Mykonos boom reveals the ‘unfortunate’ side of Greece’s recovery

Mykonos boom reveals the ‘unfortunate’ side of Greece’s recovery

Well-heeled tourists descended from luxury hotels into the gleaming labyrinth of Mykonos’s historic old town on a recent night, coveting gold jewelry and heading to bars offering expensive bottles of Veuve Clicquot. Tourists sailing the Aegean on 15-story cruise ships have taken refuge in designer boutiques on day trips of wild shopping.

Along the island’s famed turquoise coastline, exclusive beach clubs were busy sprawling restaurants onto powdery sand, preparing for an influx of billionaires, celebrities and influencers.

With over two million visitors a year, Mykonos is one of the world’s hottest holiday destinations – and a source of prosperity in Greece’s economic renaissance. Since the country’s decade-long financial crisis ended in 2018, Greece has surfed a recovery fueled by tourism and investment. Investors come to Mykonos in droves, eager to cash in on a gold mine of luxury property development, sprawling hotels and high-powered nightclubs catering to the spending crowds.

But a darker side emerged amidst the glamor recently, when a state archaeologist documenting building violations on the island was mysteriously attacked. The civil servant, Manolis Psarros, 53, was knocked unconscious with a broken nose, broken ribs and black eyes in a beating that sent shock waves across Greece.

Nowhere has the backlash been fiercer than in Mykonos, where a tight circle of locals has long whispered about the illicit and sometimes assertive activities of well-heeled entrepreneurs and a lax enforcement system that they say allows anyone with enough money operates above the law. The Greek government carried out a swift crackdown.

“The situation in Mykonos is out of control,” said Despina Koutsoumba, head of the Association of Greek Archaeologists. “The attack on Mr. Psarros was a mob-style hit designed for intimidation,” she added. “It is clear that the interests of big companies are at stake.”

Police have opened an investigation into the attack, which took place one night in March outside Psarros’ home in Athens, but declined to comment.

In addition to the Instagram glamor, Mykonos is one of the most important places in Greece for antiques. Nearby Delos, an ancient shrine to the god Apollo and a UNESCO World Heritage Site, is often crowded with travelers from all over the world.

To preserve these treasures, archaeologists from the Ministry of Culture inspect the grounds before building new structures. Twelve ancient sites were discovered in eight years on Mykonos during excavations for building foundations, halting construction in some cases and forcing relocation in others.

State archaeologist mandates have increasingly clashed with rising developments and the investor pressure behind them. Mr. Psarros had reported several offenses in Mykonos before being attacked. He was due to testify about the infringements at a trial in November that was postponed, the latest in a series of postponements since 2018.

Prime Minister Kyriakos Mitsotakis, who faces a contentious election on Sunday, moved to restore order. Last week, the government ordered one of Mykonos’ most famous beach clubs to close until further notice for building infractions, and this week it ordered the partial closure of another.

It also recently dispatched 100 police officers, as well as financial crime investigators and environmental and building inspectors, to tighten controls: More than 75 arrests related to illegal construction were made, compared to 36 arrests in all of 2022. it is also investigating reports of corruption by its own officials to alert developers in Mykonos about inspections.

The government has suspended most new building permits in parts of the island pending the completion of a new zoning plan. And Greece’s Supreme Court prosecutor has ordered further investigations into the illegal construction, describing the situation in Mykonos as “miserable”.

Citizen action groups, which work to address community concerns, said the government turned a blind eye.

“What is happening in Mykonos is no secret. State authorities have known for years,” said Markos Pasaliadis, a spokesman for one of the groups, the Active Citizens Movement. “If the attack on Mr. Psarros had not surfaced, everything would have continued as it was.”

Locals bemoan the deception but are wary of badmouthing the island, which many nostalgically remember as a cultural destination popularized by Jacqueline Onassis and Princess Grace in an era of quiet elegance.

Many are wary of investors from outside their world and speak nervously about the development that in recent years has been accompanied by an influx of black vans with tinted windows and forbidding guards.

Whether the government crackdown will work remains to be seen. Some coastlines are already enveloped in a phalanx of concrete housing. Close to Super Paradise Beach, one of the biggest party havens, no fewer than 50 hollow shells litter the surrounding slopes, awaiting completion.

Local authorities are trying to stop new hotel mega-complexes, including a multimillion-dollar Four Seasons resort that the Athens government has approved.

Homes have sprouted like mushrooms along mountain slopes and in areas classified as “impossible to build,” and some homes are larger than permitted. Some construction sites have security guards and the workers disappear when the police arrive. Koutsoumba said that some small businesses and hotel owners have reported facing pressure to sell their properties to larger interests.

Big clubs have also profited from stretches of bars, restaurants and walls that block access to public beaches.

Among them is Nammos, a jet-set playground with luxury outdoor boutiques and a waterfront restaurant, owned by Monterock International, a Dubai-based private equity holding company, and Alpha Dhabi Holding. On Friday, the government called for the closure of Nammos and the police closed one of its beach restaurants. A lawyer for Nammos called the order illegal and said the company would challenge it. A Greek court also rejected an appeal by Nammos of a separate government order to demolish illicit structures on the site.

There is also Principote, a destination for the rich that for years has been expanding over Panormos beach, along a picturesque bay, despite several citations. Authorities levied a €22m fine for illicit building extensions, with the option to reduce this to just €500 if the structures are removed. Principote, registered in the name of a holding company in the Marshall Islands, has contested the infringements and the resulting fines. Police last week ordered it closed until further notice. The company appealed that decision.

In 2016, Mykonos Mayor Konstantinos Koukas closed the business after reports of unauthorized building extensions. “But the owners kept reopening and there was little we could do,” he said.

Principote’s activity has raised red flags in the Greek Archaeological Service, which has identified antiquities under the hills near the club. Panormos is among the areas targeted by archaeologists. At a news conference after his hospitalization, Psarros said archaeologists requested police protection after facing armed guards when trying to inspect expanses of buildings.

A lawyer for Principote did not respond to requests for comment.

Tasos Xidakis, owner of the nearby Albatros Club Hotel, has been watching the club’s expansion with concern. In 1989, his father built small bungalows above Panormos, a public beach that was once accessible to all. Mr. Xidakis and his brother expanded the business into a bucolic hotel complex with panoramic views of the Aegean Sea – and Principote.

Xidakis has watched as Principote transformed itself from a rustic beach tavern in the 1970s into a destination for a party crowd paying thousands of euros for sunbeds and sushi. He said his hotel guests routinely complain about being blocked on the beach.

Local officials say enforcement resources are lacking and that once investigators and police squads leave, the illicit building will likely start all over again. Mykonos’ police force is small and its planning authority was transferred to Syros, the administrative capital of the Cyclades islands, after the officer in charge of Mykonos was suspended in 2017 for corruption.

“We want to protect our island and we are asking the state for help,” said Koukas, the two-term mayor. “Everyone wants to build everything in Mykonos, but the lack of personnel creates conditions where people can break the law.”

There are many opportunities to do this. Only three government-appointed archaeologists, including Mr. Psarros, are assigned to approve building permits in Mykonos and inspect sites.

“Some people don’t want to wait for approvals that can take anywhere from nine months to a year,” said Antonis Kyrantonis, head of the Association of Design Engineers in Mykonos. “They say, ‘I’m going to build something illegally and we’ll see what happens.’”

Christos Veronis, mayor from 1991 to 2009, said years of treating tourism as a theft of money had taken a toll on the island. But the government’s crackdown will certainly help things improve, he said.

The ugly dispute over real estate doesn’t seem to have tarnished the appeal of Mykonos, which was already swarming with visitors from the US, France and China several months before the peak season.

“It’s an international destination,” said Koukas, the current mayor. “It’s Greece’s island of stars.”


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