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Cyprus can attract real estate investment – Paul Nearchou

How can Cyprus attract real estate investment?

Paul Nearchou, director at a London-based private equity firm that is a major international investor in real estate, and a Cypriot, says that there are ways for Cyprus to integrate major trends in real estate investment.

Regeneration projects are a good example, Nearchou points out. Cyprus cities like Larnaca would be ripe for this kind of investment, he says.

“There are numerous examples of large-scale regeneration projects across most of the gateway cities in Europe. These are required not only to continue to improve a city’s infrastructure but also to improve consumer experiences. The key with these is to ensure you curate the right environment for the consumers, encompassing a range of uses/amenities and bringing life into these locations,” Nearchou says.

“As in many European cities, there has been an increase in renters in the Cyprus market. Decreasing residential-to-own affordability and a preference to rent (for flexibility reasons) are prevalent. This is obviously accentuated by the number of expats choosing the island to work and live. The higher demand combined with a large number of under-managed/under-invested residential blocks, creates an interesting investment strategy. However – it is important to size the affordability of the renters; given we’ve seen residential rents experience double digit growth in Cyprus from 2017-2019, while earnings have not seen anywhere near this increase during the same period.”

Nearchou notes that tourism is in a slump. But he feels this too is an area where international investors show great interest, and that we should look past the pandemic crisis.

“The key question here is what does the recovery look like for the tourism sector,” Nearchou explains.

“The strength of the tourism market in Cyprus is demonstrated through the continued increase in tourism arrival numbers since 2008. An increased investment in the hospitality sector has therefore been required to support and enhance these numbers. More recently, we have seen a shift to luxury (i.e. higher share of five-star hotels) which is important given the constantly changing demands of customers and higher levels of competition from other locations.”

Resorts are of interest to major investors; Cyprus currently has little to offer, but Nearchou says Cyprus should seize the opportunity.

“One should look forward and take a view on how consumer preferences will evolve. One thing I have heard from a few hoteliers is that they expect a rise in demand for resort locations, which have more space and offer all-inclusive experiences. This could be one area where Cyprus could attract investment, likely from the larger hotel investors (backing local players to develop this product) or hotel owner-operators who want to change the mix of their portfolios (by buying or developing themselves).”

Another sector that is of interest to investors is healthcare. This also offers an opportunity for Cyprus, according to Nearchou.

“I’d like to see local capital (entrepreneurs etc.) kick-off with the product/business plan, and for that to act as a catalyst to bring in either private equity capital from Europe or the institutional players (from Germany / France etc.) that want more healthcare exposure. The key with both these investors is they want to see proof of concept before committing to the product.”

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