Monaco-style development in store for Elliniko?

Authorities are in a race against time to put together the first part of a plan for the exploitation of public real estate assets, as the government has until the end of August to begin the process of utilizing, selling or ceding its assets for operation, in accordance with the terms of its agreement with the troika team, comprising officials from the International Monetary Fund, the European Union and the European Central Bank.

Indicative of the level of pressure on the government is the fact that it has yet to issue a full list of its real estate assets, among which is the contentious property in the southern suburb of Elliniko that once housed Athens?s international airport.

In reference to this piece of property, the chairman and managing director of Elliniko SA, Spyros Pollalis, told Reuters recently that a call for tenders will be issued in September in order to attract more investors. This basically excludes the scenario, at least initially, of a deal with the government of Qatar within the framework of a memorandum of understanding signed a few months ago that would have brought in revenues worth 5.5 billion euros from investments at Elliniko. This, however, does not mean that Qatar will not be a part of the process at all, but it is still too early to make any assumptions.

?There was a period during which a deal between the two governments was being discussed, but the most recent scenario is that we go directly to a competition,? Pollalis said. The Harvard University professor was assigned head of Elliniko SA in June.

The more than 500-hectare site of Elliniko is considered the state?s prime real estate asset for development within the context of a broader liberalization program that is expected to bring in revenues of 50 billion euros by 2015 that will be used to lighten Greece?s debt burden.

Last March, the government?s liberalization committee elected Citigroup and Piraeus Bank to act as consultants.

So far, however, the biggest unknown in the liberalization process is the fate of Elliniko. There are many different scenarios on the cards, though the most popular according to Pollalis is one whereby the property will be developed in zones – for residential, tourism and commercial activities, for example – along the coast, much like the model adopted in Monaco. The biggest obstacle to this plan is, as usual, naysayers in the municipal authorities abutting the property who regularly oppose each and every plan that entails private investors.

One of Pollalis?s chief tasks, therefore, is to bring local authorities around to the rationale that the state can no longer afford to operate or even maintain property of this size. The state, of course, wants to have some participation in the final consortium that will exploit the Elliniko site with an investment that will bring long-term benefits rather than an instant deficit plug.

Other than Elliniko, the other public real estate assets that will be addressed in the first phase of the liberalization program are also prime sites for the development of tourism-related activities. The first step to making them attractive to investors is to clarify the building regulations that will apply to each development zone tourism/recreation, business parks and theme parks/commercial centers. According to the midterm agreement signed by Athens and its international creditors, coastlines can be ceded to private investors for a period of 50 years.