15.01.2023
Last year, there was a positive trend: new sales showed an increase in real estate contracts by 35%. At the same time, it is worth noting the increase in the acquisition of real estate by foreign buyers by about 100% compared to the previous year. It seems that the Cyprus property market has not suffered, despite the negative phenomena that it is experiencing.
The downsides are rising interest rates on loans and rapidly rising construction costs. The cancellation of the Citizenship by Investment plan and the war in Ukraine did not have a noticeable effect on the market, and values seem to have survived (with the exception of farmland in some areas).
Interest from foreign buyers, although this sector represents only a small percentage of total sales, in value terms exceeds 20% of the total.
But external demand supports the market. Shipping companies, as well as IT firms, are showing a noticeable interest in locating here. Most recently Kassatly Group from Lebanon has announced their move here. There is also strong Israeli interest, which ranges from the buyout of local hospitals to large-scale residential and office developments, including the port of Larnaca .
Sometimes it seems to us that the foreign market will buy up Cyprus, which may have a negative impact on the Cypriots. We are not opposed to selling to foreign demand, but it makes one wonder what the situation will be like in, say, five years. More importantly, what will be the implications for the local population (especially for affordable housing)?
The “misfortunes” of other countries seem to have had a positive effect on the Cypriot economy . So, although the Ukrainian war affected the tourism market, the same country (Ukraine) “exported” numerous businesses to the island (especially in IT). Whether by accident or through good planning, the Cyprus tax system is a major asset, as is the stable political situation and our EU membership.
Foreign demand aside, 2022 was greeted with millions in redundancy payouts to bankers and others whose compensation funds hit the local real estate market (after buying new cars).
The interest of the foreign market will negatively affect local residents, including high rents for student apartments when international students leave Cyprus due to unavailability of housing.
This is a phase of uncertainty as to how local demand is affected by inflation and high electricity prices, but there is a glimmer of hope if and when natural gas deposits appear in Cyprus.
Anthony Loizou FRICS — Antonis Loizou & Associates EPE – Real Estate Appraisers and Development Project Managers
