Russians and Greeks snapping up hotels

Foreign investors are buying into the hotel industry via repossessed properties

Foreign investors are entering the Cyprus hotel sector by taking advantage of hotels being sold under the hammer after being repossessed by banks due to debt or acquired through loan restructuring.

A long list of major hotels such as the Amathus Paphos, Alexander the Great, Limassol’s Le Meridien and the Cyprotels in Paphos, have all been sold off recently to mainly Russian investors who are new to the Cyprus hotel scene.

The latest hotel to be sold is the former Holiday Inn, renamed Nicosia City Centre, in the heart of the capital. After months of negotiations with potential buyers Bank of Cyprus sold the property for EUR 11.2 mln to Greek NBG Pangaea REIC, a Real Estate Investment Fund set up by the National Bank of Greece.

NBG Pangaea REIC has acquired the total shares belonging to the former owner of the hotel, Lasmane Properties Ltd.

The new owners of the 140-room hotel are to spend some EUR 4.5 mln on renovations, aiming to transform the former Holiday Inn into a luxury hotel. Operating in the 1970s as the Kennedy Hotel, it was known as a place for business meetings, but had been closed since 2016 due to debt owed to BOC by the former owners, the Varnavides family.

According to financial reports of the Bank of Cyprus, it’s Real Estate Management Unit has sold around 13 major hotels since 2014, with some smaller hotels being added to the list. REMU has another ten hotels worth EUR 57 mln on their books waiting to be sold.

While some of the repossessed hotels are bought by Cypriot investors who wish to expand, most of the hotels are being snapped up by foreigners who are not involved in the tourist industry.

President of the Cyprus Hoteliers Association (PASYXE) Haris Loizides, confirmed that the majority of hotels sold after being repossessed by the banks are being bought by foreigners interested in a solid investment.

“It is no secret that Cyprus tourism has been doing well over the past few years and this has drawn the attention of investors. Their motive is investment and nothing else as one may presume,” said Loizides.

A real estate consultant advising banks on management of property repossessed or acquired as part of loan restructuring, told the Financial Mirror that Russian investors are the main group interested in buying the hotels from the banks, followed by Israeli and Lebanese business ventures.

The expert said these investors are interested in making a serious investment in the hotels they buy.

“Investors buying into the industry, have spent serious money in renovating the hotels acquired,” said the consultant.

He added that foreign investors have also bought hotels formerly belonging to Cypriot families, who due to the 2013 crisis, and in some cases bad management, were not able to upgrade their hotel which led them to fall behind and eventually sell out.

Antonis Loizou of Antonis Loizou and Associates Real Estate Consultants, said that Chinese investors have also taken an interest in the island’s hotel sector.

“Chinese investors although are mainly interested in building hotels, they are also looking into buying already existing ones,” said Loizou.

Meanwhile, Hilton Cyprus owners MIG are trying to sell the only five-star hotel in Nicosia.

According to property consultants, Greece’s MIG, which belonged to the late financier and ex-Laiki strongman Andreas Vgenopoulos, under the weight of financial difficulties the group is close to a deal which will see the capital’s historic hotel changing owners yet again.

The hotel owns an area of more than 6,000 square meters of land next to it which adds an additional 20-25,000 square meters for potential use (such as offices, dwellings, shopping centre, casino or concert venue), MIG said in a recent announcement.

However, some hoteliers are actively seeking investors, either for a takeover or for a cash injection in order to re-invest in their product in the face of growing tourism figures, recording a third successive year of increases.

Photis Georgiou, owner and manager of the 3-star Agapinor hotel in Paphos, has various models on offer, including a longterm lease plan or a partial sale for up to 49% of the hotel.

Apart from enjoying one of the best views of Paphos harbour, the Agapinor is popular as a year-round hotel, with the mild winter attracting pensioners mostly from central and northern Europe.

“Our company also has the advantage of owning a number of shops in the busy commercial area of Paphos, very near the recently revived old part of town, so any investor would also have a steady income from long-term rents,” Georgiou concluded.