Cyprus Business Now: weekly wrap-up

Here are the top business stories in Cyprus from the week starting July 15:

Deputy Minister of Research, Innovation and Digital Policy Nicodemos Damianou used his participation at a recently held event by the Research & Innovation Foundation (RIF) to praise Cyprus’ performance in the European innovation scoreboard, saying that this affirms the local ecosystem’s positive trajectory. “Cyprus being ranked among Europe’s Strong Innovators for the third consecutive year shows that we are on the right track,” said Damianou at the foundation’s ‘Bash 2024’ gathering. In an official announcement, the foundation highlighted that the event allowed more than 70 representatives from the Cyprus research and innovation ecosystem, including start-ups, investors, and business organisations, to network, collaborate, and exchange ideas.

Meanwhile, Yiannis Kotzias, general manager of operations of residential rental platform Phaedrus Living, has come to the defence of short-term rental properties amidst a wave of criticism aimed at the sector. Short-term rental properties, a market dominated by online platform Airbnb, have been lambasted by both the Cyprus Real Estate Agents Registration Council and the Association of Cyprus Tourist Enterprises (Stek), among other entities. In terms of the former, Cyprus Real Estate Agents Registration Council president Marinos Kineyirou said in June that “the way short-term rentals currently operate causes multiple problems in key economic sectors like tourism and real estate,” citing lost tax revenue for the state, as well as negative effects for locals. Kineyirou said that short-term rentals, especially apartments, drive up rental prices by reducing the supply of long-term rental properties. “This is one of the reasons for the steep rise in rental prices, as a significant number of properties are removed from the market at a time of increased demand due to high interest rates and inflation, making home buying difficult,” he explained.

In a related context of market dynamics, the Cyprus Mail recently sat down for an interview with Roman Gurskiy and Kirill Gurskiy, managing directors of GEM Capital, to delve into their transition from EY to GEM Capital, their investment strategies, and the unique attributes that make Cyprus and the MENA region attractive for gaming and tech investments. Founded in 2017, GEM Capital operates internationally, with offices in Paphos, Cyprus, and Dubai, UAE. Moreover, the company boasts a diverse portfolio that spans over 25 projects originating from Europe, the US, and Israel, with a total valuation exceeding $150 million. The company is also a member of TechIsland, Cyprus’ largest non-profit technology association. Roman and Kirill also shared their insights into how GEM Capital supports its portfolio companies beyond financial backing, their approach to investing in PC and console gaming companies, and their vision for the evolving gaming industry.

Additionally, the Bank of Cyprus on Monday announced a revision to its privacy statement in alignment with the European Union’s general data protection regulation (GDPR) and relevant national legislation. The updated statement aims to enhance the protection and respect for the personal data of individuals, effective from May 25 under GDPR. The privacy statement pertains specifically to the processing of personal data of natural persons falling into three categories. These include customers or potential customers of the Bank; representatives of customers or potential customers; and beneficiaries of legal entities of customers or potential customers.

In parallel, Island Oil Holdings, a diverse conglomerate specialising in the supply and trading of marine fuels, has released its inaugural environmental, social, and governance (ESG) report, encompassing the fiscal years 2022 and 2023. According to the announcement, the company’s comprehensive report was prepared according to the Global Reporting Initiative (GRI) Standards 2021, as well as the Sustainability Accounting Standards Board’s (SASB) oil and gas-midstream standards. Moreover, the document outlined the group’s contributions to the United Nations Sustainable Development Goals (UN SDGs). The report consolidates data and information from all subsidiary companies within the group. This includes Island Petroleum Limited, Island Oil Limited, NavTech Supplies Ltd, Petronav Ship Management Limited, Petronav Maritime Limited, Danaos Systems (Cyprus) Ltd, and E.J. Papadakis Ltd.

Meanwhile, projects worth €141 million are set to transform the Polis Chrysochous area in the coming years, said the mayor Yiotis Papachristofis. Among these developments is the €60m expansion of the harbour at Latchi, described as “one of the most important tourist hubs of the municipality”. In an interview with CNA, Papachristofis spoke about several key projects, including the €45m sewerage system, the coastal road, the third phase of Latchi’s development, the redevelopment of the Polis and Prodromi centres, and the creation of an industrial zone. Numerous smaller projects are also planned. He also mentioned the forthcoming upgrades to the old Port Authority warehouses in Latchi, which will be transformed into a Multipurpose Sea and Culture Centre.

In a different area of the real estate market, the Central Bank of Cyprus (CBC) has reported a deceleration in the House Price Index (HPI) for houses and apartments in the first quarter of the year 2024. This trend is anticipated to continue, attributed to a significant slowdown in sales documents, which has yet to impact on the index. According to the CBC, several factors are contributing to this slowdown. There is a normalisation in real estate demand, indicated by a marginal increase in the number of sales documents. Additionally, there’s an uptick in supply, with more homes available for rent and sale.

In governance news, the Chartered Financial Analyst (CFA) Society Cyprus elected a new board of directors at this week’s AGM. Nikos Potamaris is the new board chairman, succeeding Andreas Kleanthous, while Konstantinos Kourouyiannis, who was re-elected, kept the post of vice chairman. The secretary is Natalie Philippou, who will also serve as chair of the Diversity, Equity and Inclusion Committee. Evgeny Tarakanov takes on the role of Treasurer, Jan-Hofmeyr Retief oversees the University Relations and Equity Research Challenge Committee, Andreas Spyridis heads the Advocacy Committee, and Alexandros Klappas leads the Financial Literacy Committee. The new chairman and board said they would utilise their expertise to strengthen the Society.

In terms of tourism, tourist arrivals in Cyprus displayed a slight yet steady increase in June 2024, recording a 5.5 per cent rise to 482,261 compared to 456,985 in the previous year, according to the Cyprus Statistical Service (Cystat). This upward trend is also reflected in the first half of the year, with arrivals from January to June 2024 showing a 2.4 per cent increase, reaching 1,652,475, up from 1,613,690 during the same period in 2023. The United Kingdom continues to be the primary source of tourists, contributing 35.6 per cent of the total arrivals in June 2024, which equates to 171,704 visitors. Other significant contributors include Israel, accounting for 10.7 per cent (51,814 tourists), Poland with 7.5 per cent (36,202 tourists), Sweden with 4.9 per cent (23,639 tourists), and Germany at 4.5 per cent (21,552 tourists).

Moreover, the Polish airline LOT has announced the resumption of its flights to Larnaca Airport, with four per week during the winter season. According to a press release from the deputy Ministry of Tourism, LOT intends to increase the frequency to six flights a week during the summer season in 2025. In addition to LOT, flights between Poland and Cyprus are also operated by Wizzair, Ryanair, Enter Air Spolka, and Buzz Air. This highlighted the significance of the Polish market, which has become the second-largest tourist market for Cyprus, experiencing sustained growth over the past two years, said the deputy ministry.

Furthermore, in June, 28 out of 45 basic product categories saw price increases, with 24 of these categories rising by less than 3 per cent from the previous month. This information comes from the Consumer Product Price Watch, released by the Consumer Protection Service. Additionally, 16 categories experienced price drops, and one category remained unchanged. According to the consumer protection service, rising fuel prices in May and June, along with higher food inflation, have pushed overall inflation up from 2.4 per cent in April to 2.7 per cent in May, and 2.9 per cent in June. Prices are expected to keep climbing in July. The rise in inflation is most noticeable in food prices, which went up by 2.0 per cent from January to June 2024 compared to the same period last year. This increase is mainly due to a 4.9 per cent rise in agricultural products, a 9.5 per cent jump in electricity costs, and an 8.6 per cent increase in petroleum products.

To conclude, Cypriot real estate market analytics firm Ask Wire on Friday released its Q2 2024 edition of the Ask Wire Index, detailing property sale and rental values across the island. The Index, which spans all districts and main property types with data from Q4 2009, offers an insightful snapshot of the current market dynamics. On an annual basis, property prices across Cyprus saw notable changes: apartments increased by 3.5 per cent, offices by 1.0 per cent, and holiday apartments by 0.6 per cent. However, prices for houses and warehouses remained stable, while commercial properties experienced a decrease of 0.6 per cent and holiday houses saw a slight dip of 0.2 per cent. Overall, on a quarterly basis, the market remained relatively stable, except for a minor decrease of 0.1 per cent in house prices. Notably, price stability was observed across all districts. In terms of rental values, there were more pronounced shifts compared to Q2 2023. Apartment rents surged by 5.0 per cent, office rents rose by 3.2 per cent, and holiday apartments saw an increase of 2.5 per cent. House rents edged up by a modest 0.1 per cent, retail spaces by 0.8 per cent, and holiday houses by 0.3 per cent.