22.10.2023
Recent events in the Middle East and the war between Israel and Hamas have taken Cyprus by surprise (as in most countries). This is a dire, primarily humanitarian situation, the consequences of which are currently difficult to predict, and they concern not only immigration and tourism, but also more serious events such as the expansion of the conflict involving other countries. In addition, the economy will affect most other countries, including oil prices and the cost of living, health care and medical care.
However , the misfortunes of other countries can somehow help Cyprus. Starting with the Lebanon War (1975) and ending with the civil war in Yugoslavia, the collapse of the Soviet Union and so on. All these developments have benefited the Cypriot property market as numerous foreigners have formed communities to reside permanently in the country.
Apart from the British market, local foreign groups include Israelis, Arab citizens, Yugoslavs (mainly Serbs) and Russians, while other foreigners are business groups associated with shipping, IT companies, investment funds and hotel investors.
Let’s look at a map of the Middle East. Cyprus is in the center, and this intimidates many people who do not have an understanding of the whole picture of the geography and politics of the Middle East.
Israelis have recently become the second largest tourist visitor to Cyprus, reaching almost 300,000 per year, and they are unlikely to return with the same number of tourists, which, coupled with the loss of the Russian market of almost a million visitors due to the war in Ukraine is a very big loss, which is difficult to make up for in the 2023-2024 tourist season.
According to press reports, about 10,000 Israelis permanently reside in Cyprus and buy property on the island; some built hotels, invested and developed, while others chose to invest in hospitals or build new facilities in Nicosia and Limassol .
If the conflict ends within a short period of time, the losses will not be that great, but if it continues, the expected decline in demand for real estate will be unpredictable.
This will inevitably damage the local market, but we expect the 40% foreign investment share to drop to at least 30% (always dependent on the length of the war).
Some investors are expected to show increased interest in businesses and home purchases (or rentals), which will offset some of the losses.
Cypriots hope that this very brutal conflict will soon end, and with it human suffering, and the island’s economy will be able not only to stay afloat, but also to develop.
