In Crete, sale of former US military base Gournes draws strong interest

Investors are showing strong interest in the privatization of a prime beachfront property on the north shore of Crete – one of Greece’s most eagerly awaited property sales – with more than half a dozen companies from Europe, the U.S. and the Middle East expected to bid.

The 345,000 square meter plot at Gournes is located on the site of a former U.S. military base near Crete’s largest city and port, Heraklion, and has been approved for development as a mixed use casino and resort facility. Greece’s privatization agency, the Hellenic Republic Asset Development Fund, has set Oct. 15 as the final date for submitting binding offers.

According to sources, U.S. investment funds H.I.G. Capital and Hines have both shown interest in the site, as well as an Israeli fund and U.A.E.-based developer DAMAC Properties. Greek companies GEK Terna, Dimand and Grivalia are likewise looking to participate.

The tender for Gournes, which follows years of delay, comes amid an emerging investment and building boom on Crete, the Mediterranean’s fifth largest island.

Long one of Greece’s leading tourist destinations, Crete welcomes more than 5 million visitors a year and boasts several world class tourist attractions like the Minoan era Knossos Palace, the legendary site of King Minos and the Minotaur. Over the last two years, foreign investors have engaged in a number of deals and resort projects on the island.

In 2020, Hines acquired five hotels on Crete and this summer Russia-based developer Mirum is beginning work on its long-awaited Elounda Hills resort project. Earlier this month U.S. investment fund Blackstone acquired the Elounda Blu hotel in Crete – its sixth hotel property in Greece – through its Spanish subsidiary Hotel Investment Partners.

At the same time, the Greek government is investing billions of euros to upgrade Crete’s transport and power infrastructure. Work has recently begun on a new 1.5 billion euro international airport in Kastelli -- located about 20 kilometers from Gournes – and is expected to be in operation by the end of 2023.

Also underway is a 2 billion euro highway project stretching along the north coast of Crete, said to be one of the largest public works projects in Europe. And this month, Greece’s power transmission company linked Crete with the mainland’s power grid for the first time following the laying of a 397 million euros, 174 kilometer subsea power cable. The new link will be complemented by a second 1 billion euro subsea power cable connecting Crete with Attica that is now being laid.