Greece has been in the headlines over the last few years as the economy goes from bad to worse, government funding dries up and international investors run for the hills. It is difficult to find any positive news of late about the Greek economy but it seems that real estate investors might have other ideas?
It was revealed this week that the capital’s former international airport is being sold to a consortium of investors from Greece, the Middle East and China. So, what plans do these international investors have for the former international airport?
Urban regeneration
What is been cited as the largest urban regeneration project in Europe will see the 1.5 mi.² of prime real estate on the Greek coast transformed creating thousands of jobs in the process. The development will include the creation of parks, luxury homes, golf courses with further investment in the area of public transportation. Initial estimates suggest there could be upwards of 40,000 jobs created but there is scepticism regarding the deal and the fact that it was put on hold for 18 months because of local protests.
Who is pulling the purse strings?
There has long been concern that the Greek government is effectively a figurehead for a country which is bankrupt. The growing dependency upon bailout funds from the European Union has seen control of the country, government and austerity measures transferred to Brussels. Indeed the sale of the former international airport development is one of a number of “loose ends” which the Greek authorities have to resolve before receipt of the next instalment of bailout funding – somewhere in the region of €7.5 billion.
It is now becoming apparent that all former government buildings and government-owned developments are effectively for sale with international investors hovering like vultures. We will see in due course whether the Greek authorities have received fair value for money for the array of announced and planned asset sales but what price do you put on assets in a country which is effectively bankrupt?
Property prices
We have the refugee crisis, an ailing economy, unemployment running out of control and a government which continues to ramp up austerity measures. There is no doubt that in due course the tourist industry will flourish again which is perhaps one of the main reasons why this consortium of investors is taking over what is prime real estate on the Greek coast. There have been some small concessions to the local population but the reality is that investors are now hovering over Greece’s best assets and looking to obtain fire sale prices.
Many believe that the Greek economy will take decades to recover from the economic collapse which prompts the question, how can property prices rise in this environment? Well, the answer seems to be in the location of new developments, the rock bottom price paid to the Greek authorities and focus on the tourist industry.
Conclusion
The vultures have been hovering over the Greek real estate market for some time now amid signs that creditors were effectively pulling the strings behind the scenes. The government has been under pressure to jettison some of the more prestigious properties owned by the state and in the current economic environment, what is a fair price?
The array of asset fire sales undertaken by the Greek government has not necessarily received the kind of press coverage you might have expected. Political unrest, civil unrest and an ailing economy have put Greece in a position of weakness the like of which we have never seen before. Effectively creditors, in the shape of the European Union and other prominent bodies, are pulling the strings.