The Cyprus property market has been booming for a while, but the focus has been on the residential sector, rather than retail. However, the first casino in Europe from Hong Kong-based Melco Resorts potentially opens the door wider to luxury shopping.
City of Dreams Mediterranean was built at a cost of around $650 million and joins Melco’s other resort venues in Macau, Greater China, and Manila in the Philippines. They helped generate revenue of $949 million in the three months ended June 2023 (up 220%) for the Nasdaq-listed company whose chairman and CEO is Hong Kong billionaire Lawrence Ho.
The latest casino officially opened in the Zakaki district of Cyprus’s second-biggest city, Limassol, on July 10, claiming to be Europe’s first integrated resort with a sizable 18,300 square feet of luxury shopping thrown in. In addition to the retail space, core features are a 14-floor luxury hotel with 500 guest rooms and suites, a family adventure park, an outdoor amphitheater, and over 740,000 square feet of meetings and exhibition space.
The July opening provided a brief boost to Melco’s stock sending it to $13.77, the highest it has been since May 1, but since then it has fallen to a new low this year, and it was just above $10 today (Friday).
According to the marketing patter, the retail offer is where “Avenue Montagne meets Via Monte Napoleone meets Ginza”; the streets in Paris, Milan, and Tokyo famous for their branded boutiques. Melco did not respond to emails about whether the Cyprus market is ready for such a high-end presence. The resort website says: “Our experts have curated a selection of the best fashion pieces the world has to offer.”
Will shoppers agree? Brands include some well-known international names as well as local players. They include Vassos Eliades (home to luxury watch and jewelry brands); Cartier; Zenith and Hublot Swiss luxury watches; Italy’s Damiani, Michalis Diamonds; Costas Theodorou (travel and leather goods including Tumi); and Kult Boutiques which occupy 10,800 square feet dedicated to men’s and women’s fashion, and beach and resort wear.
A plus or minus?
There are mixed views on what City of Dreams will do for the island. One luxury retailer with long experience in Cyprus is First Boutique. Ilya Loshak, the CEO of Millya Group which owns the chain, told me: “While the opening of City of Dreams may attract more tourists, it is uncertain whether these will be affluent travelers. The location of the new casino is not in the premium market and I believe a high-profile client will be looking for a better-located place to stay when visiting the casino.”
Loshak also questioned City of Dreams’ impact on current retailers. “Existing luxury retailers will not face increased competition. By offering the best luxury experience within deluxe property developments such as Del Mar Limassol, First Boutique has shown strong and impressive growth,” he said.
The commercial area of the Del Mar project covers 46,000 square feet with space for 21 premium shops, 10 food and beverage outlets, and car parking for 260 vehicles visiting the stores. Loshak was the first to launch his multi-brand luxury fashion store at the development, with a large showcase outlet.
“City of Dreams may draw in tourists, but there is a concern that the focus on gambling might attract a specific type of visitor more interested in gaming than in exploring and appreciating the local culture. These tourists may be less likely to venture into luxury retail stores,” added Loshak.
BBF sees more pros than cons
That’s not how BBF, one of the top property developers on the island, sees it. The company has 136 residential and commercial projects on the go in Cyprus, Greece, Portugal, and Canada, and general manager Lefteris Konstantinou, told me: “I firmly believe that Zakaki district in Limassol stands out as one of the city’s most promising areas. Over the years, it has undergone a remarkable transformation, evolving into a captivating investment destination.
“The arrival of City of Dreams has been a game-changer, bolstering the region’s potential and appeal to investors and buyers alike. With other developments like the My Mall shopping center nearby, and with easy access to the city center, Zakaki’s future seems even brighter.”
Konstantinou pointed out that property prices in Zakaki were continuing to rise, and one reason why BBF got in early with real estate development in the area. The company is currently selling its Fremont gated-community apartments with prices starting at €208,000 and is flagging City of Dreams and nearby beaches as key reasons to live there.
The general manager said: “City of Dreams Mediterranean has been the most anticipated large-scale development in Cyprus this year. It has led to new investment opportunities and is expected to bolster the year-round tourism industry, driving construction, and opening up new avenues for real estate development.”
Cyprus is a bright spot in Europe
According to the latest Eurostat data, in 2022 Cyprus was the only country, among 17 European Union markets that were compared, to show year-over-year growth in housing transactions—with a massive 27% increase, and a bright spot in an otherwise gloomy market. Denmark was down by 32%, and Finland and the Netherlands by more than 16%.
KPMG data for this year show no slowdown on the island. Q1 transaction volumes across Cyprus were still at 27% above Q1 2022. Limassol led the way with over €1.8 billion worth of houses and apartments sold while the capital, Nicosia, recorded the highest volume (40%) of land transactions in 2022. BBF confirmed the hot property climate and said that commercial and non-residential permits increased in 2022 “and this trend will continue due to the influx of IT companies.”
The developer noted: “In 2022, there was an impressive 40% growth in non-residential permits. This upward trajectory is expected to continue over the next few years, fueled by an influx of immigrants and the government’s enticing IP Box incentives aimed at attracting IT companies. This robust trend is poised to drive significant growth in real estate.”
Benefiting from the program have been generally well-off Russian and Ukrainian IT professionals, particularly since the invasion of Ukraine in February 2022. Also coming to the island have been Israelis. “It is notable that purchases from Israelis are on the rise, as Israel has become prohibitively expensive and IT companies and specialists in Israel are exploring other options,” said a spokesperson for BBF.
Cyprus has become an IT hotspot. An organizer of IT/gamer meet-ups in Limassol, Tim Fadeev, has seen his hobby boom from a June 2021 Facebook post that attracted around 80 people in a pub, to founding a business, GDCy (GameDev Cyprus), with monthly events attracting more than 300 people and hosting an annual fair, supported by big players like Google
A well-established IT business owner is Alexey Gubarev, a co-founder of TechIsland, which was created to accelerate the growth of the technology and innovation ecosystem in Cyprus. The entity held its inaugural awards earlier this month. Gubarev—a serial entrepreneur, who runs the health and wellbeing tech company Palta and sold the hosting platform Servers.com, this summer to CloudOne Digital—has set his sights on big infrastructure projects on the island.
“There is not even one business hotel in Limassol,” he said, adding that he would turn some historic buildings into exhibition/conference centers as well as establish two museums, one for his large private collection of vintage audio systems. He also has the biggest collection of classic cars on the island which may be destined for the other museum. These projects will all be in the same vicinity as City of Dreams, offering some tantalizing prospects for retail sales.
Entertainment on a bigger scale
The influx of a burgeoning IT professional class, and new projects—together with the island’s tourism trade—could drive higher-end retail demand. At Zakaki’s existing mid-market My Mall, the third largest shopping center on the island where you can find the likes of Calvin Klein, Gant, Lacoste, and Zara, the operator is stepping up its entertainment activities now that City of Dreams is on the doorstep.
From the end of November to January 8, My Mall is installing an outdoor 360-degree projection dome as part of a limited-time joint venture with the music industry creatives behind it, Ukrainian Helen Dolinski and Dutch digital artist and DJ Damian Force. The Damian Force Dome Show is an immersive audio-visual event in 3D (with no glasses needed) featuring a full hour of exclusive video content.
The dome, with a capacity of 1,000 people, had its first outing in Madrid in November 2021. As a physical, but portable, structure it can also cater to shows and gala dinners and can also showcase brands on the inside and/or outside.
There appears to be an explosion of new activity, construction, and development from retail to entertainment, much of it on the back of Cyprus’s rising prominence as an IT hub. According to the government, the ICT (information and communications technology) sector contributed 13% to Cyprus’s GDP last year which translates to a €3 billion direct contribution to the economy. That share is expected to grow—and shape the future of the island as it does so.