the tender was completed five years ago, the previous government showed little, if any, progress on this front.
When the 99-year concession period at Eliniko ends, the plots deemed to belong to the state, as well as any buildings on them, will be returned to the state. While 99 years may sound like a long period, after that the state will have the full rights to the use of any property that is returned to it. Crucially, during these years, the investor will not be able to sell the full ownership of those areas, with an impact on valuations, the operation of properties, and the returns of the overall investment.
Therefore, if one of the three hotels provided by the integrated development plan is built on an area where the owner does not enjoy full ownership, that will return to the state when the concession period expires. The same applies to housing complexes, shopping centers etc. Thus those hotels or complexes cannot be sold by the owner unless the buyer accepts only the rights to the plot’s surface and promises to return any assets to the state upon the expiry of the concession.
It has already been agreed that 30 percent of the plot will be fully conceded to the investing consortium, while 70 percent will have to be returned to the state after 99 years.