ECONOMY

Decree opens the way for large tourism investment projects

A presidential decree to be signed shortly opens the way for important development projects on large land plots that will combine hotel resorts and holiday home complexes for sale or on long-term lease, sources say. Parliament has already approved legislation for the building of holiday homes on land owned by state-controlled Hellenic Tourism Properties (ETA) or single private land properties of more than 30 hectares in area. The law included a provision that holiday homes built on such plots could not occupy more than 35 percent of the total built-up area. The presidential decree pending signature sets the restrictions for such holiday home facilities that may be leased on a long-term basis or sold as well as dealing with issues relating to the transfer of property rights. According to the sources, the draft decree stipulates that the hotel facilities in such resorts must be four- or five-star. The maximum 35 percent of the built-up area allowed for residential use applies to totals of up to 100 hectares, being reduced by 2 percent thereafter for every additional 10 hectares. However, a ceiling of 10 percent of constructed facilities is set for homes on land larger than 200 hectares. In cases of land plots where tourism installations already exist, the segment on which new facilities are to be built has to measure at least 30 hectares and the 35 percent maximum applies to that. The duration of home leases will be 60 years. If the remainder of the lease exceeds nine years, the lessee is entitled to transfer full rights to a third party without the agreement of the lessor. In order to promote the parallel construction of hotel resorts and holiday homes, the decree provides that the transfer of ownership of homes can only take place after the completion of tourism installations proper (hotels, pools or sports facilities). Development Minister Akis Tsochadzopoulos is said to be confident that the new framework will ensure that investments will be viable and contribute to the elongation of the holiday season, as owners or lessees of such properties will make use of them outside peak season. Similar development schemes have been successfully applied in Spain and France. Development law Separately, the Finance Ministry’s draft bill on investment incentives contains five points that are significant for the tourism sector. First, investment subsidies for comprehensive plans for refurbishing hotels are revised from 4.5 million euros to 10 million. Second, hotel enterprises are given the option of forming a tax-free reserve for future investment instead of tax breaks. Third, the subsidization of leasing costs per employee goes up from 45,000 euros to 50,000. Fourth, the subsidization of loan interest payments is abolished, a measure that is considered unfavorable, since approximately 70 percent of tourism investments are loan-financed; in Crete, such loans have been estimated as equal to 85 percent of investment subsidies. Fifth, the system for rating tourism investments is to be rationalized, but details are not yet available. The draft bill appears to treat tourism enterprises less favorably than industrial concerns, particularly in the least developed areas.