Self-made tycoon John Christodoulou described the real estate sector as the best business sector in the world for any investor in his speech at the 17th Conference & Exhibition on Land Development, Design and Building Construction, which is taking place at the Hilton Nicosia Hotel.
As he said in his speech, “Investment opportunities in the European real estate market”, the real estate sector, with proper management, can provide goodwill – capital increase, protection from inflation, security and a steadily increasing income.
According to the chairman and owner of Yianis Group, the real estate investment company is looking for a country with higher returns, laws balanced between owner and tenant and nimble planning permitting procedures.
A major investor risk for property owners is non-payment of rent by tenants. “The system depends on tenants paying rent fully and on time. Serious problems can arise for everyone when tenants cannot pay. France and Italy have laws that are significantly favorable to the tenant. France has rules that can prevent non-paying tenants from being evicted from housing during the winter months. On the contrary, the United States and Monaco have more balanced rules that allow easier resolution of this situation,” Christodoulou noted.
As he explained, a country with laws balanced between landlords and tenants will attract more investment in the real estate sector, and this is what every country should strive for.
“The most cautious investors are buying existing buildings that generate income. In my opinion, real estate development is the riskiest aspect of any real estate investment. If you are developing far from your own area, the risk is even greater and you will need the right local partner. This may be more beneficial than any other real estate industry, but it has to be done at the right time,” he warned, adding that: “High interest rates, recession, war, change of government or the collapse of a well-known international banking institution like Lehman Brothers, or now Credit Suisse, can easily create problems and change the mood for everyone. That’s why you need to reduce your risk as best you can by having other sources of income.”
John Christodoulou expressed his sympathy to those who start without help, “because I know how it is. I couldn’t reduce my risk when I started. I had to take a lot of calculated risks with my developments to create a steady income. I can be the best real estate buyer in the world since I can move very quickly if it’s the right deal. And if I get a great price to sell a building, I will. However, I am the worst real estate seller because I am becoming unhappy and depressed, and most people know to stay away from me during this time. But I feel better after reinvesting profits in more properties.”
The key for him is developing trust with banks. “It doesn’t matter the size of your company. Once you build trust with the banks and they know you’re trustworthy and do what you say regardless of the risks, they’ll be there to support you. After all, banks are there to make money!” he said, noting that with the full support of banks, the only problem an investor has is finding the right deals.
As he characteristically said, the rules are as follows: “Rule number one: Don’t disappoint your banks. Rule number two: Don’t forget rule number one. When dealing with banks, negotiate as best you can and always stick to the agreement. Banks are key to your success.”
Town planning regulations
Regarding the urban planning regulations and their observance, he underlined that it is something good for everyone, since the quality and safety of constructions is improved and this has benefits both for the construction sector and for the wider economy.
“The construction sector is the largest industrial employer in Europe, employing almost 7% of the workforce, more than 4 million people and an annual turnover of almost €1.7 trillion. euro. Planning regulations for developments refer to the approvals required for the new construction or renovation of a building. Each country has its own minimum construction standards, but the planning process can vary from country to country. In Monaco, the application for planning permission for new buildings is strictly controlled, and permission for interior renovations can take a long time. In France, the planning permission process is complicated but has become easier to manage since the end of 2021 with the introduction of a new online application system. In Italy, planning permission can be expensive and time-consuming. However, the government has introduced a fast-track system where no permit is required if the work is “permitted development”. You will definitely need local experience. In the United Kingdom (UK), planning permission rules are comprehensive, and there is an online portal and information to help property developers throughout the process. My experience is that planning permission in the UK is a more cost-effective and effective process than elsewhere,” Christodoulou explained.
“Having an efficient planning process with clear rules will attract more property investors to any country. Let this be a lesson for a government that wants to increase GDP and attract investment in any sector by making processes efficient for investors. All you have to do is go to the UK now with all the cranes and buildings being erected, and then you will see the reality,” he added.
Russia and Ukraine
For investors who want to make some sure money, the best option, according to John Christodoulou, is “countries with order and a good regulatory process”.
He went on to say that: “If you want to make some risky money, invest in Ukraine, or depending on your judgment, morality and risk tolerance, in Russia. At some point, the war will end. But, if you decide this is your business strategy, good luck! You’re going to need it!”
At the same time, he wondered how one can invest money in the occupied areas of Cyprus, “when one cannot obtain an authentic title deed, buying land and real estate from someone who is not the legal owner”. On the contrary, as he said, the Republic of Cyprus is constantly strengthening. “Recently (10.3.2023), Fitch has upgraded Cyprus’ credit rating to BBB. The upgrade is due to the improved fiscal picture and the reduction in public debt,” he further noted.