Archaeological restrictions put Greek resort plan at risk

  • Culture ministry imposes new archaeological restrictions
  • Developer says these put 8 bln euro project at risk
  • Project seen as a test of commitment to privatisations

ATHENS: New archaeological restrictions have put plans to build a luxury resort on a disused Athens airport at risk, the developer said on Friday, in a potential blow to one of the biggest privatisation projects Greece is pursuing under its bailout.

Greek property developer Lamda, backed by Chinese and Gulf funds, submitted an 8 billion euro ($9.3 billion)proposal in July to convert 620 hectares of wasteland at the former Hellenikon airport into a complex of luxury residences, hotels, a yachting marina and casinos.

The planned resort would be three times the size of Monaco.

The group signed a 99-year lease with the state in 2014. But the project has been beset with delays, partly due to a long-running dispute with critics who fear it will damage the local environment and cultural heritage.

The latest setback was a decision by Greece's culture ministry to declare a new archaeological area over parts of the airport compound and impose other restrictions.

Lamda, whose shares dropped 6.8 percent on Friday, said the move was an "unexpected change in the contractual agreed terms."

"It is obvious that the investment cannot be materialised as long as continuous setbacks and new obstacles lead to amendments in the development plan in various ways that are not provisioned in the contract," it said in a bourse filing.

Progress on the project is being closely watched by Greece's creditors as a test of its commitment to privatisations under its multi-billion euro international bailout.

The culture ministry's decision means about 30 hectares of the area has been declared of archaeological importance. The ministry also said Lamda should review the height of some of the planned buildings.

Lamda said that would have a material impact on its plans as tall buildings were landmark features of the project.

A Greek government official said the country would stick to its contractual obligations for Hellenikon and called on Lamda to do the same and show good faith.

The official added the ministry's decision was part of the permitting process and would be taken into consideration before any presidential decree to finally approve the project.