Public properties being sold for a fraction of their actual value

17 September 2016
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Public properties, including real estate assets, are very often sold for extremely low prices, as the political risk factor supersedes even the crucial financial risk that comes with investing in Greece.

The Hellenic Federation of Enterprises (SEV) this week commented on the issue, saying that this institutional shortfall of the Greek state and the lack of trust this generates in the three pillars of power (legislative, executive, judiciary) have turned the optimum utilization of state property into “a political point-scoring battle among parties.”

As SEV pointed out, “in many instances we see the state’s assets devalued, owing to the delays that political tensions bring about in privatizations, so that they are sold off at particularly low prices. In other instances the prevailing criterion becomes the price of the privatization, without taking into consideration any distortions created in the market from incomplete planning.”

For the industrialists’ association there is no doubt that “the correct utilization of public property along clear and stable rules and terms of economic efficiency, both for state revenues and for the operation of markets, can become a key growth factor for the economy.”

All this becomes clearer when one considers the tenders that the state privatization fund (TAIPED) has been conducting for the concession of real estate assets. As property market professionals observe, in most cases the prices investors offer – particularly in instances of plot development – are just a fraction of each asset’s actual value. The reason for that is not to be found in the financial crisis and the drop in market prices, but in investors’ need to factor the political risk into their calculations regarding the sustainability of their chosen investment, in order to secure the desired returns.

There are numerous examples of investments that have either faced serious delays or been postponed indefinitely. Such is the case with the investors who won the tender for the development of the plot at Afandou on Rhodes, and suddenly saw the Culture Ministry declare that a major part of the plot is an “archaeological site.” The problems remain even today, some two months later, despite the assurances granted.

There are similar problems with the plot at Kassiopi on Corfu, which was one of the first to be auctioned via an international tender by TAIPED. The issue of necessary administrative acts is still pending, hampering the progress of the 100-million-euro investment.

The record of the longest waiting period belongs to the investment at Cavo Sidero near Sitia, in eastern Crete. Minoan Group has been waiting since 1994 to develop the 26 square kilometer plot. A few months ago it entered the fast-track process and should be completed by 2019.

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