Cyprus has long been a popular holiday destination. Many of us have relied on this fact for financial stability, making money from tourism and foreign investment.
Due to the central location of the island, people from Europe, Africa and the Middle East regularly come here. This is why the real estate market is so dependent on open borders.
Unfortunately, over the past year we have seen how easy it is to bring an economy to its knees without an international connection. In particular, the real estate market has struggled as thousands of international investors have delayed their purchases. Even in Cyprus, potential property buyers have been forced to put their plans on hold due to economic problems.
With light at the end of the tunnel, the property market in Cyprus has begun to recover as quarantine restrictions are gradually lifted around the world.
The fact that the Cyprus property market is recovering is not surprising. The pandemic has hit economies around the world hard, but most economies have been able to recover from the easing of restrictions. Tens of millions of people left without work quickly found a new one.
This is not to say that irreparable damage has not been done to businesses and personal finances.
However, the truth is that in many countries the economy no longer reflects the reality on the ground. The economy can thrive while individuals and small businesses struggle simply because large corporations and listed companies take over the market.The recovery of the global economy has benefited people on a micro level, but big business and wealthy investors are truly benefiting.
But the real estate market in Cyprus is not tied to tourism. Ordinary tourists do not buy property in Cyprus. Rather, wealthy investors do it to rent out the properties to travelers or use them as vacation and nursing homes.
This explains why the real estate market has already reached the level of 2018, despite the fact that travel restrictions are still in place in many countries.
Currently, most of the international real estate purchases are made in the EU. Investors from non-EU countries will probably need a little more time. This also applies to UK property buyers who have yet to return in significant numbers.
Not only international investors are helping the real estate market to recover. Domestic property purchases more than doubled in May 2021 compared to May 2020. This is partly due to government incentives, including an interest subsidy scheme. The interest rate is incredibly low anyway, at around 2.5%
End of British lockdowns?
The UK was due to ease lockdown restrictions at the end of June, but it is likely that this will only happen at the end of July. The number of infected people there is still high, and scientists are calling for a delay so that more people can be fully vaccinated before the country reopens.
This could have an unexpected impact on the recovery of the Cyprus property market. After all, a lot of real estate in Cyprus is bought by British individuals and investors. While they can shop without visiting Cyprus in person, shoppers are nonetheless wary of spending huge sums of money in still volatile times.
However, an extra month of self-isolation is unlikely to make much difference in the long run. Potential buyers of real estate will appear at the end of July. August will be a big month for real estate in Cyprus.
One industry that is being affected by the increase in property purchases is the international money transfer industry. Cyprus is home to a number of these companies, or at least their head offices.
Non-bank companies for international money transfers
When it comes to transferring large amounts of money abroad, banks are not the best choice. They charge huge commissions and provide interest rates that benefit themselves, thus adding hidden fees. For this reason, investors turn to international money transfer companies.
In the coming months, we can expect massive non-bank international money transfers.Companies are preparing for this knowing that their systems must work reliably if they are to take full advantage of these transfers.
Money transfer companies have been hit hard by the pandemic. It’s not because people have stopped doing business abroad or living as digital nomads. On the contrary, in many industries this type of work has become widespread. However, due to problems in the international real estate markets, the number of transfers of large sums of money has decreased.
The recovery of the Cyprus property market is great news for these companies and many of them are likely to offer benefits and incentives to use their services.
This has already begun to happen, and will only scale up in the next few months. We can expect August to be an important month for these companies as the British start buying property in Cyprus again.
What awaits the Cyprus property market?
The good news is that it is unlikely that the Cyprus property market will collapse after the boom is over. Although its growth will slow, it is unlikely to fall below pre-pandemic levels. More people are struggling than before the pandemic, and previously thriving small businesses have ceased to exist. But these individuals and businesses are not the main source of international investment in property in Cyprus.
We may even see an increase in such buyers. There will be people who decide to speed up their retirement by finding a way to buy their dream home. In order not to have to wait, they already now overcome possible obstacles in the future.In case of further restrictions, they will be able to survive the crisis in their beautiful Cypriot home.
Many are wondering if real estate investors will hold back because of what has happened to tourism over the past year. However, what we are already seeing around the world is how people are striving to return to normal life.
It is impossible to return to business as usual if we continue to expect a once-in-a-century event such as a global pandemic to interfere with our plans. There will be those who permanently lose their appetite for risk. But business owners and investors need to regain that appetite if they are to succeed.