ECONOMY

Elliniko investors eye Cyprus project warily

The investing group that has undertaken the development of the old Athens airport plot at Elliniko is expressing concern that as well as having to contend with the Greek state agencies, whose notorious red tape was to be expected anyway, its project on the capital’s southern coast is also facing competition from Cyprus.

Until recently the development of the plot in southern Athens was thought to be a project with unique features in Europe, as a site by the sea with the characteristics and the potential of Elliniko was nowhere else to be found in the region.

However, recent developments in Cyprus have revealed that not only does another such plot exist, but it is also attracting a similar amount of interest from investors. The Church of Cyprus has already approved the concession of a large plot, estimated at 2 square kilometers, in the seaside area of Geroskipou, with the aim of developing a holiday resort there with additional housing and recreational uses.

The management of Greek construction company Lamda Development – which has undertaken the Elliniko project with the support of China’s Fosun and Abu Dhabi’s Al Maabar – is none too pleased at the news. As Odysseas Athanasiou, managing director at Lamda, told Kathimerini: “The idea of developing that plot in Cyprus was only proposed 12 months ago. Judging by how quickly they have got to the point of completing a strategic plan for the investment to be implemented, one can see that they are moving at a far greater speed than we are.”

He added that the obvious competitive advantage Greece had with Elliniko is diminishing in light of these recent developments, because if Cyprus begins operating its own project first, given the bureaucratic obstacles in Greece and Cyprus’s flexible town-planning system, it will automatically attract a share of the market of potential tourists and holiday home buyers that the Elliniko project intends to target.

Such a development would reduce the project’s expected capital returns and also put anticipated state revenues at risk. A clause in the Elliniko contract entitles state privatization fund TAIPED to 30 percent of the project’s profits, but only if the investors secure a minimum capital yield of 15 percent. Therefore the state has very good reason to want to see procedures for the licensing of the Elliniko project accelerated.

The investment proposal put to Cypriot authorities by Hungarian billionaire Sandor Kenyeres, who already has a hotel unit and luxury holiday accommodation in the region, has a very sophisticated plan: Eden City will incorporate the construction of three or four super-luxury hotel units, a marina, apartment complex, shopping mall, “art village,” international cultural and conference center, and even an artificial island on which houses and hotels will be developed. The project will involve an investment of 7.5 billion euros (against 8 billion euros planned for Elliniko) and will create 10,000 permanent jobs in Cyprus.

Clearly, with the exception of the 2 sq.km. metropolitan park planned for Elliniko, most of the two projects’ other uses will be the same, although it’s true that the Elliniko plot (at 6.2 sq.km.) is more than three times the size of that at Geroskipou, which means the Cyprus project will have a much higher percentage of built area.