PHAEA’s €100M Blue Palace redevelopment in Elounda moves forward

On 15 October 2026, the Building Authority of Agios Nikolaos issued preliminary approval for the first revision of the project’s building permit. The revision concerns amendments to the architectural, structural and electromechanical studies, together with changes to the development’s planning parameters.

The investment is being developed on a 249.4-acre coastal site between Plaka and Elounda, overlooking Spinalonga. According to the site coverage plan accompanying the latest approval, total built area amounts to 31,153.19 sq m, of which 22,844.33 sq m relates to existing facilities and 8,308.86 sq m to new construction. Total building coverage stands at 24,773.59 sq m.

Two Hotels and 44 Tourist Residences

The approved plan provides for an integrated tourism complex with a total capacity of 631 beds, comprising two five-star hotels and 44 furnished tourist residences.

Specifically, the existing Blue Palace will be redeveloped into a hotel with a capacity of 348 beds, while the former Argo complex is planned to accommodate 113 beds. The 44 tourist residences will provide an additional 170 beds. The development will also include two wellness facilities with capacities of 70 and 30 people, respectively.

The incorporation of tourist residences is a key element of the investment model, allowing hotel operations to be combined with the development and commercial exploitation of high-value properties. This strategy is becoming increasingly significant in the luxury tourism sector, where investors are seeking to diversify revenue streams beyond traditional hotel operations.

Greece’s First Rosewood Hotel

At the heart of the investment is the repositioning of Blue Palace within the international luxury hospitality market through a partnership with Rosewood Hotels & Resorts. Rosewood Blue Palace will mark the international hotel group’s first presence in Greece, with an opening scheduled for 2027.

The hotel will feature 154 rooms and suites, 85 of which will have private swimming pools. Architectural design has been entrusted to Greek practice K-Studio, while interior designer Afroditi Krassa is responsible for the design of the six restaurants and bars.

The complex will also include three outdoor swimming pools, fitness and wellness facilities, hydrotherapy areas and Asaya, Rosewood’s dedicated wellness concept.

The redevelopment forms part of PHAEA’s strategy to strengthen its position in the upper tier of the hotel market, focusing on high-value properties and the creation of integrated tourism destinations.

The budget for the transformation of Blue Palace is approaching €100 million. As part of the financing package, a loan of approximately €42.57 million through Greece’s Recovery and Resilience Facility has also been reported.

The latest permitting decision follows a series of approvals issued since 2023 for the upgrading of the complex. The project’s development history includes works on existing buildings, revisions to interior layouts, improvements to the surrounding areas and the construction of new internal roads.