Developing mixed-use resorts, luxury, sustainability: Alexander Yakovlev, Head of Real Estate at Allea Group, shares his thoughts on investment and development in Cyprus, ahead of his participation in the webinar Global FDI Trends in Hospitality Investments: The Case for Cyprus.
What is Allea Group’s presence in Cyprus?
Allea Group has a portfolio of real estate development projects and secure assets in Europe. In Cyprus we have established an office and acquired a seafront plot in Limassol in 2017, on which we are developing Zaria – the group’s flagship project, which will comprise the Grand Hyatt Limassol hotel and a residential component – apartments and private villas, all totaling around 100,000 sq m of GFA. Apart from Zaria, Allea Group has interests in the Paphos region with some smaller sized F&B projects, as well as some other investments in other developments in Cyprus.
What makes the Cyprus hospitality market attractive to international investors?
When it comes to Limassol, the region where Allea Group is presented, we should understand that it is not purely a resort area; it is one of the most developing cities in Cyprus, being its informal business capital. The hospitality market in Limassol is composed of mostly outdated properties, albeit in good shape, and just a couple of newly constructed hotels. There is still a real lack of internationally branded quality properties. The market is driven by a combination of leisure and business demand, which allows some hotels to operate all year round. To be fair, at the moment Cyprus cannot be characterized as a luxury destination, there are many factors still preventing this, but we see it in the island’s future in a perspective of 5-7 years, should the government continue incentivizing tourism and the real estate sector and provided that the general outlook of Cyprus as a tax-friendly environment will remain as such. Further stimulation of ADR and occupancy growth would allow international investors to consider Cyprus as a good market.
Do you anticipate a rapid or gradual recovery of investment in Cyprus following the current downturn?
The history of the Cyprus market downturns proves that it has always recovered quite fast. The Cyprus government is doing a good job and promptly reacting to the changing environment. For example, COVID-19 made them review their approach in granting construction permits with a radical decrease in application processing time. We hope these were not just empty promises and that we see real results in practice, especially since we have applied for the Zaria planning permit a month ago, we are keeping a close eye on this. I think we should recover from all the shakes in the first half 2021, should there be no additional surprises.
Now the summer season is under way, what are main lessons you have learnt from the experience of the COVID-19 crisis?
During such circumstances it is definitely better to design a hotel rather than operate one. On a serious note, the main lesson is not to lose your flexibility and always be ready to adapt to the drastically changing environment. For operational businesses it is becoming vital to plan bigger reserves, allowing them to remain stable during crisis times. In my opinion, the government plays a big role and should be ready to jump in to help them stay afloat.
What do you see as the major trends coming up in hospitality and travel in Cyprus
As we all know, many trends originate from the other side of the globe, namely the US, and the trend we have come across the most often is the accent on sustainability and the importance of creating eco-friendly developments. This is not only portrayed in the functionality of real estate in terms of using renewable energy and preserving the natural landscape as much as possible, but also in the choice of design materials, down to colours and textures. We tend to see a lot of natural materials, earthy textures, organic concepts and of course, a lot of greenery. That was one of the main focal points we were considering when designing Zaria – we wanted to bring a fresh, new concept to the island, and hopefully, through Zaria, we will give Cyprus a head start on its journey to becoming a sustainable destination.
To hear more from Alexander Yakovlev and other speakers about the opportunities in hospitality real estate investment and development in Cyprus, register to the Global FDI Trends in Hospitality Investments: The Case for Cyprus webinar here.