(c) 2013, Bloomberg News.
(c) 2013, Bloomberg News.
MADRID — NCH Capital Inc., a U.S. private- equity firm, has won permission from the Greek government to build a tourist resort on the island of Corfu.
NCH, based in New York, will spend 23 million euros ($32 million) for the leasehold and invest about 75 million euros to develop a hotel, marina and private holiday homes, said Andi Ballta, the firm's managing director for the Western Balkans and Greece.
"We were looking at Greece way before anyone considered investing there and that's put us ahead of the competition," Ballta said. Construction may start as early as 2015, he said.
Investors are returning to Greece as fixed-income, currency and derivatives markets show the crisis that gripped the euro area from 2009 is diminishing. Greek bonds returned almost four times as much as any other government securities this year after the coalition government stuck with commitments made under Greece's international bailouts, lowering the risk that the country would exit the 17-nation euro.
Greece's Hellenic Republic Asset Development Fund, which is charged with raising 11 billion euros through state assets sales by 2016, accepted NCH Capital's bid in January 2013 to lease a 490,000 square-meter (5.3 million square-foot) property on Corfu under a 99-year concession. The deal marked the first overseas investment in state land in 15 years.
Yields on Greece's 10-year government bonds have dropped to 8.38 percent from a peak of 37 percent in March 2012 and Moody's Investors Service raised the nation's credit rating by two levels last month, citing the country's progress in fiscal consolidation. Fitch Ratings increased its score for Greece to B- in May, six steps below investment grade.
"Stability and distancing from the 'grexit' scenario has improved business sentiment with respect to real estate investment," said Ioannis Kaligiannakis, co-founder of Redvis Ltd., an Athens-based property-valuation company.
Invel Real Estate Partners last month agreed to buy most of National Bank of Greece's Pangaea property unit for 653 million euros in the country's largest ever property transaction. On Dec. 10, the state privatization fund chose the Jermyn Street Real Estate Fund IV as the preferred bidder for Astir Palace Vouliagmenis, a luxury-resort operator it jointly owns with the National Bank of Greece, after Jermyn Street bid 400 million euros for 90 percent of the company.
Greece, which had originally targeted 50 billion euros by 2015 from its state asset sales program, has so far raised about 4 billion euros and directly collected 2.6 billion euros of that amount. That sparked criticism among European officials that the government isn't moving quickly enough to reduce debt.
The Hellenic Republic Asset Development Fund has identified 40 uninhabited islands and islets that could be leased for as long as 50 years to generate income. The fund is currently marketing a 99-year lease for a larger project on the island of Rhodes that includes an 18-hole golf club.
"There is improved sentiment about investing in Greece," Andreas Taprantzis, the fund's executive director for real estate, said in an interview at Bloomberg's headquarters in New York on Dec. 17.