Greece has an advantageous geographic position and several natural characteristics that make its land a more valuable asset compared with most countries. Although these characteristics could lead to significant revenue from more efficient land use (mainly in form of tourism investments), unique historical reasons have resulted in a framework regarding land that is extremely complex, and thus hinders investment.
- The problems start with issues of ownership. Both the public and the private sector have overlapping property claims that lead to significant number of land plots without proper titles, with the Greek state claiming that almost 60 per cent of land is public, while the private sector claims around 50 per cent.
- The other major problem is the lack of spatial planning, which results in overlapping regulations and unclear laws, thus leading to long-running and disruptive disputes regarding allowed land uses.
However, the potential gains if these issues were to be resolved are significant. NBG Research has used an econometric model to estimate the benefits for just one sector – tourism. While tourism activity has so far been approached by the literature through demand models, we propose an alternative view to analyze the patterns of global tourism activity based on supply side considerations (relating to the land characteristics of each country).
Our estimates suggest that critical reforms in the Greek land market could lead to additional tourism revenue of €8.1 bn per year (€6.3 bn in extra receipts and €1.8 bn in extra investment). These estimates for the tourism sector capture only a part of the total benefit for Greece, as other sectors will also benefit from these reforms.
To reach this potential, the following steps could be considered:
- A coherent national cadastre needs to be a policy priority, which in turn requires the clarification of what constitutes forest (i.e. public) land. Any attempt for a complete spatial planning framework requires cadastral maps for the Greek territory. In the meantime, information from the many local mortgage registers could be used to form a temporary cadastral map, specifying, at least, land boundaries.
- Although important legislative initiatives have been made during the past months to improve the business environment, these aim to bypass the existing legislative obstacles and do not address the root cause of the problem. Difficult political decisions are needed in order for the land uses to be clarified, with provisions for the environmentally sensitive areas as well as for the landowners that will suffer wealth losses. In particular: (i) while illegal buildings in environmentally sensitive areas should be demolished, the state could legalize other illegal buildings (as attempted by recent law); (ii) for land with no buildings, the state could determine land uses according to economic and environmental criteria, with the aim of limiting development to specified areas -- increasing the density of development in such areas -- while leaving protected areas free of any development (e.g. NATURA). Towards that end, the state could start with a pilot land exchange program in specific areas.