Nearly five years on from Cyprus’s near financial collapse and bailout, Limassol is undergoing a property development boom fuelled by Russian money.
In the marina of the island state’s second largest city, opened in 2014 by the president, Nicos Anastasiades, super-yachts are berthed in front of €15m villas along with their support ships carrying helicopters and other accoutrements of the super rich.
Look to the marina’s east and the skyline is beginning to fill up with high-rise luxury apartment developments. Look west and by 2021 Europe’s biggest casino resort is due to have opened its doors. The €550m investment aims to attract at least 300,000 tourists and 11,000 jobs.
It is Russians who are flocking to Limassol, snapping up properties along the island’s southern coast. Many are “buy to leave” investors, with most of the villas around the marina left empty by owners who prefer to live elsewhere.
Plans are afoot to construct another six marinas along Cyprus’s southern shore, to the consternation of environmentalists. Like the Limassol marina all are private schemes on leased government land, aimed at luring the super yacht crowd and changing the former British colony’s image.
In the secretive world of high-net wealth, ownership is rarely acknowledged. The yachts moored in Limassol are private holdings held under company names. Most cost astronomical amounts in operation costs alone, but that, say employees, is “pocket fluff” for the sort of people who own them.
“Our aim is to become the Monte Carlo of the eastern Mediterranean,” Nikiforos Pampakas, the marina’s marketing manager, declares straight-faced, before breaking into a smile. “Right now, I think we are the Cannes of this part of the world. Most of our clients are Russian-speaking.”
It is all far removed from the island’s near financial meltdown at the height of its banking crisis in 2013. The EU and IMF were forced to step in with a $10bn financial lifeline when it became clear that Cypriot banks, exposed to gargantuan levels of Greek debt, were at the point of collapse.
Like other developers in the EU’s most easterly member state, the marina project’s investors lost millions five years ago when bank deposits were slashed and the country’s second largest bank, Laiki, was closed overnight. But they have ridden the wave.
“Our project has proved to be bulletproof,” says Andreas Christodoulides, chief executive of the €24m Limassol marina. “Bulletproof despite the crisis.
“Business is very good. We lost €8m or €9m in the bailout but the buyers keep coming. We have more than made up for it.”
Cyprus’ economic recovery partly accounts for the newfound optimism. The island’s conservative leader, Anastasiades, who won a second term in office earlier this month, has been widely credited with re-energising an economy that only a few years ago was seen as a European basket case.
Under Anastasiades’ watch, Cyprus exited the bailout programme in March 2016, much earlier than expected, following a stringent austerity programme of structural reforms and wage cuts in both public and private sectors. “We stuck to the rules,” says Panicos Constantinou, an official at the finance ministry. “But we’re also a small, open economy where big investments can have an impact.”
Record tourism has also driven growth. This year is expected to be better than last, a bumper year that brought more than 3.6 million visitors to the Mediterranean island on the back of war and instability in other popular regional destinations. At least 1 million were Russian – up 65% since before the crisis.
Limassol has long been a magnet for affluent Russian expatriates, with the city earning the moniker “Limassolgrad” partly because of its reputation as a hub for offshore Russian finance and those wanting to hide their riches.
In the wake of perestroika, the 50,000-strong Russian community has grown exponentially. Shops with Cyrillic signage abound alongside Russian newspapers, radio stations, schools and churches.
Although Russian businessmen were among the biggest losers when the EU forced Cypriot bank depositors with more than €100,000 in savings to help foot the bailout, most bucked expectations and stayed on.
But while focus on the expatriates has sharpened as investigators home in on Russian links to the inner circle of the US president, Donald Trump, Cypriot authorities are eager to lure ever more.
“We hold about six seminars a year promoting Cyprus across Russia,” says Antis Nathanael, head of the Cyprus Russian business association in Nicosia. “The 300 Cypriot companies in our directory have 90% of their operations in Russia and are worth around 80% of the wealth of Cyprus. We share the same religion and they love our sun. With Brexit, I am now working on bringing oligarchs over from London.”
Limassol’s changing skyline is also testimony to Cyprus’ Russian love-in. Under a money-for-passports programme instituted to help boost economic recovery, foreigners can become Cypriot citizens in a mere six months if they invest €2m in property.
Lawyers readily admit that the pickings have been rich. Russians desperate for a passport that will give them and their families easy access to other EU countries have led the wave. Last year the finance minister, Harris Georgiades, admitted that the controversial business model had injected around €4bn in foreign investment into the Cypriot economy – nearly 25% of the island’s GDP.
“If they are going to pay €2m for a property, why not get a passport as well,” quipped Christodoulides.
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