The end of 2021 has not undergone major changes in the real estate sector of Cyprus. The lower end of the housing market, targeted at local residents, with properties in the region of 300,000–500,000 euros, had good demand and prices were rising. There has been a drop in prices for more expensive properties, primarily as a result of the termination of the citizenship by investment scheme with Limassol, and Paphos has suffered the most, as well as projects for marinas and golf courses.
Now the question is, what will 2022 be like for real estate?
The situation in Ukraine affected Russian demand as well as Ukrainian demand, which was the fastest growing market. Now we see that not only has demand plummeted, but some of these two countries that have already bought property here are putting it up for sale.
We live in a global economy, and the situation in any country affects others.
The extent of the consequences will depend on the duration of the situation and the sanctions imposed by the EU/Cyprus.
We hear complaints from lawyers and accountants that they are losing business from their foreign (mostly Russian) clients, and this cannot but affect the local market, both in leasing and in sales, since these firms employ more than 5,000 highly paid employees.
Also, as a result of the current situation, the tourism market, which is a precursor to interest in real estate, is expected to halve this year.
Rising inflation and gasoline prices have led to an increase in the total cost of construction by about 10% in recent months.Travel costs have risen, as has the cost of living, making life in Cyprus less affordable. Interest rates will rise, making loans more expensive despite subsidies given to local residents.
As if all that wasn’t enough, the presidential election is due in 2023 and political parties are already trying to outdo each other on how to win votes, creating uncertainty and volatility in the market.
This is partly discussed by the forthcoming charge of VAT on houses.
All these factors and others will certainly affect the market for both local and foreign buyers, which is likely to shift demand towards existing properties.
We are now targeting other tourism markets such as Germany and Denmark, which should help with the demand for local property.
So, there will be many uncertainties in 2022, which is alarming, although various public and other infrastructure projects are being implemented that will make Cyprus more attractive.
Antonis Loizou & Associates EPE – real estate appraisers, real estate agents and real estate consultants, www.aloizou.com.cy