For Sale: Greek Islands, Marinas and Tax Offices
Got some cash to spend? How about a piece of the Greek islands of Rhodes or Corfu? Or a royal palace, a marina, or even a consulate building?
As Greece is struggling to appease international lenders andlive up to the conditions of its bailout,the debt-choked nation is speeding up the sale of state assets by expanding its privatization program.
Greece’s state fund (Hellenic Republic Asset Development Fund or HRADF) now has more than 70,000 state owned properties on offer for investors and it aims to generate 19 billion euro ($24.5 billion) by 2015 via the sales.
The state’s properties include a 119,800 square meter peninsula with a palace hotel complex and a marina, a 450,000 square meter area in Rhodes with an 18-hole golf course and 4 miles of beach, a coastline in Corfu, an airport area in Athens and the 2004 Athens Olympics broadcast centre.
Apart from land areas, Greece is also offering its government buildings. Greece's ministries of justice, health, education and culture are seeking to rent out some of their buildings, and although the country is coping with rampant tax evasion, 13 of its tax offices are on offer for privatization as well.
Last week, Greece completed its first privatization deal by leasing the International Broadcast Centre, used during the 2004 Olympics, to development group Lamda. The group is paying 81 million euros ($104.7 million) to lease the 73,000 square-foot area for 90 years, a price Odisseas Athanassiou, CEO of Lamda Development, said is “fair.”
“The deal made financial sense,” Athanassiou told CNBC, and rejected rumors that the agreement was made to please Greece’s international lenders.
But Sam Zell, U.S. real estate mogul and chairman of Equity Group Investments, told CNCB that a similar retail property would cost “dramatically less” in the U.S. and added that he wasn’t familiar with the Greek commercial real estate market.
Greece’s plans to launch a privatization program have been postponed several times because of the country's political uncertainty, but a source at the state fund told CNBC it is ready to make up for this “wasted time”.
So far the privatization fund has raised less than a tenth of the targeted amount. Investors have not been rushing to lease the state’s assets because of the “fog around the Greek economy” and worries the assets could be devalued further if Greece were to exit the euro zone.
Lamda CEO Athanassiou described the program as Greece’s last chance to be a successful country.
He also noted that the Greek government has not exploited the full potential of its tourism and new energy industries. “There are so many resources and opportunities in Greece. It's not a matter of a poor performing private sector or a lack of resources, but how the state is operating,” he said.