15 April 2013
Press reports over the weekend disclose that Skorpios Island Greece, originally developed by Aristotle Onassis in the 1960s, has been purchased by Ekaterina Rybolovleva for over $ 100 million.
The Greek island, located east of Lefkada, was originally purchased by Aristotle Onassis and developed into a private luxury resort in 1963. Skorpios Island is the location where Onassis married Jacqueline Kennedy in 1968. Upon Onassis’ death in 1975, Skorpios Island passed to his daughter, Christina, who died in 1988, and in turn to her daughter, Athena Onassis Roussel, to inherit the island as well as the part of the Onassis fortune not controlled by the Onassis Foundation.
Skorpios Island is reported to have been purchased by Ekaterina Rybolovleva, daughter of Russian billionaire Dmitry Rybolovlev, who founded the Uralkali potash producer in 1990, and today owns the AS Monaco Football Club among other assets.
The total purchase price is estimated by Reuters at “over $ 100 million.” Other sources put the price at GBP 100 million.
The Skorpios Island investment is an interesting one, primarily due to the legal complexity of buying and developing Greek islands. Besides its historical value, this island is an interesting development option because:
The real estate infrastructure (villas, guest houses, jetty, etc.) is already available.
The island is located only 1.5 miles away from the village of Nydri on Lefkada Island, which makes the boat transfer to Skorpios easy.
Skorpios and Lefkada are also quite close to the international airport at Aktion, which has recently expanded its operations to receive charter flights: transfer by helicopter is also possible (although there are no scheduled services available).
Unfortunately, further development is probably going to be very difficult: subdivision and licensing for further construction will be difficult, but is possible with the right circumstances. Any further development will have to be done carefully, as local resistance to changing a cultural/historical “asset” may emerge, as may resistance against environmental damage to the Greek Island.
What are some points any Greek island investor should be careful of when structuring the property deal?
Transport Access: Most Greek islands are in remote locations and require difficult and time-consuming transfers via central airport hubs (e.g. Athens), regional airports, and then by boat. Private helicopter transfer services are still not well developed in most Greek islands, and could comprise an interesting investment project.
National Security Vetting: Islands located in sensitive border areas cannot be sold to non-Greek citizens. Although this is a violation of European Union and other rules, in practise this makes it difficult for non-EU citizens, and all non-Greek citizens in some circumstances, to buy a Greek island.
Environmental Zoning: A number of Greek islands are located in EU Natura areas or may be classified as forest areas. In practise, this makes it impossible to build any form of structure on a Greek island. Extensive zoning and legal due diligence is needed in advance.
Construction Planning and Zoning: Outside an urban zone, permission to build is typically given for up to 200 m2 of building footprint per 4,000 m2 of land plot, with permission for another 200 m2 of “supporting structures.” Although Greek land plots can be subdivided, increasing the building coefficient on independent plots, this has certain zoning and practical difficulties. There are other rules relating to the distance of the building from the littoral.
Water Availability: A key difficulty in developing Greek islands is the availability of fresh water. This is typically provided by tanker ship, or by desalination, as most Greek islands due not have their own source of potable water.
Terracing and Landscaping: The high winds, lack of precipitation, lack of groundwater and lack of fertile soil means that landscaping a Greek island is a challenge. Skorpios Island has benefitted from reforestation and planting work Aristotle Onassis started a long time ago; most Greek islands today need very extensive work to get any semblance of vegetation planted and sustained.
Security and Medical Services: The Greek economic crisis and the isolation of most islands means that personal security needs to be carefully planned. Moreover, medical services on most islands tend to be basic, with urgent cases airlifted to Athens or Thessaloniki in an emergency. High wind speeds and the Greek economic crisis also mean that that very often, helicopter medevacs are simply not available.
All these points indicate that developing a Greek island for private use is difficult; developing it for commercial use is even more difficult. There are solutions available, but these are time-consuming and costly. Any investor seeking to purchase a Greek island should be forewarned.
Even billionaires encounter problems. The Emir of Quatar, for instance, recently purchased 6 Greek islands for EUR 8.5 million, after over 18 months of red tape. The issue was reportedly only settled with the visit of Greek Prime Minister Antonis Samaras to Qatar in February 2013. One can only imagine what it will take for the Emir to get a building license.
Having said this, there are over 6,000 islands in the Greek archipelago, and of these, approximately 200 are for sale. Owning a Greek island is possible, though difficult, but with the Rybolovlev family and the Emir of Qatar providing their vote of confidence, we hope to see many more such headlines in the future.
Navigator Consulting provides a full range of due diligence, investment analysis and property valuation and management services in Greece. Please contact us for further information.
Sources:
Russian billionaire's daughter buys Onassis island Skorpios. Reuters: 13 April 2013
Dmitry Rybolovlev. Wikipedia: accessed 15 April 2013
Idyllic Greek island where Aristotle Onassis married Jackie Kennedy is 'sold for £100million' by his only surviving heir. Daily Mail Online: 15 April 2013
Qatari emir buys six Greek islands for a song. The Guardian: 4 March 2013