GIG: Can you tell us about the main areas in which you specialise and your activities in Greece?
Sigalas: Hill International is a global project management and consultancy firm headquartered in the U.S. and listed on the New York Stock Exchange (NYSE). We provide technical assistance, programme management, project management, and a range of advisory services to support investors and governments with planning, maturing, and delivering major capital programmes worldwide.
We invested in Greece during difficult times, and we are delighted to see our efforts coming to fruition. We are currently engaged in some very exciting projects across different project sectors such as ports, airports, hotel projects, new hospitals, master-planned developments, oil and gas, and others. This distinct mix of projects underscores the breadth and depth of our regional operations and our team’s ability to support clients through the different stages of a project’s planning and implementation.
GIG: What drove Hill International to have its regional base in Greece? And what are the benefits?
Sigalas: It was during the late 1990s that Hill International’s management established administrative headquarters for non-U.S. operations in Athens, essentially to support international operations in the Balkans, the Middle East, and North Africa. At the time, Hill did not have active operations or projects in Greece. This allowed the company to make use of a pertinent Greek law that provided incentives for companies with international operations to maintain their administrative headquarters in Greece.
Greece has several advantages. It is an EU country with a great location, at the heart of the eastern Mediterranean and within a reasonable flight-time radius from all European locations and the Middle East. It has a well-educated and English-speaking workforce and an advanced level of transport infrastructure. Of course, climate, culture, and lifestyle are all factors that contribute to Greece potentially emerging as the main hub for the wider southeastern Europe/eastern Mediterranean region. These are some of the reasons why we strongly believe in Greece and its development potential. Although, to be able to compete internationally, Greece still has plenty to do towards adopting a bold framework for investment and taxation incentives, which are key to attract international businesses and professionals to establish their base in the country.
Nowadays, as we have significant operations in Greece, the Athens office has evolved to be the main office for projects in Greece and SE Europe, while we maintain certain backbone administrative functions – such as finance, human resources, and IT – that support other geographical regions in Europe, the Middle East and North Africa.
GIG: What are the flagship projects you are currently undertaking and what are some of the most exciting projects you have in the pipeline?
Sigalas: We are delighted and honoured to be involved with some major projects such as the circa €400 million Stavros Niarchos Foundation Health Initiative that involves the construction of three new exemplary hospitals designed by the internationally acclaimed architect Renzo Piano; the €350 million CapEx programme for the upgrade of the Port of Piraeus; the €130 million planned expansion of Pier 6 of the Port of Thessaloniki; the new international airport of Heraklion in Crete, widely known as the Kasteli Airport; the Trans Adriatic Pipeline (TAP) in northern Greece; the new Holocaust Museum in Thessaloniki; and the redevelopment of the Astir Palace, the ‘crown jewel’ of the Athenian Riviera.
I want to stress that these are just some of our current projects. These are more known to the wider public and the investment community. Regardless of how big or small a project is, and notwithstanding the specific remit that we may have on any given project, as a team, we feel the same level of honour and responsibility to deliver on every project. This sense of responsibility should transpire in the market also as, ultimately, each project is a piece of the puzzle that amalgamates into the big picture for the country as an investment destination.
Looking ahead, there are major upcoming projects that are maturing in Greece.
In Athens alone, there are €5-6 billion worth of major and smaller scale projects to carry out over the next five years. These projects can act as ‘power houses’ for development. This includes just Phase 1 of the master Hellinikon redevelopment, the largest urban regeneration project with a waterfront to be carried out in a Europe; the integrated resort casino within the Hellinikon project; the €500 million planned major expansion of the Athens International Airport; the expanded scope of the Piraeus Port Master Plan; the metro expansion; and many more such as Alimos Marina, Vouliagmeni Marina, Asteria Glyfadas, Piraeus Tower, and wider real estate activity in Athens.
Likewise, there is a strong pipeline across the country, including northern Greece, Crete, the Peloponnese, and the Greek Islands. This is mainly driven by public private partnership (PPP) infrastructure projects, strategic investment projects that have been approved across the country and on certain islands, the new generation of privatisations – regional ports and airports, investments in energy, renewables, waste management – and the wider real estate activity that will hopefully improve as the systemic banks sanitise their portfolios from the non-performing loans (NPLs).
GIG: The Greek government has been very outspoken about its commitment to catapult projects forward and have set great expectations. What is your outlook?
Sigalas: Indeed, expectations are high and rightly so. We need to manage expectations, however, and put them in a realistic and pragmatic frame. There should be no fallacy that billions are going to be poured into projects in early 2020. It needs to be recognised that the market has suffered, thus far, from a lack of mature projects that are ready for construction.
To improve the situation going forward, there needs to be a systematic effort to bring all these projects to maturity. They need not just actually to commence but to reach an advanced level of construction. This is critical. It is only when projects reach a peak stage of construction that the wider public witness actual activity, bulk funds are deployed in the economy, jobs are created, and you get the spill-over effect. This happens during construction and, of course, during operation.
All stakeholders should take note that this is not an easy task and requires a continuous effort. My two cents is that while things are improving, it will take two to two-and-a-half years for all these projects to really peak. But the requisite upstream effort is due now, and there is not a single day to lose.
GIG: Can you tell us more about your involvement in the expansion of the Port of Thessaloniki, as well as the eagerly awaited Kasteli Airport on Crete?
Sigalas: In September 2019, following an international tender that attracted seven consortia, we were appointed – in collaboration with a Greek marine engineering firm – as the designer and project manager for the planned expansion of the marine works infrastructure of Pier 6.
The Port of Thessaloniki is the most important port of northern Greece and a key transportation hub for Southeast Europe as a part of the core network of the Trans-European Transport Network. It hosts a variety of activities, including the servicing of all types of cargo, ferry/passenger shipping, and cruises, as well as the Port of Thessaloniki free zone, operating under the applicable tax and customs legislation. Pursuant to the terms of the relevant Concession Agreement, the Thessaloniki Port Authority (THPA) is required to implement a minimum €180 million capital expenditure programme to upgrade the port. The main project relates to the expansion of the marine works infrastructure of Pier 6. As it was announced by THPA, in parallel with the design process, we worked to launch the pre-qualification stage of the main construction tender at the end of November 2019, with a view of selecting the preferred contractor in the first half of 2020.
Following an international tender in June 2018, we were selected as the independent engineer for the new international airport of Heraklion Crete, widely known as the Kasteli Airport. The total investment is expected to exceed €500 million. The project will be developed under a concession agreement for a period of 35 years, with the Hellenic Republic maintaining a 45.9% stake in the concession. The concessionaire is Ariadne Airport Group and comprises Terna, a reputable Greek corporation, and GMR Group, an India-based airport investor and operator. Works include the construction of a new airport with a terminal of 72,000 m2, an ICAO aerodrome reference code E runway of 3.2 km, an apron area capable of more than 30 remote and contact parking positions, as well as the connecting roads and a commercial zone. The airport will become the second busiest airport in Greece, behind Athens International. After a long waiting period, we have commenced preliminary works and, hopefully – very shortly – the concession effective date will be duly achieved to allow the project to move forward with design development in full throttle.
Without a doubt, both are infrastructure projects of broader national and particular regional significance, providing also several benefits to the local economies. We are fully aware of the responsibilities that come along with the honour to serve these projects, hence we look forward to working hard with all stakeholders involved for their successful delivery.
GIG: What was it like operating out of Greece during the crisis years?
Sigalas: It was a defining period for our operational presence in Greece. Moreover, it was also a period that we experienced first-hand, on a personal level, since political developments and economic circumstances affected everyone’s lives, families, friends, and careers.
Reflecting back, between 2010 and 2011 we saw a window of opportunity to break ground in Greece operationally. Why? Due to the crisis it was evident that funds coming into Greece going forward would be predominantly international. The country was called upon to privatise assets across sectors and would also need to take actions to increase the investment attractiveness of assets to both the public and the private sector in order to attract foreign direct investments (FDIs). Accordingly, our profile, international experience, and knowledge of Greece had the potential to be a perfect match with international investors in this changing landscape.
This was the broader premise of our strategy. Getting to where we are today involved extremely hard work, loads of sweat, and also some tears along the way to see our efforts come to fruition.
Our first assignment, the one that put us, in a way, on Greece’s map, was with the privatisation agency Hellenic Republic Asset Development Fund (HRADF). We were appointed the leader of a consortium that rendered real estate and technical advice to HRADF for the preparation of the tender associated with the flagship privatisation of Hellinikon SA. This was back in September or October 2011. Greece had just signed a medium-term plan with its lenders that stipulated the creation of the HRADF, with the privatisation programme being an annex to Greece’s financial agreement. The HRADF was in its nascent period. I am not exaggerating by saying that when we started on Hellinikon there were just 3-4 people at HRADF. They did not even have basic office equipment.
Greece was essentially at ground zero at the time. I recall we were going for meetings at HRADF’s offices downtown, and we had to pass through protestors marching against Greece’s Memorandum. Often, for security reasons, we had to dress casually and wear jeans, as anyone in a suit at the time could be considered affiliated with the “Troika”.
Ever since, we have experienced first-hand the developments in the country. In early 2014, we won the tender for the project management of the redevelopment of Astir Palace, appointed by the international investors. This was the big break that we had been working for, and we put a lot of energy and passion into this project. I mentioned tears before and this is literally true. In March 2015, there was a major setback at a transactional level that almost cancelled the deal.
However, and this is a long story cut short, with a committed investor, teamwork, perseverance, and, fundamentally, a willing state, when circumstances changed later on in that year the deal was turned around. We went through an adjusted zoning process and the closing of the sale process was finally achieved in October 2017. President Barack Obama was the last guest at Astir in November 2017. In March 2017 we commenced construction, and Astir reopened as the Four Seasons Astir Palace in March 2019, after a complete redevelopment programme that made Astir into a world-class destination and which exemplifies the great things that Greece has to offer to the global hospitality sector.
Meanwhile we have worked hard – steadfastly – on different fronts, including attracting top talent, nurturing relationships, and successfully pursuing infrastructure projects related to other major privatisations, many of which have eventually came through such as the Port of Piraeus and the Port of Thessaloniki.
That is a quick glimpse into the past, but we are always looking ahead!
GIG: After the difficulties of the crisis years, how do you now see prospects for Greece’s construction industry?
Sigalas: Looking ahead, we are upbeat about Greece’s development potential. Of course, this comes with certain caveats, but we are optimistic.
Why is that? Circumstances are promising overall. That will benefit not only the major investments that rank high on the political agenda but also smaller and medium scale investments across different sectors and regions of the country.
One of the key lessons learned from our experience is that even during the crisis major privatisations and deals eventually came through in Greece. Arguably, this sets a precedent of major projects that have been tested under the most extreme transaction scenarios and turbulent political circumstances. Indeed, it needs to be recognised that the timeframes for maturing investments/projects are too long and this is an issue that should continue to rank very high on the political agenda.
To this end, there are several actions in motion by the state that are in the right direction. Of course, everything will be judged by the end result, but the big picture is that Greece is looking ahead into a new era, and circumstances are now more promising than ever before.