Energy

The biggest potential for investment in the coming years will be in the hydrocarbons sector. Noble Energy’s appraisal drillings in Cyprus’ Exclusive Economic Zone (EEZ) in October confirmed natural gas reserves of 3.6 trillion cubic feet (tcf) to 6 tcf, with a gross mean of 5 tcf, in block 12. According to preliminary findings, block 12 in Cyprus’ Exclusive Economic Zone (EEZ) is estimated to have 7 trillion cubic feet (tcf) of natural gas; appraisal drillings are underway and the results are expected to be final by October 2013. Cyprus is set to become a natural gas exporter at a time when international demand for liquefied natural gas (LNG) is expected to rise. The confirmed reserves could meet Cyprus’ gas demand for over 100 years and the gas from all six leased EEZ blocks could provide exports to Far East markets and up to 30% of Europe’s additional gas needs by 2025. A memorandum for the construction of an LNG terminal in Vassilikos was signed in June 2013 between Cyprus and Noble Energy, Delek Drilling and Avner Oil Exploration. The ambitious project is of strategic importance and represents the largest investment in the history of Cyprus. The initial construction phase of building the LNG plant and other necessary installations is estimated to take four years to complete, and additional infrastructure willalso be constructed for major energy companies currently exploring its offshore blocks. Construction work is expected to go on for over 15 years. Investment in the production of LNG could run into the billions and there will be investment opportunities for related industries, such as a liquefaction plant and pipeline construction, power generation and oil product storage solutions. The government is also prioritising renewable energy sources (RES), aiming to reach 13% RES electricity supply by 2020, through wind farms, photovoltaic (PV) systems, solar thermal plants and biomass and biogas utilisation plants, providing investment opportunities in major infrastructure projects.

Banking and Financial Services

International banks have increased their presence over the years, and with the current restructuring of the local banking sector following Cyprus’ financial crisis and bailout, there are opportunities for more foreign banks to set up operations in a market that is thirsty for funding. Niche services such as asset management, ship financing and custodian services could be areas of interest. Other investment opportunities in the banking and financial services areas that can be tapped into by international banks and financial groups are mergers and acquisitions, private equity and venture capital projects as well as financing of large infrastructure projects in the oil and gas industry, casino and resort development and other large scale projects. The passing of the Undertakings for Collective Investments in Transferable Securities (UCITS IV) legislation in 2012 and The Alternative Investment Fund Managers Directive (AIFMD) in 2013 have created new opportunities for the emerging fund industry of Cyprus, while foreign exchange trading is a key growth area. Despite the economic crisis the number of investment firms and funds is increasing.

Shipping

Cyprus’ maritime sector is a true success story and despite the financial crisis the overall tax and operational framework for shipping in Cyprus has remained intact. Shipping contributes over €1 billion to the country’s economy annually, accounting for around 7% of GDP and directly employing 4,000 shore-based personnel and 55,000 seafarers around the world.  Cyprus is the only EU-approved open registry, which means you do not have to be a Cypriot national to register a ship and enjoy the variety of benefits of the Cyprus flag. The proven advantages of Cyprus’ shipping legislation, ratified international conventions and the general framework of shipping related business have attracted many of the world’s most influential names in shipping to base themselves on the island. Cyprus continues to encourage innovation in the international shipping sector, providing debate and practical solutions for worldwide issues – proof of this is an EU-approved tonnage tax that secured Cyprus’ position as the largest third party ship management centre in the EU and the largest crew management centre in the world. Growing Asian demandwill continue to provide new opportunities for this thriving sector. Cyprus already boasts the third largest merchant fleet in the EU and the tenth eleventh largest in the world.

Tourism

Investment in multipurpose developments such as casinos, luxury marinas and golf courses are part of a wider project to upgrade the Cypriot tourism product. There is clear scope to extend the tourist season beyond the popular summer months and add to the current 2.4 million holidaymakers currently visiting Cyprus each year.  Key investment possibilities are in special interest areas such as medical tourism, sports, nautical and agro tourism, conferences, theme parks and managed attractions. A new potential area of investment is the development of state-of-the-art casinos. So far, the Finance Ministry has put together a proposal for one licence for a ‘high-quality’ casino – preferably in a tourist area. The annual turnover of online gambling in Cyprus is reportedly around €2.5 billion and politicians and hoteliers alike have welcomed the proposals on the operation of casinos, which could open up a new stream of investment and revenue. As part of the proposal, the Finance Ministry is calling for the establishment of an independent casino supervisory authority and a strict legislative framework. A major luxury marina project is being developed in Cyprus’ coastal city of Limassol, and more marinas are planned for Paphos, Ayia Napa and Larnaca, providing residential and retail investment opportunities. Cyprus also currently has four 18-holeinternationalstandard golf courses and the government plans to award permits to bring the total number to 11, turning the island into a golf destination of choice.

Wellness Services

Cyprus provides investment opportunities in wellness services thanks to its moderate climate, clean seas and rich natural environment. This segment is fairly under developed in Cyprus, but with the island’s renowned hotels and resorts with international marketing and recognition, the potential to develop wellness tourism is well supported. Having an established tourism product ripe for diversification and with the existence of thermal springs, spas and therapy centres are of particular interest. Making use of the natural properties of thermal springs, gases and mud baths with healing properties, mineral spas and hydrotherapy centres could be established in Cyprus. The properties of water, with or without chemical additives, are used for therapeutic purposes and with the exceptional sea quality could contribute to an increase in thalassotherapy services. With over 340 days of sunshine, Cyprus could also be ideal for climatotherapy centres. With its well-trained human resources, strong track record in tourism and a government commitment to enhance the prerequisites for developing the sector – including training, capacity building and infrastructure – Cyprus offers many opportunities in wellness tourism services.

Professional Services

Despite the current economic developments in Cyprus, the professional services sector continues to be strong. Staffed by experienced and highly qualified professionals, this sector is supported by a favourable and constantly updated tax regime and is the backbone supporting foreign investors in Cyprus. The expertise of the country’s lawyers, accountants and other specialists – often UK or US trained – offer full and efficient services in all aspects of company law and tax planning. With around 80% of Cyprus’ economy based on the provision of services, this sector is one of the most important in the country. Cyprus was the first country in the world for the Institute of Chartered Accountants in England and Wales (ICAEW) and the Chartered Institute of Management Accountants (CIMA) to set up training outside the UK – strengthening Cyprus’ reputation as a centre of excellence for professional services. Cyprus continues to be one of the leading jurisdictions used by blue chip companies and corporate planners for structuring investments into Europe and the world’s leading high-growth markets.

Property and Real Estate

Cyprus has long been a desirable location for investors, expats, retirees and those looking for a second home in the sun. Due to the current economic climate, property buyers can find exceptional properties at attractive prices. Apartment sales prices have fallen by 44.3% since their mid-2008 peak, according to recent economic estimates. Meanwhile, the construction of upmarket developments continues, creating opportunities for investment and strategic partnerships. To further encourage investment from long-term residents, the government is working on simplifying the legislative framework and creating a fast-track procedure for granting long-term residence permits. Third country applicants who invest a total of €300,000 for the purchase of one or more properties will be granted permits, provided they are purchased from the same vendor. This incentive has already attracted investors from across the world and most recently Cyprus has seen an influx of Chinese property buyers. As well as tourism-related property development, a recent revision to the law on trusts will open up opportunities for real estate investors.

Information and Communication Technologies

Recognising the crucial importance of the ICT sector, Cyprus has formulated a national digital strategy, making IT development a priority in its economic development plan. With access to major satellite systems and supported by an extensive submarine fibre optic cable network – including the world’s longest optical submarine telecommunications cable SEA-MEWE-3 linking Cyprus directly with South East Asia, the Middle East and Western Europe – the island is attracting an increasing number of international companies looking for a reliable regional hub. Cyprus welcomes more foreign direct investment to expand its overall ICT services and more specifically is keen to develop projects in e-Government, e-Business, e-Learning, e-Inclusion and e-Health. The Cypriot government also offers financial incentives for innovative small and medium-sized enterprises setting up on the island. With the support of a growing research community, Cyprus aims to become a centre of excellence for technology training. Both Cyprus University of Technology and the University of Cyprus provide highly qualified computer graduates to meet the sector’s growing demand, while the Cyprus Institute is engaged in several ground-breaking and technologically innovative projects.

Education

With an average annual increase of 10.5% in the total number of tertiary students in the last five years, and with almost a third of all tertiary students studying in Cyprus coming from abroad, there is a great opportunity for new universities, colleges and research institutes to be established in Cyprus. The education sector continues to offer investment opportunities through the construction of campuses of foreign universities in Cyprus and in the provision of short (two-year) vocational and technical training courses. Currently there is a gap with little available for the non-academic students leaving high school and although a recent EU-funded pilot programme has attempted to bridge this gap, there are still significant opportunities for  private sector involvement. Three areas of education that are currently experiencing a great deal of growth are oil and gas, health and online education. Oil and gas management is attracting much interest given Cyprus’ natural gas reserves and the arrival of foreign companies working in the field. In health education, The University of Nicosia is currently in the second year of offering a medical degree through the University of London, St. George's Medical School. This is the first medical programme in Cyprus and has attracted students from around the world. Online education is an increasing global trend and the University of Nicosia is working towards this venture. Other areas of potential educational investment are in electromechanical engineering, photovoltaics, car mechanics and domestic gas engineering.

Health and Medical

In the medical sector there are investment possibilities in the improvement of e-Health services to the public sector, specialised medical services and the development of rehabilitation centres. Approximately 60,000 health travellers visited Cyprus in 2010, with the overwhelming majority coming from the UK, followed by Germany, Israel the Middle East, Sweden and Italy. The EU Cross Border Healthcare Directive, approved in 2011, has resulted in an increase of individuals looking for alternative health tourism destinations. Cyprus has been promoting the development of this sector and offers opportunities for partnerships between private companies and local government. Several investment opportunities exist to buildand transfer or operate centres offering care in fields including pathology, general chirurgical, heart operation, plastic chirurgical, ophthalmology, gastroenterology, paediatrics, otorhinolaryngology, obstetrics and gynaecology, urology and orthopaedics. Particular interest has been shown in centres providing specialised services from cardiac surgery interventions, kidney transplants and renal insufficiency care to oncology services, surgical remedial or aesthetic surgeries and neurosurgery. There is also good scope for the establishment of rehabilitative services for patients with mental and respiratory problems as well as for people who need long recovery after surgery.  Other areas of opportunity include the provision of preventive and diagnostic tests and dental treatments.

Research and Technology

Research and technology has been expanding from a low base with two key initiatives – the Cyprus Institute and the Technological University of Cyprus. The Cyprus Institute was founded in 2005 and has links to several world-class research institutes. It has founded three research centres to date, focusing on energy, environment and water, computation-based science and technology and technology in archaeology. The new Technological University of Cyprus was established in 2007 with research focusing on geotechnical sciences, the environment, engineering and technology, health sciences, management and economics, applied arts and communication. The planned Technology Park and the promotion of incubators also offer an expanding range of opportunities for research and development investment.