Greek Business File, September-October 2020, No 127

by Symela Touchtidou

Finally, the day has come. Journalists and camera crews were invited to the ceremony of an iconic event:

The beginning of precursory works at the old Athens international airport, the Hellinikon

These should lead to the construction of the Metropolitan Pole of Hellinikon – Agios Kosmas, the “Hellinikon” as it is widely known. The revitalization of the old Athens airport is one of the biggest real estate development projects in Europe.

Three times the size of Monaco, once completed, the Hellinikon will host the biggest urban park in Europe along with a model city and a diverse entertainment complex. It will also be one of the biggest coastal parks in the world. Some of its main features will be a yachting marina, a luxury residential tower, a new world-class aquarium, two shopping malls, an office tower, all signposted by the two skyscrapers –in the shape of the Caryatids of the Erechtheion building of Acropolis– that will house the casino and the 6-star hotel of the complex.

The revitalization of the Hellinikon is considered a milestone on Greece’s way to a modern, investment-friendly and truly open economy. “From here, where airplanes took off, the Hellinikon project can become a take-off symbol in the new era for our country,” Odisseas Athanasiou, CEO at LAMDA Development S.A., said addressing the Prime Minister of Greece, Kyriakos Mitsotakis, during the breaking ground ceremony. “To make our vision become a reality we need to keep calm and down to earth. This is a marathon. Visions have risks, this is the way it is. They bring risks, many of which impossible to foresee. The coronavirus Covid-19 pandemic is a typical example”.

The first phase of construction work is about demolishing and removing old buildings. Out of a total of 900 buildings currently on site, about one third will be demolished. Next phase, infrastructure work, is expected to begin in the first half of 2021. It will be at least a decade before we see the first completed part of the Hellinikon project. It is expected to take 25 years before the area reaches its final shape.

Meanwhile, funding is a challenge

Lamda Development SA, the company that took up the ambitious project, proceeded to a €650 million share capital increase in late 2019.

Shortly after the ceremony at the old airport, Lamda got green light to issue a corporate bond. It calls it a “national bond” and asks all Greeks to become part of the project. Funds raised will be used partly to repay previous loans and partly to fund future construction work.

Along with two corporate loans by Eurobank and Piraeus Bank, the lease and sale of properties, such as the casino and the residential and commercial developments, Lamda is expected to acquire a capital of up to 2 billion euros, adequate to cover the first five years of the construction period.

“This will become a development hub. It will be a modern project, a ‘green’ project, ecofriendly, a project that will be the symbol of the new Greece,” the Greek Prime Minister said at the ceremony. “Getting here was not easy. Throughout these years, the way we think about using public spaces has evolved. The Hellinikon became the battlefield of two different mentalities. The one saw the place as a potential giant park, a public garden. The other sees growth as the result of the creative cooperation between public and private sector. The private sector puts in capital, the public sector sets the rules and makes sure that the place is accessible to all citizens.”

The bar is set high

The revitalization of the Hellinikon is a titanic project, even for European standards. Different players have placed different bets on it. The Greek government hopes it will work as a magnet for future foreign investment. It also longs for a positive contribution to the overall national GDP. The timing is crucial. Battered by the pandemic crisis and the subsequent recession, the Greek economy desperately needs a boost. The Hellinikon project sends out the word Greece “really means business” to an investor community highly skeptical due to past bitter experiences.

The tourism industry expects the Hellinikon will help turn the Greek capital into an all-year-round world-class tourist destination. Projections say that Hellinikon will attract to the “Athens Riviera” over one million new tourists yearly.

The Greeks expect high value-added jobs. Athenians crave for high-quality open spaces that are so rare in the Greek capital.

A green agenda

Lamda Development promises “a new prototype of urban development”. They state that the Hellinikon project is an “opportunity to rethink how cities are planned and to create a new global benchmark for urban innovation”.

Pedestrian space will be maximized, the building coefficient was kept to less than 0.5, and archaeological locations and historical buildings, such as the Olympic facilities and the old terminal, will be highlighted. Lamda will cooperate with international bodies that manage green certification schemes to ensure best practices in energy infrastructure, waste management, water efficiency, smart infrastructure, transportation and reduction of pollution. Among the investors that chipped in the capital increase, the European Bank for Reconstruction and Development (EBRD) has its own agenda.

The Bank says EBRD funds will be used to support the green economy. The Bank will work with Lamda Development to identify climate actions, including the development of assets at an energy level of nearly zero.

The Odyssey coming to an end

Once Greece’s only international hub, the Hellinikon airport closed in 2001.

Ιt briefly hosted some of the 2004 Olympics venues and was turned into an informal refugee settlement in 2016.

Squeezed by the financial crisis and Greece’s lenders, Greek governments were finally pushed into a privatization process under the Hellenic Republic Asset Development Fund (HRADF) umbrella. The international tender procedure for Hellinikon opened in 2011. Only Lamda Development S.A. submitted a binding offer. Back then, Lamda, a real estate company under the control of the Latsis group, had the backing of the Global Investment Group, made up of Abu Dhabi’s Al Maabar, China’s Fosun Group and other European funds. The contract for the transfer of the shares of “Hellinikon S.A.” to Lamda Development was signed three years later. It was only the beginning.

Lamda Development was forced to present improved terms in 2016 by the SYRIZA coalition government. A vast and rare majority in the Greek Parliament voted in favor of the ratification of the contract between the HRADF and Lamda in September 2016.

Overall, it took dozens of government decisions, numerous rulings by the Court of Auditors and the Council of State, other rulings by the Central Archaeological Council, the Central Council of Modern Monuments and the Central Council of Architecture to make it to the breaking ground ceremony. All these in a background of fierce political dispute over the appropriate use of this extremely privileged piece of land.

It is highly unlikely that an investor unfamiliar with the Greek bureaucracy and the politics of the country would have made it. It is no coincidence that the foreign investors participating in the initial investment scheme dropped out along the way.

“We believed in the project with the passion of a Don Quixote” said Odisseas Athanasiou. Hard to argue. There have been times that insisting on realizing the project seemed like chasing windmills.