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On 24 April, Greece's Central Archaeological Council (CAC)
postponed its decision on the legality of an already-constructed
10-floor hotel in the Makriyianni district of Athens near the
Acropolis, to await a ruling by Greece's highest administrative
court. CAC's opinion is required for the construction of buildings
in archaeologically sensitive areas.
In January, residents in the area asked the Environment Ministry
to intervene and revise construction regulation around the
Acropolis, objecting to the development of high-rise buildings
nearby. In March, the ministry suspended for a year the provision
of new building permits for constructions higher than 17.5 m around
the Acropolis. Earlier in April, in a separate case, CAC ruled that
part of the area around the port of Piraeus is of archaeological
interest and voted against the construction of a shopping center
next to a new cruise terminal. The proposed development is part of
a EUR580-million (USD646-million) investment program by Chinese
investor Cosco, the port's owner.
Significance
Project delays and significant uncertainty for business activity
are likely due to blockages by individual agencies in granting
environmental and other permits. The recent project rulings are
likely to be driven by political considerations ahead of the local
and European Parliament elections in May-June.
With the general election scheduled for October, we expect to
see increased regulatory uncertainty, featuring temporary bans and
delays in the issuance of permits for new constructions, which
would cause project delays of around a year. Already-constructed
structures in archaeologically and environmentally-sensitive areas
are likely be allowed to operate. High-value projects such as
Cosco's program and the Hellinikon development project near Athens
are likely to get political support, but still be delayed by at
least a year by inefficient bureaucracy, the complicated regulatory
framework, and court challenges, and in the case of a government
change, when key officials are likely to be replaced.
If the government makes changes to CAC's structure, this would
indicate potential easing of controls on green-field investments in
Greece. Changes in the political leadership in local governments
following the local elections would indicate increased contract
cancellation risks for local projects.
