Destination Branding and Investment Opportunities

Could the Greek Countryside Provide the Solution?
JAN-FEB 2018|BY PARASKEVAS MAKRIDIS, ECONOMIST MSC
While since 2010 Greece has introduced a wide range of reforms and structural changes aiming to improve its fiscal performance and manage its large debt, the increasing rates of direct and indirect taxation and the lack of financial liquidity needed to promote investment has seen the domestic business climate take a downturn.

The strict fiscal and budget constraints in which local governments operate revealed a discrepancy between the potential of municipal land and building assets and their utilization on one hand and the absence of a comprehensive strategy under which municipalities can generate economic, social, and/or environmental benefits on the other.

According to the Foundation for Economic and Industrial Research (IOBE, 2017), revenue generated from own resources amounted to 36.5% of total for municipalities that are also capitals of their regional units and at 49.6% for smaller municipalities, while fixed assets to equity ratios were 0.92 and 1.01 respectively. Evidently, meaningful collaboration between municipalities and private investors can lead to revenue generation and allow each municipality to fully realize its branding potential, rather than resort to obsolete one-size-fits-all policies that by definition don’t take into account the variability of local competitive advantages (e.g. cultural, historical, natural). Currently, the biggest obstacle municipal authorities face in managing their real estate and assets is the lack of external awareness about land availability and involvement processes. Meanwhile, primary sector and tourism entrepreneurs successfully promote local products and destinations, demonstrating the ability to brand and market their services and products effectively while making the most of the significant cultural, historical, and natural assets of their respective regions. Thus, effective destination and brand management is key to improving local economies, utilizing real estate, and promoting sustainable growth throughout the country. Municipal authorities can encourage private sector involvement by working to repurpose their unused assets, increasing awareness of available assets, and developing a structured approach towards optimizing their real property portfolios.

Getting involved

There are three ways of involvement: long term leases, purchases, and public private partnerships. Long-term leases (up to 50 years) are arguably the most effective, as the other methods involve complex and lengthy procedures. Under current law (mainly Law 3463/2006 and 4277/2014) properties can be leased by means of a public auction approved by the municipal council and with auction criteria set by its economic committee. Generally, it takes 200 days from the municipal council’s approval, including judicial review, for the contract to be implemented.

The auction process can be demanding, involving multiple legal applications, and the criteria of the call for tenders vary depending on the length of the contract, the nature of the investment, and the readiness of the municipality’s infrastructure to support a project. Most cases require bank guarantees and proof of satisfactory financial capability to carry out the project.

In conclusion, local governments and municipal authorities can encourage private sector involvement while securing their own economic sustainability and financial strength. And while there is a need for structural reforms for the efficient utilization of municipal land portfolios—as this is key to improving their economic performance—it is apparent that the Greek countryside combines natural beauty with an ideal climate, upgraded infrastructure and road networks, and local competitive advantages that can boost local economies, decrease regional unemployment, and contribute to effective region branding.

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