Karma Group, led by Nicolas Karullas, recently completed a major project in the Famagusta area: Mythical Sands Resort and Spa. The company’s financial performance improved despite the financial crisis in Europe and a general decline in real estate activity.
The project itself is a multi-profile residential complex consisting of apartments, townhouses and villas with hotel service.
In a follow-up interview, Karma Group CEO Karullas shares with Valentina Shapovalova the success of the companies they lead. He talked about how he managed to achieve such results in the most difficult year of the 21st century to date.
In a year like 2020, how did you manage not only to avoid slowdowns in the development of the company, but also to strengthen your position in the market?
The year really turned out to be difficult for business: the financial crisis, the pandemic, negative media publications about the prospects for the development of the Cyprus property market kept us in suspense. But even so, real estate on the east coast of Cyprus is in stable demand.
Our business is concentrated in the most popular region among tourists – the areas of Protaras and Ayia Napa. The number of permanent residents in this area is only 20,000. But every year about 1,500,000 tourists visit Protaras and Ayia Napa, including not only foreigners, but also residents of Cyprus. For this reason, seasonal residences and holiday homes are in demand in the region. Investors are interested in acquiring real estate for rent, and retirees see the region as their main place of residence.
Over the past 20 years, our region has experienced stable and healthy growth. This phase replaced the surge in construction that was observed in the major cities of Cyprus earlier.
Real estate on the east coast of Cyprus, by tradition, is of interest not only to foreigners, but also to local investors. Locals show great interest in the region, given the closed borders. Before the pandemic, their share was 40-50%, but everything changed in 2020, when domestic demand grew even more significantly.
What are the forecasts for 2021?
The economy and real estate market of Cyprus, of course, had a negative impact on the pandemic. But we are confident in our future, as before COVID-19 and the abolition of CIP, the property market in Cyprus recorded significant growth.
Rapidly growing indicators (quantity of supply, prices, volume of demand) attracted both local and foreign investors to the island. Currently, large-scale projects are under development, the cost of which amounts to hundreds of millions of euros. Among them are the Ayia Napa Marina, the City of Dreams Casino Resort in Limassol and the port of Larnaca. As a result of construction, all of them will make the surrounding areas and real estate more attractive for investment.
Investors are interested in our projects, we see it. We also believe that now is the right time to buy high quality assets.
How do you think the cancellation of the Cyprus Investment Program (CIP) will affect the real estate market on the east coast of Cyprus?
The principle of risk diversification always remains relevant for our company. We did not rely only on CIP and now we see that this strategy has become a winning one.We are approached by clients from all over the world who need modern and high-quality real estate by the sea. Being engaged in the construction of housing and summer residences, we see that demand has remained at a good level. Yes, indeed, the cancellation of the program affected the decline in demand in the upper price segment. But from our experience, I can say that even the most expensive properties are now of interest to investors and are able to generate rental income. We see this by providing rental services to our clients through Karma Rentals, a summer residence rental agency on the east coast of Cyprus.
Obviously, the cancellation of the investment program will make adjustments to the development of the property market in Cyprus. But the East Coast real estate market was not significantly affected by the CIP, and our region is not expected to be hit hard. But Limassol and Paphos will have a harder time.
What sectors of the Cypriot economy, in your opinion, should develop in the coming years?
The island has great potential. Cyprus needs a massive development plan for the next ten years. Investments are needed in infrastructure, technology and services, this will allow the island to remain a business center. Investments in healthcare, education and shipping are also important.
An excellent government initiative was the creation of the Sub-Ministries of Shipping, Research, Innovation and Digital Policy. The development of the educational sector also brings impressive results: today 47,000 students study on the island. New universities are opening in Cyprus and Karma Group is supporting this initiative as a partner of the American University of Cyprus.
It is very important for the country to invest in green energy and the necessary infrastructure for such projects. Also, do not forget about local agriculture. The land of the island is capable of offering high quality products such as potatoes. It is known far beyond the borders of Cyprus and is grown in the fields of the eastern part of the island. Agriculture needs investment and involvement of young people in this area.
The relocation of the European office of Amazon to Cyprus, if carried out in accordance with the plans described in the media, could be a strong precedent for development.
Improved air connectivity will also bring benefits, an area where great progress was made before the crisis.
Do you think the situation in the real estate sector and in the economy of Cyprus as a whole has begun to improve after the crisis of last year?
According to me, yes.I want to note a positive point – statistics from open sources show a decrease in sales in 2020 in our region by only 11%. It is worth considering that this is against the backdrop of lockdowns and interrupted flights. This is a great result! We hope that the start of universal vaccination in Europe and the gradual return to normal life will have a positive impact on the market outlook.
Today Karma Rentals sees a positive trend in the number of summer residence bookings. And this is expected: people have been waiting for travel and missed the clear sea, the warmth of the sun and serenity. Luckily, the east coast of Cyprus can offer all this at the highest level. If you are looking for the perfect summer house, Protaras or Ayia Napa is the place to be.
We value our customers and the feeling is mutual. 35 years have passed since the founding of the company, over the years we have built and sold more than 4,000 quality properties.
The motto of our company is Honesty, Integrity, Quality. This helps us in making the right long-term decisions. And I am sure that these values and principles are shared by the entire Karma Group team.