Cyprus Business Now: weekly wrap-up

Here are the top business stories in Cyprus from the week starting October 28:

Financial support and advisory services are essential for Cyprus’ small and medium-sized enterprises (SMEs) to enhance resource efficiency, according to a recent Eurobarometer survey published by the European Commission.

The survey highlighted the need for targeted support to help SMEs expand their green initiatives and embrace sustainable practices in the marketplace.

Conducted between June 3 and 28 with 248 Cypriot SMEs, the findings reveal that 59 per cent of respondents believe financing or subsidies would significantly aid their resource efficiency efforts. Furthermore, 31 per cent of SMEs noted that guidance on financing and planning investments in resource efficiency would be beneficial, while 30 per cent suggested that advisory services on improving resource use would help.

Meanwhile, Cyprus’ refinancing needs are projected to remain within manageable levels over the coming years, staying well below the ten per cent of GDP threshold. Projections estimate requirements at around three per cent of GDP in 2025 and 2026, and approximately 4.5 per cent in 2027, according to a financial outlook report by the Finance Ministry.

The report indicates that gross financing needs are expected to reach approximately €1.1 billion in both 2025 and 2026, increasing to around €1.7 billion in 2027. Additionally, the ministry highlighted that Cyprus’ cash reserves are robust, covering the next nine months of financing requirements, underscoring financial stability.

In a related development, the Deputy Ministry of Tourism is set to launch a series of initiatives in 2025 to support, promote, and enhance Cyprus as a tourist destination, according to the budget submitted to the House.

This budget outlined strategies to boost the tourism sector through targeted advertising, strategic partnerships, and sustainable development projects. A significant portion of the budget is earmarked for high-priority advertising campaigns to attract visitors to Cyprus for various types of tourism, including conference, wedding, religious, golf, and rural tourism. Strengthening partnerships with international airlines is also a priority to improve connectivity and reach.

Further driving Cyprus’ economic activities, Limassol led the high-value real estate market in September, recording €29.8 million in top property sales, according to analytics firm Ask Wire. The district accounted for six of the ten most expensive transactions, including a €5 million field in Yermasoyia.

This high-value activity was primarily concentrated in Limassol, which amassed €18.5 million in sales, followed by Paphos with transactions totaling €6.5 million, and single high-value sales in Nicosia and Larnaca valued at €2.9 million and €1.8 million, respectively.

Elsewhere, the Ministry of Energy, Commerce, and Industry approved changes on Tuesday to the “conserve and upgrade for businesses and other entities” grant scheme.

With a budget of €19 million, the scheme, which runs until December 31, 2026, provides support for energy efficiency improvements in existing buildings and facilities. Eligible participants include both new and established SMEs, with the initiative’s primary aim being to support energy-saving measures in buildings that consume high levels of energy, targeting at least a 30 per cent reduction in primary energy use.

October also brought positive developments to the tourism industry, as hotel occupancy rates rose significantly, according to Thanos Michaelides, president of the Cyprus Hoteliers Association (Pasyxe).

Michaelides noted that occupancy rates reached 80 per cent and slightly surpassed the rates of October 2023. Looking forward, November bookings are anticipated to maintain this momentum, potentially extending the high season. Michaelides expressed optimism that “until October, all hotel units are in operation,” and that the association aims to incorporate November into the high-demand summer season.

On the technology front, the Energy Ministry spearheaded Cyprus’ presence at GITEX Global 2024 in Dubai, where the island’s advancements in AI, cybersecurity, and partnerships were showcased. Held at the Dubai World Trade Centre and Dubai Harbour, GITEX featured more than 40 exhibition halls, welcoming tech giants and startups to present advancements in artificial intelligence, cybersecurity, mobility, and sustainable technology, among other sectors, drawing a global audience.

Further cementing Cyprus’ role in regional collaboration, Lieutenant General Osama Rabie, head of the Suez Canal Authority, met with Cyprus’ Deputy Shipping Minister Marina Hadjimanolis in Ismailia to discuss sustainable maritime practices and the impact of Red Sea tensions on global trade. Rabie underscored the authority’s dedication to enhancing bilateral cooperation with Cyprus, aiming to develop the canal as a ‘Green Canal’ by 2030.

Moreover, international trade in electric and hybrid vehicles between the EU and third countries has experienced a surge, with Eurostat reporting that electric and hybrid cars represented 43 per cent of EU car imports in 2023, a notable rise from 8 per cent in 2017.

Cyprus, aligning with this trend, sources over half of its car imports from outside the EU, underscoring the bloc’s growing reliance on non-EU imports to support sustainable transport growth.

Adding to Cyprus’ economic strengths, the economic climate saw an improvement in October, primarily driven by a boost in the services sector, according to the University of Cyprus’ Economics Research Centre (CypERC).

This positive shift reflects a notable increase in both consumer and business sentiment, which has positively impacted on demand in the services sector, with other sectors showing less pronounced change.

Highlighting Cyprus’ growing position in the global film industry, Dionysios and Simos Manganis from Green Olive Films spoke with the Cyprus Mail about their latest project, ‘Find Me Falling’, which topped Netflix’s charts and attracted global attention.

The film, a romantic comedy, reached 22.5 million streaming hours within three days of its release, showcasing Cyprus as an appealing location for international productions.

Meanwhile, a recent EY survey revealed that 75 per cent of global workplaces have now adopted generative AI, a dramatic increase from 22 per cent in 2023.

This surge in adoption is reshaping productivity and skills development across various industries, with the technology sector leading at 90 per cent.

At a local level, economic optimism was echoed by Aristides Vourakis, president of the Association of Cyprus Banks, who expressed confidence in the continued economic growth resulting from recent interest rate cuts by the ECB.

Vourakis emphasised the positive impact on lending rates in Cyprus and highlighted the banking sector’s involvement in the government’s interest rate subsidy scheme for housing loans, which is aimed at providing housing relief to families.

In the leisure sector, October saw high visitor numbers at restaurants, cafes, and bars across Cyprus, with occupancy rates between 80 and 90 per cent.

Neophytos Thrasyvoulou, president of the Federation of Leisure Centre Owners (Osika), attributed the success to increased tourism but also acknowledged challenges ahead, citing regional conflicts as factors affecting visitor confidence.

Rental prices have also surged across Cyprus, impacting both upscale and affordable neighborhoods. In response, the Interior Ministry has introduced a new initiative aimed at easing financial strain for Cypriots and residents by setting affordable rental benchmarks.

This initiative includes a renovation grant for property owners who commit to renting their units at reduced rates for a minimum period.

The government’s robust financial position is further evidenced by a €1.4 billion surplus recorded for January–September 2024, representing 4.2 per cent of GDP, which more than doubled compared to the same period in 2023.

Finally, the government launched a subsidy programme to aid young families in building or purchasing their first home, offering one-time grants between €20,000 and €50,000 based on income and family size, reinforcing the government’s focus on addressing housing affordability.

However, as officials acknowledged in discussions on Tuesday, there remains no practical solution to alleviate rising energy costs, a significant factor in the high cost of living.

MPs voiced their concerns over the lack of “trust” in regulatory bodies tasked with managing pricing and competition, urging more transparency and accountability to restore public confidence.