20.11.2023
Market insiders warn that there could be economic problems as the island looks like a vast construction site, fueled by a slew of projects supported by Israeli investment despite the war with Hamas . They stress that Cyprus is a safe environment for Israelis and expect a further surge in their activity after the end of the conflict. However, they note potential problems in the real estate market caused by numerous private projects and an unprecedented influx of public works affecting supply as demand increases.
Sustainable market
The latest Land Registry data on sales documents for the first ten months of 2023 not only reflects the resilience of Cypriot property, but also highlights concerns about potential market problems.
The ten-month period marked the industry’s best performance since 2008, with 12,825 property sales recorded, according to the latest figures. A significant increase of 36.2% was recorded compared to the previous year, with all districts except Nicosia (an increase of 8%) experiencing a double increase . Larnaca saw an impressive growth of 32% compared to last year.
Michalis Zavos , a board member of the Cyprus Land Development and Construction Association and managing director of the D. Zavos Group , said that the property market continues to develop, showing annual growth of approximately 20%. He highlighted the favorable conditions of Cyprus as a safe investment hub, especially for foreigners in the Mediterranean region.
Zavos points out that Israelis are constantly looking for investment opportunities in Cyprus, buying land and building apartments to generate significant income, given that rental yields range from 5% to 8%, surpassing the average of 3% in Israel.
Large public projects
Stelios Gavriel , President of the Federation of Construction Contractors (OSEOK), confirms the development of the construction sector, attributing this growth to the increase in the increased construction costs of developers and the steady pace of the market.
Gavriel praised government projects under the €1.2 billion Recovery and Resilience Facility, which have made a significant contribution to the expansion of the sector, and expects the government to bring many projects to market in the new year. He said major government projects involve joint ventures between two or three companies, refuting claims that the government favors specific contractor firms.
George Chrysochos , CEO of Cyfield Group , noted that, despite a temporary decline in activity in the first days of the war in Israel, the situation has returned to pre-war levels of purchases and sales.
Chrysochos argues that high property prices in Israel are encouraging investors to favor Cyprus, where prices are more attractive. It highlights strong demand for housing and office space, leading to a surge in private sector projects and exposing issues such as labor and machinery shortages in the construction sector.
Chrysochos suggests that the government limit the number of projects brought to market to address any potential problems in the industry.
