After years of delays to an €8bn plan so central to the Greek economy that it formed part of discussions with eurozone creditors, Athens gave the green light to the Hellinikon real estate development that is seen as essential to helping Greece recover from the pandemic and recession.

Three times the size of Monaco, Europe’s largest urban regeneration project is Greece’s most significant private investment in a decade. On Friday, property developer Lamda Development paid a first €300m instalment on its 99-year lease to begin transformation of the site on Athens’ old airport.

The project’s success, which partly depends on tourists being as mobile as they were before Covid-19, is seen as critical for Greece’s post-pandemic recovery. It will also be a test for conservative Prime Minister Kyriakos Mitsotakis, who vowed to speed up the project as part of his 2019 electoral campaign.

“Its importance is symbolic,” said economist Dimitris Katsikas of Greek think-tank Eliamep. “After a long period of political and bureaucratic stalling, its launch sends a signal just ahead of the implementation of the country’s EU-financed recovery and resilience plan that Greece is on track to becoming an investment-friendly economy.”

The project, which will generate as many as 75,000 jobs, according to its developer, envisages the old runways of Athen’s former Hellinikon airport becoming beachfront villas, high-end shopping malls, with a marina, five-star hotels, a casino, office space and the largest public park in Europe.

“This is a huge challenge and a blessing at the same time,” said Odysseas Athanasiou, Lamda’s chief executive. “It is the biggest opportunity we can have as a country to put Greece on the map, for the right reasons,” he told the Financial Times.

Abandoned as an airport in 2001, the more than 6m square metres site served briefly as a sports venue for the 2004 Olympics and, more recently, as a refugee camp. For the most part, though, the deserted property has been a reminder of Greece’s economic difficulties, especially after its financial crisis in the early 2010s.

Lamda won the tender for its development in 2014, but initial payment was withheld amid multiple delays and bureaucratic hurdles.

“Nobody knew what was coming, it was a colossal project not only in size but in terms of complexity,” Athanasiou said. New laws for high-rise buildings had to be put in place, and at one point archaeologists blocked the demolition of a series of buildings while Greece’s forestry department declared a section of the former airport was a forest.

Progress stalled further following the 2015 election of Syriza, Greece’s previous leftwing government, even though fulfilling the project was a prerequisite of the country’s creditors and was discussed regularly by eurozone finance ministers.

Over the next five years, Lamda will invest €2.5bn in the project, Athanasiou said. “We believe it’s going to be a magnet for investment in a series of sectors, not only in tourism,” he said. “It will be the first totally smart city built from scratch in the world.”

Still, given its troubled past, many expect further complications. There will always be concerns about project implementation “especially given Greece’s bad track record”, Katsikas said.