Desperation Gets A Grip: Greece Puts Islands Up For Sale

What started as a provocative suggestion by German politicians, have now become a reality; it has been discovered that an area in Mykonos, one of Greece‘s top tourist destinations, is put up for sale on the website Private Island. The website also lists a 1,235-acre property at Nafsika in the Ionian sea on sale for €15 million. Others go for less than €2 million.

“Selling off your islands or areas that belong to the people of Greece should be used as the last resort.”

Makis Perdikaris

Mykonos - Greece

Mykonos is one of Greece’s top tourist destinations.  Private land owners are now looking for a buyer willing to inject capital and develop a luxury tourism complex, according The Guardian.

There’s little that shouts “seriously rich” as much as a little island in the sun to call your own.

For Sir Richard Branson it is Neckar in the Caribbean, the billionaire Barclay brothers prefer Brecqhou in the Channel Islands, while Aristotle Onassis married Jackie Kennedy on Skorpios, his Greek hideaway.

Now Greece is making it easier for the rich and famous to fulfill their dreams by preparing to sell, or offering long-term leases on, some of its 6,000 sun-kissed islands in a desperate attempt to repay its mountainous debts.

The Guardian has discovered that an area in Mykonos, one of Greece’s top tourist destinations, is one of the sites for sale.

The area was earlier reported to be owned one-third by the Greek government, which was looking for a buyer willing to inject capital and develop a luxury tourism complex, according to The Guardian, referring to a “source close to the negotiations.”

However,this might not be quite true, according to director of Greek Island Properties, Makis Perdikaris. (See comment from Mr.Perdikaris below).

“All the properties that we sell of rent through our website, http://www.greekislandsproperties.com, is privately owned and none is government property,” he points out.

Potential investors are looking at property on the island of Rhodes, are mostly Russian and Chinese, the UK newspaper writes.

Investors in both countries are looking for a little bit of the Mediterranean as holiday destinations for their increasingly affluent populations.

Roman Abramovich, the billionaire owner of Chelsea football club, is among those understood to be interested, although a spokesman denied he was about to invest.

An Act Of Desperation

Greece has embarked on the desperate measures after being pushed into a €110 billion bailout by the EU and the IMF last month, following a decade of overspending and after jittery investors raised borrowing costs to unbearable levels.

The sale of an island – or convincing a member of the international jet-set to take on a long-term lease – could perhaps  help to boost its coffers.

Nafsika Island

The Private Islands website also lists an 1,235-acre property at Nafsika in the Ionian sea on sale for €15 million.

But others are on for less than €2m – less than a townhouse in the suburbs of London.

Some of the country’s numerous islands are very tiny,  and would barely fit a single sunbed, The Guardian reports.

Only 227 Greek islands are populated and the decision to press ahead with potential sales has also been driven by the inability of the state to develop basic infrastructure, or police most of its islands.

The hope is that the sale or long-term lease of some islands will attract investment that will generate jobs and taxable income.

Desperate attempt to repay debts is also driven by inability to find funds to develop infrastructure on the islands.

The Last Resort

“Selling off islands or areas that belong to the people of Greece should be used as the last resort,” Makis Perdikaris, director of Greek Island Properties, says.

Adding: “But the first thing is to develop the economy and attract foreign domestic investment to create the necessary infrastructure. The point is to get money.”

In its battle to raise funds, the country is also planning to sell its rail and water companies, The Guardian writes.

Chinese investors are understood to be interested in the Greek train system, as they already control some of the ports. In a deal announced earlier this month, the Greek government agreed to export olive oil to China.

We Give You Money – You Give Us Corfu

After the socialist government of prime minister Geórgios Papandreou responded to the IMF bailout with draconian budget cuts, rioters took to the streets, costing three lives in May.

In the midst of the crisis, the German chancellor, Angela Merkel, delayed her support as she faced local elections and popular opposition to any public-funded help to Greece.

As strikes almost paralyzed the country and hedge funds bet against the economy, German politicians called for Greece to start selling islands, historic buildings and artworks.

“Those that are insolvent must sell everything they have to pay creditors. Greece owns the buildings, businesses and uninhabited islands that could be sold to pay debts,” German politician Josef Schlarmann said earlier this year.

Frank Schäffler, a financial expert in the Free Democratic Party, also suggested that Greece should also sell the famous Acropolis.

Vice Foreign Minister Dimitris Droutsas was not particularly impressed with the proposal, and responded in an interview on German television:

“I have heard the proposals. Such proposals are not appropriate at this time.”

Yesterday the price of insuring Greek government debt (Credit-default Swap) surged to nearly 1.000 basis points, a level usually equated with a default situation.

It’s A Shame

The City, where investors are increasingly shunning Greek investments, welcomed any island sales.

“It’s a shame if it comes to this, but it does at least demonstrate that Greece is prepared to take all actions necessary to try and meet its obligations,” Gary Jenkins, a credit analyst at Evolution Securities, says.

Property prices have fallen between 10% and 20% since the May riots in Athens, as bad publicity has drawn visitors away, according to Makis Perdikaris.

“We have experienced a very slow booking season. Most tour operators offer hugely discounted rates,” he says.

PS:

If you’re trying to log on to the Private Island Online website, expect a little trouble. There’s obviously heavy traffic on the site right now.

Related by the Econotwist:

Why Optimists Are Wrong About The Euro Zone

European Banks Loaded With Greek Debt

A Baltic Future For Greece?

Athens: Banks On Fire – Thee Dead

86% of German Citizens Oppose To Greek Bailout

Greek Crisis Force Germany To Put Help For Unemployed On Hold

The Great Greek Soap Opera

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