Stavros Caramondanis: We need the right incentives to attract investors to the construction sector
Maria Karaiskou 07:19 - 16 January 2024
The state must intensify their response and support so that the sector can, in turn, support the domestic economy, explains the CEO of Ayia Napa Marina, Stavros Caramondanis, stressing that the construction sector seems to be responding well to the pressures which it is subjected to from time to time.
In an interview with InBusinessNews, in the context of "IN Business Forecasting 2024," Caramondanis states that while Cyprus meets all the conditions to be one of the world’s top investment destinations, unfortunately it is not.
As he underlines in this regard, if we want to talk about an industry that will bring investors and further revenue to the state coffers, we need to find the right incentives, so as to attract them.
“Unfortunately,” he argues, “from 2020 and beyond there has been an inertia in terms of incentives. And unfortunately, not providing incentives makes you weak against competitive foreign developments."
Caramondanis estimates that the course of the construction sector in 2024 will be more or less similar to the closing stretch of 2023. That is, as he explains, with ever-increasing interest from potential new investors and customers, while, as he adds, the geopolitical situation has created some significant opportunities for mixed-use developments, such as Ayia Napa Marina.
Referring to the Ayia Napa Marina, Stavros Caramondanis points out that the project's entry into the maturation phase is expected to take place from 2025 and beyond.
"We are working so that 2024 will be a continuation of 2023, with even more shopping and dining options at the marina, a richer programme of events and, of course, even more tenants, since now the deliveries of apartments in the first revolving tower in Cyprus are at an advanced stage," he emphasises.
He does not exclude, if and as long as conditions permit, the construction of the west tower (2nd tower), in a mixed-type development combining hotel and apartments for sale.
How do you see the economic environment shaping up in 2024, in light of inflationary pressures, high interest rates and unpredictable ever-changing geopolitical developments?
With the close of 2023, which should be seen as a year full of challenges, 2024 is expected to be a year with a slightly better picture.
Undoubtedly, 2023 was a year with significant pressures on the domestic economy which by extension led to a low growth rate. At the same time, the increase in interest rates in turn led to greater uncertainty and put significant pressure on middle-class households.
2024, based on the forecasts of the European Commission, is expected to be a year for which moderate optimism should prevail. Based on the economic indicators for the year, a small GDP growth of 0.4% is expected, a decrease in inflation by 1.1% and unemployment by 0.3%.
Government measures to curb inflation combined with wage indexation gave the market a little breather.
For 2024, I personally expect interest rates to stabilise and then be cut by the European Central Bank in the second half of 2024.
High interest rates which have exerted and will continue to exert significant pressure on households, reducing demand for housing, have been and continue to be a thorn in our sides.
At the same time, tourism, which is an important pillar of support for the domestic economy, as well as additional export services, is expected to slow down in 2024 compared to previous years.
On a geopolitical level, developments undoubtedly created and continue to create uncertainty. In any case, despite the situation, opportunities are created that can be exploited for the benefit of local businesses.
The biggest and most difficult challenges
What do you consider to be the biggest and most difficult challenges that the Cypriot economy will have to face?
Most of them have been mentioned above. Inflation, interest rates and lingering uncertainty, little drop in the unemployment rate.
Undoubtedly, all of this occupied and will continue to occupy the relevant agencies and ministries in 2024 as well.
Some of the decisions that have been taken are critical for improving the course of the domestic economy, however, in a constantly changing economic environment, vigilance and continuous monitoring are required.
At this point I consider it important to mention the main issue of the lack of human resources, with this shortage affecting all professions.
Would you say that taking into account the latest upgrades, the Cyprus economy is now well on its way to development?
On a better path yes, but not on a path that ensures/secures the future. The foundations have been laid, but a collective effort is required to maintain the upward trend.
The numbers and forecasts for 2024 and 2025 demonstrate that vigilance is required, not complacency.
In addition, the slowing growth of important pillars of the economy such as e.g. tourism, possibly sounds the alarm for further actions on the part of the decision-makers.
Increasing interest from potential new investors and customers
What do you think will be the course of the sector in which you operate in 2024?
I see the path to be more or less the closing stretch of 2023. Increasing interest from potential new investors and customers. At the same time, the geopolitical situation has created some important opportunities for mixed-use developments, such as Ayia Napa Marina.
As I have already mentioned, high interest rates have an impact on housing demand. I believe that with the new unified housing policy recently announced by the government, more suitable conditions are being created to solve the housing problem more broadly.
At the same time, however, appropriate solutions must be found so that the high prices of raw materials and materials can be addressed.
What are the biggest industry trends/changes you anticipate in 2024?
Further integration of technology and especially AI & VR technologies to offer a more in-depth view and 360 experience to potential new investors and customers.
Projects that incorporate green growth while enhancing sustainability are also expected to flourish even more.
And these are just some of the industry trends and developments.
The most important problems of the sector
What are the most important problems that are currently plaguing your sector and the solution of which you consider to be a priority in view of the new year?
The construction sector seems to be responding well to the pressures that it is subjected to from time to time, and this, at the same time, demonstrates the vigor of the entrepreneurs who are active in the sector. Nevertheless, the response and support, if you will, from the state must be stepped up so that the industry can, in turn, support the domestic economy.
Indicatively, I could mention and refer again to actions and measures which were absent and continue to be absent. For example, lack of incentives to attract and retain new investment. Reduction of VAT on land developments, an even greater increase in the building factor. These are just some of the things I've pointed out from time to time.
In addition, it is important to emphasise that we are systematically faced with a significant lack of human resources, whether it has to do with the construction industry or with catering, or in general with hospitality services.
This significant lack creates cumulative and other problems, which have to do with completion/delivery delays, with obstacles in the smooth operation and more broadly in the operational part.
Inaction on incentives
If you could ask the Government to take specific measures or formulate policies to support/strengthen your sector, what would they be?
If we want to talk about an industry that will bring investors and further revenue to government coffers, then we need to find the right incentives to attract them.
Unfortunately, from 2020 onwards there is an inertia in terms of incentives. And unfortunately, not providing incentives makes you weak against competitive developments abroad.
Cyprus, a country with 300 days of sunshine a year and excellent living conditions, with a very good education system, with a good road network and communication network should be one of the top investment destinations. Unfortunately, it is not.
Ayia Napa Marina is being enriched
What are your organisation's plans/strategy for 2024?
Ayia Napa Marina is a project that is still in its early stages. Entry into the maturity phase is expected to take place from 2025 onwards.
All of us are working with the future in mind and to achieve the mission and vision of the investors. That is, to make Ayia Napa Marina the top tourist destination of the Eastern Mediterranean, both by land and by sea.
In this spirit, we are working so that 2024 will be a continuation of 2023, with even more shopping and dining options at the marina, a richer programme of events and of course with even more tenants, since now the deliveries of apartments in the first revolving tower in Cyprus are at an advanced stage .
Our journey continues. It had, has and will have turbulence and stormy seas, but we always remain optimistic and work with vigor and confidence for the next day.
Finally, if and as long as conditions permit, we will not hesitate to proceed with the construction of the West Tower (2nd tower), in a mixed-type development combining a hotel and apartments for sale.
The role of technology, opportunities and challenges
What role does technology, such as artificial intelligence, play and what changes is it expected to bring about in your field?
Technology and its applications have always played and will continue to play an important role in developments both in the field of land development and in other industries and sectors of the economy.
While the opportunities and integration of technology are key, there are undoubtedly areas that need attention.
It is a fact that AI & VR technologies offer immersive experiences to users of service products and potential new customers/investors.
At the same time, however, there is currently a significant lack of personnel who can integrate/make the most of these technologies. In addition, it is to be expected that the implementation of cutting-edge technologies at an early stage is to be accompanied by high implementation costs.
Something that must be taken into account is the fact that not all users/customers are at the same level of knowledge and therefore cannot utilise technology applications to the same extent. For this reason, more effort and more intensive training of users/customers may be needed.
The above should in no way be considered obstacles to the implementation and further utilisation of these technologies.