29.04.2023
Despite high inflation, the Cyprus property market has maintained a solid growth in 2022 thanks to demographic changes, high-tech companies and Ukrainian refugees, real estate analysts say.
PwC Cyprus Partner Konstantinos Savvides said the market’s growth last year was driven by an influx of foreign high-paid employees moving to Cyprus and Ukrainian refugees.
According to an in-depth analysis by PwC , the total value of real estate transactions in Cyprus reached a record high of 5.2 billion euros in 2022, recording an annual growth of 27%. The number of properties sold reached 22,500, up 12% from the previous year, exceeding the pre-pandemic level of 2019 by 31%.
In 2022, the government introduced incentives for companies representing foreign interests to set up a headquarters or base in Cyprus. “According to a report from the European Commission, more than 1,000 foreign companies decided to move their activities to Cyprus during the year, along with 9,000 employees, which is approximately 25,000 people if their families are included,” said Savvides . He added that thousands of Ukrainian refugees fleeing the war have added to the number of foreigners who have settled in recent years. At least 17,000 Ukrainians have taken refuge in Cyprus since the outbreak of the war in February 2022.
“The positive effects of this ongoing demographic shift are clear on observed levels of demand in the real estate and rental markets.” Savvides argued that this would generate a wide, direct positive impact on the Cypriot economy. “These are people who contribute to the real economy by renting and buying property, shopping at local markets and eating at local restaurants.” He said that demographic changes are behind the recovery of the sector, with foreign citizens mainly eyeing apartments in Limassol and Paphos.
During 2022, 5,928 properties in Cyprus were purchased by foreigners (in terms of registered contracts of sale) compared to 3,691 properties in 2021, representing an increase of 61%. Approximately 57% of properties purchased by foreigners in 2022 were purchased by non-EU citizens (2021: 50%, 2020: 61%).
All areas of Cyprus recorded an increase in the number of properties purchased by foreigners on an annualized basis, with the most notable growth being in Paphos and Limassol (79% and 78% respectively), followed by Larnaca (55%).
Sales contracts registered by foreigners in all districts except Famagusta (down 5%) exceeded pre-pandemic (2019) levels. At the same time, in Limassol and Larnaca, the number of registered contracts increased markedly by 68% and 60%, respectively.
According to the Land Registry data, in Limassol , Larnaca and Paphos, the number of registered sales contracts has increased (40%, 43% and 58% respectively compared to 2021.
During the same period, annual sales in Nicosia and Famagusta remained relatively stable. “Undoubtedly, the driving force of the market is related to apartments, the demand for which is mainly fueled by the growing desire of companies with foreign interests to relocate their operations and personnel, mainly to coastal areas,” Savvides said . A strong domestic segment further supported demand.
A total of 9,000 units were sold in 2022, compared to 7,000 in 2021, representing a 29% increase. The value of transactions reached 2.1 billion euros in 2022, up from 1.5 billion euros in 2021, an increase of 42%.
Savvides said that if Cyprus is to continue to reap the benefits of the growth of the real estate sector, the authorities need to correct the weaknesses in the island’s social infrastructure. “These people have a lot to offer the island and its economy, but unfortunately the system doesn’t seem ready to accommodate them and their needs.”
Savvides explained that Cyprus needs to invest in schools that serve children from families moving to Cyprus, while the healthcare system also needs support. “Investments will be required in education and the health system, as well as in the creation of a public transport network. This may seem minor, but is critical if we are to maintain our reputation as an attractive business destination.”
