Tourism in Greece is flourishing, and with international tourism expected to reach – and exceed – pre-pandemic levels, it is no wonder that investors from all over the world are flocking to Greece.
Traditionally, hospitality assets were considered a relatively simple investment in terms of legal risk and potential licensing issues. However, in recent years, things have become more complicated. In terms of obstacles and relevant recent developments, there are four main issues (the Big Four, as I like to call them):
A. The Special Spatial Plan for Tourism
The issue: Since 2017, hospitality investments in Greece have been developed and are operating without a Special Spatial Plan (SSP) – which constitutes the highest level of spatial planning in Greece – in force. For those active in the tourism sector, the story is a familiar one, but in brief: In 2015, the Greek Council of State annulled the SSP for Tourism approved in 2013 for reasons related to the formalities of its issuance. After navigating through various challenges and some court rulings later, a committee was established in 2018 to compile a new SSP. Nevertheless, five years later, hospitality investments keep being developed without any guidelines or directions from the higher level of spatial planning, risking being blocked by the Council of State in the event of an application for annulment by a third party having a legitimate interest.
The good news: The Minister of Tourism has announced that the new SSP will be made available to the public for consultation in the coming weeks.
B. The Regional Spatial Plan for South Aegean
The issue: Where are most hospitality investments developed? In the South Aegean. What does the South Aegean lack? A Regional Spatial Plan (RSP) – i.e., the second level of spatial planning in Greece – is compiled per region and determines the guidelines of all sectors for the relevant area of Greece, with which all lower levels of planning must comply.
The current RSP for the South Aegean was issued in 2003 and is seriously outdated. Apart from the fact that it does not (and could not) take into account the newer types of tourism, it is also quite general and does not provide any meaningful guidance.
The update: Despite the fact that the consultation on the draft RSP for the South Aegean was completed some three years ago, it’s still unclear when and in what form it will be approved.
C. Roads as a Condition of Buildability
The issue: According to the case law of the Council of State, plots located outside of city boundaries (i.e., in non-urban areas) are only considered buildable if they have a “face on”/are directly adjacent to a road, characterized as part of the public common-use network by means of a presidential decree. Unfortunately, there are very few such decrees across the country, which means that very (very!) few plots around Greece qualify for the issuance of a valid building permit.
The good news: The Ministry of Environment is working intensively to identify a solution that will be accepted by the Council of State. The word is that a draft presidential decree is ready for submission to the Council of State for normative scrutiny. In addition, a new bill is expected to be made public for consultation in the coming weeks, which is said to address the issue in the interim period (i.e., until the issuance and implementation of the above decree).
D. Carrying Capacity
The issue: Several top Greek destinations, such as the Cycladic Islands (Mykonos, Santorini, Paros), have been characterized as sensitive ecosystems. Pursuant to the Council of State, only smaller-scale developments are suitable in such destinations as they have a lower impact on the environment and, therefore, when a project is proposed and submitted for assessment by all competent authorities, it should be accompanied by a carrying capacity study to verify that the proposed investment does not exceed the limits of the carrying capacity of the area in question. However, there is no officially established methodology for calculating their carrying capacity and, in practice, different criteria and methods have been used.
The good news: Last summer, a law was passed providing for the issuance of a presidential decree, which will define the methodology and parameters for calculating the carrying capacity as an index for sustainable – and acceptable – development. This decree is also supposed to be ready for submission to the Council of State for normative scrutiny.
So, 2024 should be an interesting year for us all!
By Helen Alexiou, Managing Partner, AKL Law Firm
This article was originally published in Issue 11.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
