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Gulf funds investing in Cyprus ‘only a question of time’

Tourists walk on the road next to the beach in Paphos, Cyprus. Gulf funds are 'looking at all of Cyprus', particularly in real estate Kostas Pikoulas via Reuters Connect
Tourists walk on the road next to the beach in Paphos, Cyprus. Gulf funds are 'looking at all of Cyprus', particularly in real estate
  • ‘All focused around real estate’
  • 5,000 Mena businesses set up in 2023
  • Favourable taxes for tech and finance

Three sovereign wealth funds from the Gulf are in discussions to invest in real estate projects in Cyprus, according to one of the island’s biggest developers.

“It’s only a question of time that it is going to happen,” said Pantelis Leptos, co-president of the developer Leptos Estates, without giving further details on the wealth funds involved or the locations in Cyprus that are of interest to Gulf funds.

“They’re looking at all of Cyprus and multiple businesses, but it’s all focused around real estate,” he said.

Leptos said 5,000 companies from the Middle East and North Africa set up in Cyprus in 2023.

Dubai’s DP World is one of the biggest regional investors in Cyprus. In April 2016 DP World Limassol was awarded a 25-year concession to operate a multi-purpose terminal in Limassol, the island’s main port, including a 7,000 sq m cruise terminal which started operation in February 2017.

Aramco, the Saudi Arabian state oil company, is an important shareholder in the Cyprus-based Global Maritime Fund, which provides financing for maritime companies.

Leptos said he expected Middle Eastern money to make up as much as 30 percent of economic activity in Cyprus in the years ahead.

“It’s a huge number, but it shows the level of interest there is,” he said.

“We are being approached by businesses from all around the region, who say, ‘Let’s explore, let’s start discussing what are the possibilities, what is there for us and do you have any big projects for our companies?’”

The GDP of Cyprus rose by 2.4 percent last year, and the European Commission forecasts growth of 2.8 percent and 3.0 percent over the next two years.

“If you look at the way companies from Mena were working before, they always had branches in the other Mena countries, which surrounded Cyprus, but Cyprus was in the middle and was never approached,” Leptos said.

“The main reason was the Cypriot mentality at the time. They said, ‘We don’t want partners, we don’t want headaches, if we need money, we can go to the bank and get money.’ It was a different philosophy.

“What we’re witnessing now is a second or third generation of business people who say, for example, instead of owning 100 percent of one hotel, let’s own 20 percent of five hotels,” Leptos said.

The Cypriot government’s long-term strategic plan, Cyprus Vision 2035, aims to establish the island as a regional base for innovation and technology. 

The country offers favourable tax regimes for specific sectors, such as financial services, technology and renewable energy.

Cyprus also has more than 60 double tax treaties with countries including many in the Gulf and Mena, such as Egypt, Kuwait, Bahrain, Jordan, Lebanon, Iran, Qatar, Saudi Arabia and the UAE.

However, concerns remain over the country’s long-held reputation as a tax haven and centre for illicit financial activity, notably for Russian oligarchs active since the onset of the war with Ukraine.

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