‘Demand for east coast real estate remains stable’ says Karma Group CEO Nicolas Karoullas

Despite the European financial crisis and general real estate market decline, Karma Group, led by Nicolas Karoullas, has improved its financial performance, and recently completed the largest project in the Famagusta region: Mythical Sands Resort and Spa.

The development is a multifunctional residential complex, consisting of apartments, townhouses and villas with hotel services.

In the interview by Valentina Shapovalova that follows, Karma Group CEO Karoullas explains how the companies he represents achieved such results in the 21st-century’s most difficult year to date.

How did you manage, in a year like 2020, not only to avoid a slowing of the company’s development, but also to strengthen your position in the market?

The year really turned out to be difficult for business – the financial crisis, pandemic, negative publications in the media about the prospects for the development of the Cyprus property market – it kept us in suspense. Despite everything, the demand for real estate on the east coast of Cyprus remains stable.

Our business is concentrated in the Protaras and Ayia Napa areas, the most popular tourist region of the island. The total population of Protaras and Ayia Napa is only 20,000 inhabitants, but the region, with its developed infrastructure, receives 1,500,000 tourists annually, both foreigners and residents of Cyprus. In this regard, the region attracts buyers of summer residences, someone buying a holiday home; or investors, as an investment for rent; and some people in retirement, as an alternative to the main place of residence.

In previous years, there has been a construction boom in the major cities of the island, but our area has experienced steady, healthy growth over the past two decades.

The east coast of Cyprus is traditionally in demand not only among foreign investors, but also popular in the domestic market. Despite the closure of the borders, we have seen a lot of interest from local buyers. Their share was 40-50% before, and in 2020, high domestic demand played a particularly important role.

What are the forecasts for 2021?

The Cyprus property market and economy have undoubtedly been under the stress of the pandemic. But we look to the future with confidence because, before the start of Covid-19 and the cancellation of the investment programme, the Cyprus market showed tremendous growth.

Indicators such as the volume of demand, supply and prices have grown rapidly, with both local and international investors coming to the island. Significant projects worth hundreds of millions of euros are being developed, such as the Ayia Napa Marina, the City of Dreams Casino Resort in Limassol, the Larnaca Port – all of which will make the surrounding territories and real estate more attractive.

We see the interest of investors in our projects and believe that now is the right time to purchase high-quality assets.

How do you think the cancellation of the Cyprus investment Programme (CIP) will affect the real estate market on the east coast of Cyprus?

Our company always adheres to the principle of risk diversification. We did not stake everything on the CIP and now we see that this strategy has worked.

As a developer of residential properties and summer residences, we work with clients from all over the world in need of quality modern homes on the shores of the cleanest sea. Of course, the cancellation of the programme will reduce demand in the upper price segment of real estate but, in our experience, even the most expensive villas in the region are in demand and can even bring rental income to investors. We see this by providing rental services to our clients through Karma Rentals, a summer residence booking agency on the east coast of Cyprus.

In other words, it is clear that the cancellation of the investment programme will correct the development of the island’s real estate market. However, we do not expect a strong blow to our region since the real estate market on the east coast was not significantly affected by the CIP. Limassol and Paphos will have a harder time.

What sectors of the Cyprus economy, in your opinion, should develop in the coming years?

We believe that Cyprus has great potential. The island needs a master plan for development of at least 10 years. In order to remain a business centre, Cyprus needs investments in infrastructure, services and technology. Also, investments are required by the shipping, healthcare and education industries.

We believe that the creation of the Shipping Deputy Ministry and the Deputy Ministry of Research, Innovation and Digital Strategy is a great government initiative. The results of the development of the education sector are also impressive: today there are 47,000 students on the island, new universities are opening in Cyprus and the Karma Group supports this initiative as a partner of the American University of Cyprus.

It is very important for the country to invest in green energy and the necessary infrastructure for green projects. We must also pay attention to local agriculture. The land of Cyprus can offer quality products, including the famous far beyond the borders of Cyprus, potatoes, grown in the red earth of the eastern part of the island. We need to invest in agriculture and motivate young people to work in this area.

The relocation of Amazon’s European office to Cyprus, if carried out in accordance with the plans described in the media, could also become a strong precedent for development.

The island will also benefit greatly from improved air connections – there were big advances in this area before the crisis.

Do you think the situation in the real estate sector and in the Cypriot economy as a whole has begun to improve after the crisis of last year?

I think yes. For example, I am pleased with the fact that statistics from open sources show a decrease in sales in 2020 in our region by only 11% – and this is against the backdrop of quarantine and the lack of air traffic. This is a good result! We hope that the start of universal vaccination in European countries and the gradual return of normal life will have a positive impact on the market prospects.

Today, Karma Rentals sees a positive trend in the number of summer residence bookings. And this is to be expected: people have missed travel, clean sea, warm sun and tranquility. Fortunately, the east coast of Cyprus can offer all of this at the highest level. If you want a perfect summer house, Protaras or Ayia Napa is the place.

We value our clients and they reciprocate: over the 35 years of the company’s existence, we have built and sold more than 4,000 high-quality real estate units.

Our company’s motto – Honesty, Integrity, Quality – helps us make the right decisions with a long-term perspective. And I am sure that these values and principles are shared by the entire Karma Group team.