03.03.2023
Annual real estate sales rose in the first two months of the year, helped by the relocation of high-tech firms and their employees.
According to the latest data from the Land Registry, sales documents filed in January-February amounted to 2,222 units out of 1,907 in the two months of 2022, representing an annual increase of 17%. Compared to 2019, real estate sales are still growing by 39%.
Economist Thassos Yasemides said the number of sales documents filed with the Land Registry Department shows the dynamics of the sector. He noted that the cost of documents of sale should also be taken into account, since the sector is adapted to the demand in the domestic market, people choose Cyprus for resettlement with their families, as well as from markets such as Israel.
“Increasing mobility in the market is facilitated by the transfer of the headquarters of companies to Cyprus, which leads to a strengthening of prices and rents. Real estate is in particular demand primarily in Limassol , and in recent months in Paphos and Larnaca , ”said Yasemides .
The economist agreed that higher construction costs have forced developers to put some projects on hold, noting that this has boosted sales of old properties.
According to the data, the largest annual increase in sales of 67.9% was recorded in the Famagusta region , where 131 documents were issued in the first two months, compared to 78 documents in the same period in 2022.
It was followed by Larnaca , where sales rose by 32.9%, reaching 428 from 322. Property sales in Limassol also rose by 13.9%. But in Nicosia, sales fell by 13.5%.
In February, the number of sales documents filed was 1,131, compared to 1,052 in 2022, representing an 8% year-on-year growth.
According to Yasemides , a major outstanding issue is “to amend the law on the reduced VAT rate in such a way that, on the one hand, the objectives (of the EU directive) are met, but without affecting the market.”
The European Commission has given lawmakers until February 15 to approve legislation in line with EU housing incentive directives, but the government has demanded a delay to allow for a presidential election.
The EU directive requires Member States to introduce legislation on a 5% VAT rate on houses up to 140 square meters. In Cyprus, a reduced VAT rate of 5% applies to houses up to 200 sqm .
A European Union directive to reduce the size of homes eligible for a lower 5% VAT caused an uproar from MPS and real estate stakeholders as they argued it would jeopardize the recovery of the construction sector.
