June 28th, 2011
06:24 PM GMT
(CNN) - Greece vows to sell many state-owned assets and catch up to what European countries started doing back in the 1980s. So, better late than never. But can Greece really sell £50bn worth of assets as promised?
There are many challenges. Firstly, the unions don't want to see state employees go to work for private firms and of course face massive job cuts.
The Greek can vow to sell this or sell that, but at what price? Will it be a fire sale meaning Greece won't get the money it needs? Who would buy real estate in Greece with so much uncertainty?
As one investor said at a Greek investment conference, "Reforming Hellas A Challenge" in London Tuesday, what's the point of buying land if you can't build on it? The point being the legendary red tape of doing business in Greece makes it hard to build in confidence and therefore even harder to get finance to start a massive project.
Still, there are strong words of assurance coming from the Greek government. It will change the laws to make it easier to wade through the bureaucracy. It will set up a "proper" legal framework to put assets up for sale.
"Although one can admit a very large number of mistakes," admitted George Christodoulakis, the Special Secretary for Asset Restructuring. He told the conference, "there is no reason to cry over the spilled milk. We should face the facts and optimize from now on."
I took it to mean yes Greece has been a poor place for foreign investors in the past, but the Greek people (read the unions) have got to face the fact that assets will be sold.
So, what is up for sale? The government's 55% stake in the new Athens Airport for one. Also the site of the old Athens airport. It’s minutes from the center of town, is on the coast and will be the most lucrative real estate asset on offer.
"We are talking about, first of all, extensive real estate; the old Athens airport is a major part of this, George Gourdomichalis of the Piraeus Marine Club told me. "What has been built around the Olympics [should be sold]. We are talking about concessions around infrastructure projects: bridges, highways, ports, airports."
But what we heard time and time again was that there is very little foreign investor confidence in Greece now. People talked about the risk of default which would mean any real estate investment could lose value, the risk of the government changing laws that would make investments less secure, the lack of transparency, the power of the unions; on and on.
"The image that Greece has is that it is not very transparent in its processes. That is scaring people are coming to invest in the country," Nikos Stathopoulos, Managing Partner of BC Partners told the conference.
What you also hear is that Greece has so much potential – be in the food sector or of course the tourism sector – but now is the time for Greece to catch up to the rest of Europe and realize that privatization and job uncertainty are on the way and here to stay. Welcome to the real world.
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