Wednesday’s news of former businessman Babis Vovos’ arrest over unpaid debts seemed ironic as it coincided with the activation of the law concerning the double rehabilitation project for the areas of Votanikos and Ambelokipi in Athens.
The “Double Facelift” is a project that will see the construction of a more than 50,000-square meter mall that Vovos had been desperately trying to get permission to develop in Votanikos since the mid-2000s. It was the very cancellation of that effort by the Council of State in early 2009 that sent the then-listed property development company Babis Vovos SA into a downward spiral and eventually to bankruptcy a few years later.
According to observers of the course of the company that dominated the local property market for some two decades, from 1990 to 2010, the blocking of the investment in the double rehabilitation project by the City of Athens was the kiss of death for Babis Vovos SA.
The reason for that was that the company Vovos founded in the late 1970s had invested significant funds in the development of the mall at Votanikos, having borrowed more than 150 million euros for that purpose. The suspension of the project left the firm with an asset it could neither sell nor use as collateral, as it had already been mortgaged for loans of €125 million from Piraeus Bank and Alpha Bank. The company therefore had to repay a huge loan it received for an asset that would not fetch a single euro.
The perfect storm for the enterprise came to a head in the 2010s, when the financial crisis led office rental rates – a key source of revenue for Babis Vovos – to slump 40-50% from 2010 to 2014. At the end of 2011, Vovos’ total obligations added up to over €870 million, leading the company and its owner to the inevitable.
Today the half-built shopping center at Votanikos has been transferred to a special-purpose company for the construction of the sports and commercial complex. This vehicle is controlled by the two creditor banks, Alpha and Piraeus, and will be among the entities to implement the part of the Double Facelift project at Votanikos, including the mall.