Sergey Kudryavtsev: "You can’t just build and sell – you need to operate, maintain and deliver long-term returns"

Sergey Kudryavtsev, the Founder and CEO of Paphos-based INEX Development, assesses the current state of the real estate market in Cyprus and offers his unique perspective on the challenges it faces and how best to deal with them.

What is your outlook for the real estate market over the next 12-18 months? Which segments do you expect to experience significant growth?

The real estate market is maturing, not exploding. We’re no longer in a race to build bigger or faster – what matters now is building smarter. In our field, we see intelligent residential spaces leading the way: homes that are more integrated with technology, sustainability and actual human behaviour. We’re past the era of speculative development based on location alone. We build for people – for the way they actually live. We think about how they spend their time, how they move through their day and how their homes can support real life, not just floor plans. We choose materials that don’t just last but get better with time: surfaces that age beautifully, gardens that grow richer and more layered, places that feel more alive every year. We create environments that evolve and improve as people live in them. Commercial real estate is evolving too. The traditional office footprint is shrinking, while hybrid, plug-and-play workspaces are gaining ground. Flexibility now matters more than square metres. There’s also rising demand for our active office concept – spaces that adapt to changing needs, support wellbeing and use smart technology that responds to how people actually work. We have implemented this successfully in our Beon active office in Paphos and, due to the strong response, we’re opening a second location in Limassol later this year.

The most promising areas for growth in my opinion are community-oriented projects, mixed-use developments and smaller cities like Paphos, which remains undervalued but it’s quickly gaining attention thanks to infrastructure improvements, a growing international community and a lifestyle that combines nature, culture and convenience. It’s one of the few places where you can step out of a meeting and be by the sea or walk through a historical neighbourhood within minutes – offering a rare kind of work-life balance.

The local real estate market has demonstrated considerable resilience but it is not without its problems. What are the biggest challenges the industry will face this year and beyond?

First, the way we currently use land leaves room for improvement. Much of the island is either under-zoned or not very well planned, which limits long-term potential and increases the risk of over-development in the wrong places. Without smarter urban planning, we might struggle to build real value. Second, the skills gap. This isn’t just about labour shortages; it’s about mindset. We’re still operating in a largely traditional construction culture but today’s buyers want future-ready homes with integrated tech, real sustainability and higher service levels. To meet that, we need a new generation of talent and thinking across the supply chain. Third, public-sector inertia. Reforms have started but so far, all the processes from issuing permits to inspections are taking longer than everyone would want them to be. It’s not just a bureaucratic issue – it affects investment timelines, cost control and international competitiveness. This area still requires further development.

Compared to other Mediterranean destinations, how competitive is Cyprus in attracting international clients and institutional investors? What are the country’s key advantages and where do you see vulnerabilities?

Cyprus has strong fundamentals – climate, location, tax regime, EU status (soon to be a Schengen state) and a high quality of life. For many private buyers and family offices, it’s an appealing entry point. But when you look at the broader Mediterranean, you see Portugal, Spain and some parts of Greece pulling ahead in terms of planning policy, digital infrastructure and investor readiness. Our challenge isn’t selling the island - it’s scaling what works. The market still doesn’t have much depth in professional services, data transparency and institutional-grade assets. These gaps make it a bit harder to attract long-term capital at scale. But the opportunity is real. At INEX, we’re building a modern development ecosystem around our projects – with everything from parks and playgrounds to cultural venues and sports zones. We’re helping to upgrade Paphos where it needs it. With this approach, the whole of Cyprus has every chance to become a top-tier investment destination.

The island’s high-end property market is drawing increased attention from institutional investors, private equity funds and family offices. In your experience, how is the influx of institutional capital reshaping the real estate landscape?

It’s creating a new standard and that’s a good thing. Institutional capital isn’t just money; it brings expectations around governance, reporting, asset performance and exit strategies. You can’t just build and sell – you need to operate, maintain and deliver long-term returns. This shift is making developers more disciplined. Projects now need to demonstrate future cash flows, community value and long-term resilience. We’re moving from a sales-driven model to an asset-management mindset – a transformation that will raise the standard across the market, especially in rental housing, urban regeneration and smart developments.

It’s now a year since local government reforms were implemented. What has their impact been on the real estate industry and is there room for further improvement?

The reforms set a positive direction by acknowledging past challenges such as fragmentation and inefficiency. While progress is moving at different speeds, many local administrations are still in the process of gaining the tools, digital platforms and motivation needed to work differently. The next step is transparency and accountability. In my opinion, everyone should be measured by outcome – by how fast and how well services are delivered. Clear rules, consistent timelines and digital tracking would do more for the economy.

To what extent are government policies shaping development trends in the real estate sector?

These policies matter but they’re not a silver bullet. Incentives help attract capital but they don’t build trust or long-term value. What shapes the market more deeply is demand – for better living, working and investing experiences. What we’re seeing is a growing interest in developments that combine multiple layers of value: smart location, mobility, community and real service infrastructure. That’s not something a tax break alone can create. It comes from vision and execution. For Cyprus to move forward, we need to start thinking beyond transactions and focus more on building ecosystems. That’s the real shift. That’s where the future is.

(Photo by TADOBI)

• (This interview was first published in the May issue of GOLD magazine. Click here to view it)