Cyprus looking to alternative markets for major investments

By George Pirishis

A significant stagnation in terms of attracting investors for large-scale developments has been observed in the Cypriot real estate market.

This slowing down of that particular segment of the economy has been going on for a long time and, with the adverse effects of the Ukrainian crisis, it seems will be very difficult to find investors for the foreseeable future as well.

It should be noted that the Association of Large Developments (ALD), which has been overseeing large projects in the country since its inception, has launched 25 mixed developments, of which only a small number have actually materialised, such as the Limassol Marina and the casino project.

These two investments, which are estimated at several million euros, have added a great deal of value to Cyprus’ GDP, while it is noted that the total value of the 25 major development projects amounts to €7 billion.

Speaking to the competent bodies and organisations, it was mentioned that things have become even more difficult, particularly since the abolition of the investment programme for obtaining a Cypriot passport.

This was exacerbated by the coronavirus pandemic and its resulting economic crisis, followed by the recent sanctions on the Russian market by the West.

These events were disastrous for the development of this kind of project.

The termination of transactions with the Russian market effectively eliminates any chances of finding investors from that country.

Among the projects of the ALD that remain on paper include a golf course combined with luxury residential units, medical centres, as well as some high-rise buildings, which, as we know, have been put on pause following the abolition of the Cyprus Investment Programme. 

Therefore, the association of large-scale developments, together with other business entities, is looking to other neighbouring markets, mainly such as Israel, Egypt and other Arab countries.

Based on information received by the paper, there was a trade mission of business entities to Egypt, where there were contacts with corresponding Egyptian entities, for potential investments by Egyptians in Cyprus.

It should be recalled that Cyprus promotional agency Invest Cyprus also held contacts in Israel during the previous months, while recently a large delegation from Cyprus attended the major international exhibition of Expo in Dubai. All these contacts are part of the efforts made by relevant business bodies to attract investors.

Based on what was reported during the recent General Assembly of the Association of Large Developments by association president Andreas Demetriades, the ALD has already submitted recommendations to the Ministry of Interior with the aim of improving and functionalising the existing Permanent Residency Programme (PRP) in Cyprus.

More specifically, the recommendations include suggestions for urban planning regulations, such as various planning incentives, the increase of the building factor by 20 per cent and the abolition of the minimum usable floor area of apartments.

In addition, the recommendations include, inter alia, the provision of tax incentives (VAT and income tax reduction) to further attract foreign companies, as well as the abolition of capital tax gains.

“The association’s main objective remains the improvement of social, urban planning, tourism and economic incentives that enhance the development of the domestic economy and attract significant and long-term investments to the island. This is a mutual effort and cooperation of the Association with the government, the competent bodies and political parties,” Demetriades said during the General Assembly. 

Finally, ALD officials have stated that in the event that the specific bill is not passed, the fast-track procedures and time limits provided for in the bill will have to be implemented by other similar administrative arrangements, within the framework of the existing legislation.