There is an increase in demand for luxury commercial property in Cyprus, and mainly in Limassol, but we need to be vigilant to keep up with the demand as more companies look at the island as a potential business base, says Michalis Zavos, Chief Executive Officer of Zavos Group.
Could you describe the Zavos Group and its main activities?
Zavos is a family business and was established in 1980. So far, we have developed more than 130 projects all over Cyprus, but our core business is in Limassol, where we are considered one of the largest property developers. We have both commercial and residential projects, and are responsible for many landmark buildings in every corner of Limassol. Our group consists of three departments: land and building development, project management, and after sales service.
What key projects do you have in the pipeline?
One of the main projects we have at the moment is branded the Del Mar, which has 168 apartments and 31 shops, and is one of the biggest projects in Cyprus, with a building of 40,000 square metres on a plot of 34,000 square metres, with 170 metres of beach front land. It is a state-of-the-art building of 27 floors, incorporating the latest technology into its design. We are doing very well so far, with over 90% sold in the first phase, with hopes to sell the rest by completion. We have not yet released the second phase, but within the next few weeks the new tower will be launched and it will be our “Signature Collection” as well. We have started works already, and are hoping to deliver the first phase by the summer of 2019, and to complete the whole development by the end of 2019.
What market are you targeting for this project?
This is a new generation of projects, and one of the best high-rise buildings in Cyprus – not only because of its size, but also because of the design, which looks almost like a ship. It is truly an impressive building, offering five-star facilities, a clubhouse, 24h concierge services, a gym and spa, two swimming pools, and many other luxury features. We have interest from around the world, but the major markets are Russia and the Middle East. Our target market is mainly to attract high-end clients, as the starting price for a two-bedroom apartment in our project is €1.3 million, and at the top end of the scale prices reach around €14 million. If you compare it to other projects in Cyprus, the Del Mar is unique because of its location, the land, and the space around the development. There is and will be more competition in the luxury property market, but we are fully focused on delivering bespoke projects for a niche clientele. In addition to the Del Mar, we are also developing “The Address By the Sea” a seafront project with 11 floors and 30 apartments, works have already began, as well as “Limassol Corniche” project, to be launched within the next few months, which features a smaller beach-front building of nine floors and 28 apartments.
The Del Mar is a joint venture between your group and fellow Cypriot developer Leptos. It is also one of the only large-scale projects funded entirely by local investment, what does this say about the real estate sector in Cyprus and its players, such a short time after the crisis?
The fact that Del Mar is fully funded by local companies is a strong statement that we believe in our country and economy. Hopefully this will also be a vote of confidence for foreign companies to follow suit and invest in further projects on the island. This is the key message we want to get out there, that local companies are ready to invest and believe in the Cypriot property market. After the 2013 crisis, we moved forward together with the advantage of new government incentives to offer interesting and solid luxury developments for foreign buyers. Cyprus needed to upgrade its offering, also due to the attractiveness of its citizenship and residency schemes, which has brought new investors to our shores. It has helped our economy and our property companies, and proof of this is that we have succeeded to make off-plan sales, giving us the opportunity to secure capital for the construction of new projects.
Cyprus already hosts the headquarters of many international companies, what growth potential do you see in this trend and where on the island do you see most companies relocating to?
The city that has the most chances to provide excellent commercial property is Limassol. We already see a lot of companies coming from Israel and setting up operations in the seaside city. Limassol is also already home to a large number of shipping companies, who bring their staff from overseas, and need accommodation to rent or buy. There is an increase in demand for luxury commercial property in Cyprus, and mainly in Limassol, but we need to be vigilant to keep up with the demand as more companies look at the island as a potential business base. What we often hear from clients is that Cyprus is very cosmopolitan, and people feel very at home on the island. Due to its rich and long history, Cyprus is a veritable melting pot of influences from the region and has long had a strong appeal with Middle Eastern clients and Russians, who find many similarities with their culture and religion. As for the corporate environment, it is easy to do business in Cyprus, and with our EU membership and legal system based on English Common Law principles, many multinationals find it a convenient base. In addition, having one of the lowest corporate rates in Europe, operating costs are low. There are also great opportunities in the luxury rental market based on the same model as Dubai.
What positive developments have there been in the real estate sector over the last year?
There have been a lot of good things, especially the incentives the government introduced in 2016, as well as the naturalisation by investment programme, which has also given the real estate sector a boost. The reduced VAT scaled down from 19% to 5% on the first property purchase done in Cyprus, and the suppression of transfer fees, are some of the good initiatives introduced last year. All these things make the real estate sector very attractive, in addition to the low corporate tax and the low cost of living compared to other European countries. I see healthy growth potential for the real estate sector as well as the economy for the next five years.
What investment opportunities or growth potential do you see in Cyprus?
As a group, we see opportunities in the medical business. Cyprus has the potential to promote medical tourism, particularly for cosmetic surgery, and attract many wealthy individuals worldwide looking to recover in a good climate and luxury setting. We have a good project in the pipeline, a rehabilitation centre with residential property around it to accommodate patients in Limassol. The real estate players have an important role in supporting the development of medical tourism in Cyprus. Education is also something the country could develop more, mainly due to its location which could help attract more students from the region. Incentives should be given to foreign academic institutions to raise the standard of education provision in Cyprus and to attract more collaboration and international campuses to the island. However, at the moment the sector offering the most potential to drive growth is the energy sector, as it has already attracted major international companies to Cyprus and we are seeing an industry develop around it. A solution to the long-standing Cyprus Problem would be ideal, as it would bring many additional political and economic benefits in its wake. But the Cyprus issue has never stopped us from developing our economy and we are doing very well at the moment.
What personal message would you like to relay to foreign investors?
Cyprus has a strategic location and it will always offer attractive investment opportunities, and not only in real estate. It is also a safe and stable country with a comfortable business environment. Being a small country, Cyprus offers a lot of flexibility and a great quality of life. It is a perfect option to manage your business anywhere in the world.