Cyprus Business Now: weekly wrap-up

Here are the top business stories in Cyprus from the week starting July 22:

The European Central Bank (ECB) recently decided to maintain interest rates at their current levels but indicated that the upcoming September meeting is “wide open,” given the downgraded economic outlook for the eurozone and predicted continued falling inflation. ECB President Christine Lagarde emphasised that risks to growth are now “tilted to the downside,” suggesting a potential rate cut in September.

She highlighted that growth likely slowed in the second quarter, with weak investment and industrial output indicating muted future expansion. This outlook supports expectations for further rate cuts to suppress price pressures, though Lagarde refrained from committing to a specific rate path, underscoring data-driven decisions. Commenting on this, Victor Trokoudes, CEO of fintech company Plum, noted that the ECB’s decision to hold rates was widely expected, mirroring previous well-trailed rate cuts.

Meanwhile, in the investment sphere, ECM Partners and Metric Capital Partners announced the sale of a majority stake in FAMAR, a pharmaceutical contract development and manufacturing organisation, to private equity investor MidEuropa. MidEuropa, headquartered in London with operations in Warsaw and Bucharest, focuses on investments across healthcare, technology, services, and consumer sectors. This transaction, where current shareholders remain invested, demonstrates confidence in FAMAR’s future potential and aligns with broader economic activities.

Despite economic challenges, the Cyprus real estate market has shown resilience in the first half of 2024. The Cyprus Real Estate Agents Registration Council reported an 8 per cent increase in property transfers and a 1 per cent rise in transaction value compared to the same period in 2023. This growth, highlighted in their latest bulletin, underscores the market’s strength, although the number of sales documents submitted saw a slight decline. On a quarterly basis, the second quarter showed significant improvements, reflecting ongoing investor interest in the region.

In another strategic move, Cyprus aims to become a Regional Research, Innovation, and Technology hub by 2035, as laid out by Chief Scientist Demetris Skourides. His comprehensive Strategy Roadmap and Programme rollout focus on bolstering research, enhancing innovation, and driving internationalisation. Engagements with key stakeholders and international partnerships are pivotal to this vision, which seeks to externalise Cyprus’ research and innovation ecosystem.

The Cyprus Consumers Association (CCA) reported a notable rise in consumer complaints in the first half of 2024, particularly concerning passenger rights and organised travel. While complaints in telecommunications and unfair terms in consumer contracts decreased, the CCA stressed the need for better consumer support and market inspections to address increasing issues. Their mediation efforts with retail businesses have been effective in resolving disputes, highlighting ongoing consumer protection efforts.

Addressing a long-standing issue, the Cyprus Borrowers Association (Syprodat) has initiated discussions with political parties to propose a law for “trapped buyers” – individuals who have paid for properties but are unable to obtain title deeds. This issue, exacerbated by developers’ financial difficulties, underscores the need for legislative action to protect buyers and resolve property ownership disputes.

Contrary to recent sensationalist reports about a “crisis” in Cyprus’ tourism industry, local experts have debunked claims of a significant drop in bookings. The Cyprus Hoteliers Association and the Association of Cyprus Tourist Enterprises emphasised the resilience of the tourism sector, with current tourist arrivals matching last year’s levels. This perspective highlights the importance of continued investment and sector strengthening despite challenges.

In an innovative leap, the Paphos Regional Tourism Board introduced an application that uses augmented reality to bring the myth of Aphrodite to life at key locations. This project aims to enhance the visitor experience and leverage technology for tourism development, showcasing both well-known and lesser-known aspects of Aphrodite’s myth.

Furthermore, the first investments from the Cyprus Equity Fund, established in collaboration with the European Investment Fund, are expected to commence in the autumn. This fund, aimed at bridging the financing gap in entrepreneurship and innovation, has garnered significant interest, with the Bank of Cyprus committing €2 million. This initiative highlights the government’s focus on supporting SMEs and driving economic development through innovative funding mechanisms.

Lastly, Deputy Tourism Minister Kostas Koumis reported an increase in tourist arrivals and revenues in the first half of the year, despite various challenges. Emphasising the crucial role of local authorities, Koumis called for a cohesive tourism agenda to address regional issues and support the sector’s growth, reflecting the broader efforts to align and strengthen Cyprus’ tourism ecosystem.