Hellinikon: Ready for Take-Off

After years of delays and bureaucratic obstacles, it is finally hoped that construction at the site of the former airport in southern Athens will begin in 2020. The landmark €8 billion real estate development is expected to create tens of thousands of new jobs and bolster economic growth in the years to come.

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The Hellinikon Project. It’s the biggest urban regeneration development in Europe and seen as the project to propel the Greek economy into the future for decades to come. Located at the former international airport of Athens, in the suburb of Hellinikon, the €8 billion project will stretch over 6.2 million square metres. The numbers are impressive. During the construction phase, the project is forecast to contribute 2% to the country’s economy and create 85,000 jobs. Ten thousand jobs will be created on a permanent basis. Tax revenues for the state will exceed €14 billion over a 25-year period, while there will also be many intangible benefits. Situated in a prime coastal suburb that lies seven kilometres away from the city centre, the development will include luxury residences, hotels, a yachting marina, and a casino. All this will centre on a park area rivalling the size of Hyde Park in London or New York’s Central Park. This will go a long way towards transforming Athens, which currently offers fewer green spaces than most European capitals. The masterplan for Hellinikon also allows for sports and entertainment facilities, museums, cultural venues, and the construction of a hub for educational and R&D purposes. The development is tipped as having a far and deep-reaching impact on just about every part of the Greek economy. But administrative delays and, to a lesser degree, local opposition have held back the commencement of construction work on the project that was taken on in 2014 by a group of investors led by Lamda Development. The licensing procedures are finally moving along – albeit at a slow rate – and even though there is no precise date on when construction will commence, it now seems likely that the bulldozers will finally start work in early 2020. Progress has been made on key issues that need to be completed before construction starts, with Greece’s top administrative court, the Council of State, signing off on the project and archaeologists also rubber-stamping the deal. In October 2019, Lamda Development said that it hoped to secure all the necessary licences to start the development of luxury homes and offices at the site of the former Athens airport in early 2020. Lamda plans to turn it into a complex of luxury homes, hotels, offices, a yachting marina, and a casino. “I believe when we go in, and this I think will happen in January 2020 – in any case, early 2020 – all permitting will be completed. There will be no risk in terms of licensing,” Lamda CEO Odisseas Athanasiou told shareholders when they met to vote on an equity issue of up to €650 million to fund part of the investment. Lamda announced the cash call in September, saying China’s Fosun and Abu Dhabi’s Eagle Hills had withdrawn interest in the project and it would undertake the development on its own due to the complexity and strict timetable. And in December 2019 – in the largest share capital increase by a non-financial company since the onset of the crisis in Greece – Lamda raised €650 million through a rights issue. Aegean Airlines participated in the cash call by acquiring a 1.6% stake in Lamda, while the European Bank for Reconstruction and Development purchased a 1.8% stake. According to Lamda’s bourse filing, the equity sale was oversubscribed by 1.1 times with 99% of it covered by investors who exercised their preemptive rights. Lamda expects to spend about €2 billion in the first five years of an estimated 25-year construction phase to build two skyscrapers of offices and a hotel, about 800 residences, and a park, Athanasiou said. “Investment risk for the first five years is covered,” he said, adding that there had been strong foreign interest in the residences, of which there are eventually expected to be about 10,000. Lamda expects to secure an additional €400 million from property sales, about €800 million from banks loans, and €150 million from issuing debt to reach that sum, he added. Greece received two bids for the €1 billion casino resort within Hellinikon: one from US casino operator Mohegan Gaming & Entertainment (Mohegan) partnered with Greek contractor GEK Terna, and another from Hard Rock International (Hard Rock). In January 2020, the Hellenic Gaming Commission awarded the casino operating license to Mohegan. Think tank IOBE says that investment and synergies from the project can strengthen the “infrastructure, construction activity, and production capacity of the economy, boost output with both an autonomous and an endogenous permanent increase of private consumption, and, lastly, improve the balance of payments with the corresponding inflow of private capital.”
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