Savvas Papasavvas participates in the IR Global Real Estate Virtual Series – Real Estate Recovery: Bouncing back after the global pandemic
FOREWORD BY EDITOR, ANDREW CHILVERS
As the Covid-19 pandemic continues to disrupt businesses across the world, one of the biggest debates being played out is the future of property – in the city centres and suburbs; in office space, commercial and residential.
Just what will the world of real estate look like at the end of 2021? Will cities return to normal, and office space and retail malls remain the same, or will they be changed forever?
Most legal and financial advisors in the real estate sector agree there is an element of crystal ball gazing, but likewise there are now clear signs of how things might just look in the near future.
Helping clients in the new normal: How are legal advisors assisting clients during the ongoing pandemic lockdowns? How important has the Counsel role become?
In Cyprus, the retail industry has been suffering much the same as elsewhere. This is particularly true of clothing retailers, restaurants, and malls in general. Supermarkets and smaller essential shops like butchers, have been doing well. In fact, the pandemic has been an opportunity for them. They sell more to customers who spend more time at home while the restaurants and malls are shut.
Since the beginning of the pandemic, it was observed that rent concessions were frequently granted to lessees as a direct consequence of the coronavirus pandemic. Landlords and tenants are looking to their advisors to provide them with ideas as to how both sides can make temporary amendments to long-term lease agreements. Those tenants and landlords I’ve spoken to seem willing to compromise – mainly because they believe that this is mostly a temporary measure while everyone gets back on their feet. Most of them are unprepared and require advisors to assist them with their current problems and during the recovery period ahead. This is probably a big opportunity for advisors – particularly those who have been innovative and are trusted by their clients.
Cyprus is heavily reliant on its tourism industry, which has suffered a lot. That’s been a detrimental effect on the sector. But the government has provided subsidies and hopefully with the vaccine rollout there will not be any serious long-term consequences and the recovery of this industry will be fast.
Sound of the suburbs. As more people and businesses flee city centres for the suburbs, will real estate investors look more closely at long-term suburban development projects?
In the past few years there has been a successful governmental attempt to move government buildings and public service providers outside of the city centres. Particularly in Limassol, this was successful, and the private sector followed. Many new buildings have been erected outside the city centre in the past few years.
With the outbreak of the pandemic and the fall in demand for office space the prices have fallen as well. Therefore, a potential tenant may choose to rent modern offices that landlords do not have the financial ability to hold back from the office lease market until the pandemic is over and slightly older offices that landlords provide for fair rentals.
“The mall stores are done.” How long will it take for shopping malls to recover from Covid-19 in your jurisdiction?
Investors in malls need primarily to assess whether the current situation is a slow-moving wave; that will go away sooner or later or whether it’s a permanent issue that will last for many years ahead. Some investors are prepared to invest in alternative ways of doing business, other than e commerce, which has been the main reaction of most retailers.
For example, a client of mine has already started planning to convert their mall from its present structure, currently being a huge building divided into small shops, to an open type of mall that will be able to accommodate shopping in isolation; away from other people, but at the same time provide to shoppers the facilities of a mall infrastructure.