GREEK REAL ESTATE IN TRANSITION

The Greek government is increasingly turning to private-public co-operation in order to better exploit the state's real estate assets.

Prompted by the need to reduce the national debt, as required by the Stability and Growth Pact which covers euro-zone countries, the government is pressing public institutions to make fuller use of their property assets before their activities can be subsidised by the tax-payer.

Private management

Many public enterprises have therefore hived off all or part of their real estate holdings into property management and/or development companies or entered into contracts with other private companies to exploit their properties.

In the first category are the National Bank of Greece, which established National Real Estate, and the Greek Industrial Development Bank (ETVA) and Greek Telecommunications Organisation (OTE) which have set up similar vehicles.

The University of Athens, the Army Pension Fund and the Greek church are among the institutions in the second category: assigning parts of their property portfolios to private property management companies for periods as long as 20-30 years.

Risk management

Typically, professionals undertake the risk of renovating properties and putting them on the open market, against payment of fees to the institution. The institutions hope to significantly increase their revenues while transferring the risk to the property companies.

Long leases on a number of properties owned by the University of Athens have been assigned to Real Estate Development Services (REDS), a subsidiary of the leading construction company Elliniki Technodomiki, which will pay for refurbishment and then exploit the properties for between 20 and 30 years.

The Army Pension Fund is behind a major project involving the Megaron Building near Syntagma Square. A 25-year management contract has been signed with a joint venture called Picar, headed by Piraeus Bank, which is to develop the 57,500 sq. metre site (whose boundaries are Panepistimiou, Stadiou, Voukourestiou and Amerikis) the largest single commercial property in central Athens.

(It was the home of British and US intelligence services after the second world war and of the US military mission during the civil war and currently includes EOT's offices and the Pallas Theatre.)

State property is the responsibility of the Greek Public Real Estate Corporation (KED) which, on behalf of the Greek state, manages, develops, sells and lets more than 100,000 properties totalling some 20,000 square kilometres or 15% of the total land mass of the country.

128bn euro sell-off

During the period 2000 - 2004, property valued at over 128 million euro (Dr43.8bn) will be sold to private developers for housing, offices, shopping centres and tourism developments; other properties will be let on long leases of up to 99 years.

"We are in exploratory discussions with banks and developers and plan to sell property of the order of 29 million euro per year," says managing director Alexander Demacopoulos.

Centralising ministry facilities

One of KED's main projects is implementing the governments Politeia programme to centralise government ministry offices, aiming to bring under one roof all the services of each of its 18 ministries.

(Government ministries and their related agencies and their 22,000 employees (in 1998) were housed in 171 separate buildings in and around Athens. Most buildings date from the second world war, have no air conditioning and offer poor working conditions.

The dispersal of services has led to poor communication between departments while Athenians have to travel from one neighbourhood to another to obtain public services.)

Because KED has not had the resources to undertake this project alone, a scheme was devised whereby the rejuvenation programme was incorporated in a broader, one billion euro (Dr340.8 bn) urban redevelopment scheme to be financed by the EUs Second Community Support Framework and the European Investment Bank.

KED turns to UK consultants

In September last year, KED hired the UK consulting engineers Gibb Ltd. to help prepare a submission to the EIB. The bank approved the scheme in December 2000 and authorised release of the first tranche of 50 million euro in February 2001.

KED has already re-housed the Ministry of Transport in new premises at Holargos and the General Secretariat for Information Systems (the headquarters of the TAXIS computer system of the finance ministry) in what was previously a Petzetakis Plastics factory in the industrial district of Moschato.

Work is continuing on conversion of the Keranis cigarette warehouse in the Elaionas district to re-house ministry of the environment and of a warehouse on Akti Vassiliadis in Piraeus to house the Ministry of Mercantile Marine. A newly built centre for the National Statistical Service, sited on arterial Pireos Ave. is also under construction.

Church looks to hotel projects

Although not subject to government policy, the Church of Greece is also exploiting the positive climate for attracting investment in advance of the 2004 Olympic games.

It has had plans approved to build luxury hotels on three of its properties in time for 2004. They include a 750-bed city hotel on an 11,000sq m site in the central Kolonaki area of Athens. The two other hotels would be in resort areas on the Saronic coast: at Kavouri and Vouliagmeni.