Real estate is the best business in the world for any investor, Cypriot billionaire John Christodoulou said during the 17th Real Estate & Construction Conference & Exhibition.
In his speech at the conference which took place on March 29 in Nicosia, the Nicosia-born CEO of Yianis Group noted that investment in real estate has multiple advantages compared to other types of investment, as it can bring capital appreciation, a hedge against inflation, security and a steadily growing income.
When real estate investment companies pick locations to invest in, they seek “a country with higher returns, laws balanced between landlord and tenant and a swift planning process,” Christodoulou stressed.
However, investment in real estate does not come without risks, the Cypriot businessman said.
One of them is when tenants don’t pay. “The system depends on tenants paying rent in full and on time. Serious problems can arise for all when tenants cannot pay. France and Italy have laws that are significantly favourable to the tenant. France has rules that can prevent eviction of non-paying tenants from residential properties during the winter months. On the other hand, the UK and Monaco have more balanced rules that allow for easier resolution of this situation,” Christodoulou noted.
As he explained a country with laws balanced between landlords and tenants will attract more investment.
“Most prudent investors buy existing income-producing buildings. In my opinion, property development is the most risky part of any real estate investment. And if you are developing away from your own country, the risk is even higher and you will need the right local team. It can be the most rewarding of any property sector but the timing has to be right. High interest rates, recession, war, change of government, or well-known international banks like Lehman Brothers or now, Credit Suisse going bust, can easily create problems and change the mood for everyone. This is why you need to mitigate your risk as best as you can by having other sources of income,” he said.
Christodoulou also shared with the audience some of his experiences starting out in the sector.
“I feel for those starting out with no help because I know what it is like; I could not mitigate my risk when I first started. I had to take many calculated risks with my developments to create a solid, stable income. Now, I can be the best buyer of real estate in the world as I can move very quickly if it is the right deal. And, if I get a fantastic price to sell a building, I will sell. However, I am the worst seller of property because I become miserable and depressed and most people know to stay away from me. But I do feel better after the profit has been reinvested again in more real estate,” he said.
Working with banks
In his speech, the Cypriot real estate mogul also spoke of the importance of building a relationship based on trust with banks:
“It does not matter the size of your company. Once you create trust with the banks, and they know you are serious and perform regardless of the risks, they will be there to support you. After all, the banks are there to make money! When you have the full support of your bankers, the only good problem you have is to find the right deals. When dealing with banks, negotiate as best as you can and always stick to the agreement. They are a key to your success.”
Regarding planning, Christodoulou noted that planning rules is good for everyone, as when the quality and safety of structures improve, this benefits both the construction sector and the wider economy.
“By having an efficient planning process with clear rules, more property investors will be attracted into any country. Let this be a lesson for a government that wants to increase GDP and attract investment in any sector by making processes efficient for investors. You only have to go to the UK now with all the cranes and the buildings going up, then you will see the reality,” he said.
Occupied north Cyprus
Christodoulou, who fled Cyprus with his family at the age of 9, due to the Turkish invasion, also commented on the rising trend of investing in real estate in occupied north Cyprus.
“It is not because my family lost their homes in 1974, but I genuinely do not understand how anyone can invest money there when they cannot receive a genuine title deed, purchasing land and property from someone who is not the legal owner,” he said.
On the other hand, “the rest of Cyprus, goes from strength to strength. Recently on 10 March 2023, Fitch Ratings upgraded Cyprus to a Triple B rating. This improvement is due to better public finances and reduced government debt,” he commented.
Negatives and positives of investing in real estate
Concluding his speech, the property mogul provided some suggestions on how to make Cyprus a more attractive destination for real estate investment.
“A real estate investment company is looking for something different to an individual seeking a holiday home in the sun. The real estate investment company seeks a country with higher returns, laws balanced between landlord and tenant and a swift planning process. The holiday home investor is checking days of sunshine each year and the availability of local airports and direct flights,” he said.