PwC Cyprus has released its latest publication on the Cyprus property market, which provides information on the performance of the sector in 2021, showing clear signs of recovery, despite disruptions caused by the pandemic and the termination of the Cyprus Investment Program (“CIP”), as of November 1 2020.
According to PwC analysis, the total value of the transaction in 2021 reached 3.8 billion euros, which means an annual growth of 26% (down 14% compared to 2019). In terms of volume, real estate deals during 2021 reached 19,100, up 32% from the previous year, and even surpassed 2019 levels by 11%, driven by growing domestic demand.
The Nicosia, Limassol and Larnaca areas recorded a double-digit increase in transaction costs in 2021 compared to 2020, with Limassol accounting for 42% of the total transaction value. While a market recovery is evident in all districts, transaction costs in 2021 appear to have declined from pre-pandemic (i.e. 2019) levels, with the exception of Nicosia, which is the only district that saw an increase. This is mainly due to the fact that the Nicosia market is predominantly focused on the local segment, which has become a key factor in the recovery and growth of the sector in 2021.
The residential segment showed clear signs of recovery, with the value of transactions in apartments and houses reaching €2.4bn in 2021 (apartments: €1.3bn and houses: €1.1bn), posting an overall growth of 16% in terms of in value terms and by 23% in physical terms compared to 2020. Land assets proved to be the key market drivers during the year, with land transaction value reaching EUR 950 million, accounting for 44% of the sector’s total transaction value growth. In terms of volume, a total of 7,300 land transactions were registered during the year, representing a significant annual growth of 43%.
Despite the termination of the CIP, there were 139 residential real estate transactions registered in 2021 with a value of ≥1.5 million euros, which is 21% less than in 2020. 1.5 million) amounted to 380 million euros in 2021, which corresponds to a decrease of 5% compared to 2020. This indicates that, despite the smaller volume, transactions are on average in more expensive assets.
Perhaps the most resilient segment of the sector in 2020 and 2021 was residential property valued at between €100,000 and €300,000. This is mainly due to strong demand for new homes, as well as increased activity in the private rental (especially apartments) and sales transactions. In terms of transaction value, residential real estate in a certain range amounted to around 1.1 billion euros in 2021, up 33% from 2020 and 15% from 2019.During 2021, real estate purchased by foreign nationals increased by 24% year on year. Since August 2021, the monthly transactions of foreigners appear to be consistently above pre-pandemic levels, demonstrating the overall dynamics of the Cyprus property market. As for the construction sector, during 2021 the continuous increase in the cost of materials was unrelenting, recording an annual increase of 11%, mainly due to inflation in the prices of metal products (about 23%) and wood products, chemicals and plastics (about 10% ). Despite this increase, in the first 10 months of 2021, the volume of new building permits increased (17%), while the cost of such permits decreased by 8% compared to the same period in 2020, indicating that new developments on average smaller scale.
Commenting on the publication, Mr. Konstantinos Konstantinou, PwC Consulting Partner in Cyprus, noted that “despite the disruptions caused by the pandemic and the end of CIP, as of November 1, 2020, the real estate and construction sector has maintained its position as one of the fastest growing sectors of the economy, fueled by the growing level of transactional activity in the growing domestic market.