06.09.2021
Today, the Department of Lands and Surveys released data showing that the lack of sales of real estate to foreigners slows down the recovery of the real estate market.
From the published figures it follows that in the local market the number of real estate transactions in the first 8 months of 2021 reached the highest figure in a decade – 4089 units. For the same time period, sales of objects on the foreign market amounted to 2,000 units. They have yet to return to the level that was noted in 2018 before the pandemic – 2884 units.
We can speculate about the reasons why overseas property sales have not yet recovered:
- The COVID-19 pandemic continues to make life difficult for foreigners wishing to visit the island and return to their home countries.
- The sudden end to the disgraced Island Citizenship by Investment Scheme (also known as Golden Passports) after being exposed by undercover reporters from Al Jazeera in August 2020 by The Cyprus Papers also resulted in untold reputational damage to Cyprus.
- The decision of the Cypriot authorities to introduce restrictions and bureaucratic barriers for UK citizens who wish to buy property after Brexit. The competitive advantage of Cyprus over countries like Spain has been drastically reduced for Britons looking for holiday homes in the sun. (A few years ago, people from the United Kingdom made up the majority of foreigners buying property in Cyprus).
Real estate sales figures for each of the market segments:
Sales of real estate in the domestic market
Compared to August last year, this year the number of real estate transactions among the local population has increased by 32%. Such a high growth rate is due, among other things, to low interest rates and their state subsidies.
But, as we reported earlier, this statistic also includes an unspecified number of non-disclosure agreements. These include loan restructurings, foreclosures and debt-for-asset swaps negotiated between banks and insolvent borrowers as part of banks’ efforts to reduce problem portfolios. Unfortunately, the Department of Lands and Land Surveys does not publish these figures separately.
But there is open information on property management of the Bank of Cyprus (REMU). Thus, we learn that REMU has completed transactions on 387 properties with a contract value of 85 million euros. These figures refer to the first half of 2021 – and during the same period, REMU acquired €21 million worth of real estate through asset swap and property recovery debt.
Sale of real estate to foreign citizens
The increase in real estate transactions with the participation of foreigners in August amounted to 24% compared to August 2020. But for the reasons mentioned earlier, a full recovery to pre-pandemic levels will still take quite a long time.
Sales of real estate to EU citizens
Compared to the same period last year, sales of real estate to EU citizens increased by 60% in August.At the same time, from January to August, sales in all districts showed a significant increase compared to last year.
Foreign sales for non-EU citizens
Sales to non-EU citizens (including UK citizens) were down 1% in August compared to August 2020, with sales in Nicosia (the capital) and Larnaca breaking the trend. But so far, sales are still well below pre-pandemic levels.
