'Cyprus property depends on foreign buyers - Financial Mirror' | Blog

'Cyprus property depends on foreign buyers - Financial Mirror'

Недвижимость на Кипре зависит от иностранных покупателей - Financial Mirror

An analysis of the total number of sales contracts registered with the Cadastral Department of Lands for the first five months of each year reveals that the Cypriot property market is experiencing its most active year since 2008. A study of the same figures suggests that the Cypriot real estate market is experiencing the most foreign investor dependent year since 2007. More specifically, foreign sales account for 46% of total sales in 2023, up from 43% in 2008. Continuing to analyze this data, we can conclude that the share of foreign sales in the real estate market in 2023 is the highest ever, with the exception of 2006 and 2007, when the share was 49% and 53% annually, respectively. These''The figures underline the significant reliance on foreign buyers in the current market and highlight the sustained interest and activity of international buyers in the real estate sector.

According to the Central Bank of Cyprus, house prices increased annually in all regions. House prices rose by 2.9% in Nicosia, 7.1% in Limassol, 3.3% in Larnaca, 10.4% in Paphos and 4.2% in Famagusta. Apartment prices rose significantly in all regions, by 4.3% in Nicosia, 9.3% in Limassol, 9.4% in Larnaca, 8.6% in Paphos and 5.1% in Famagusta. According to market data, this significant price increase is mainly due to the headquarters pull policy, which has attracted around 1,000 foreign companies to Cyprus in 2022. These are mainly companies from''Russia, Israel, Ukraine, the UK, Lebanon and Belarus. At the same time, the increase in lending costs due to the ECB interest rate hike does not seem to have had a significant impact on the overall demand for real estate, but on the other hand, it has significantly affected the demand for new housing loans. According to the Central Bank of Cyprus' Monetary and Financial Statistics publication, the volume of new housing loans in the fourth quarter of 2022 decreased by 25.2% year-on-year.

Sale other properties in Emba 136 111,00 $

Cyprus,Emba

197 м²

Sale flat in Kyrenia 307 034,00 $

Cyprus,Kyrenia

3 Bedrooms

1 Bathroom

93 м²

Sale flat in Famagusta 182 301,00 $

Cyprus,Famagusta

1 Bedroom

1 Bathroom

48 м²

Sale house in Lapta 210 833,00 $

Cyprus,Lapta

1 Bedroom

1 Bathroom

47 м²

Rent flat in Limassol 3 920,00 $

Cyprus,Limassol

3 Bedrooms

3 Bathrooms

118 м²

Sale flat in Paphos 419 577,00 $

Cyprus,Paphos

2 Bedrooms

2 Bathrooms

94.95 м²

Rising interest rates and construction costs are negative factors for Cypriots considering purchasing real estate. However, a group of potential buyers are actively seeking to take advantage of the current''opportunity by purchasing properties from the existing stock of new homes before the changes to the reduced VAT policy are implemented. This is particularly relevant for properties that cannot meet the newly established size and value criteria. While foreign investment in Cyprus real estate has great potential, it also carries certain risks. Foreign investments are characterized by instability, they are subject to many dynamic factors that are constantly changing. In essence, if foreign investment loses its momentum, there is a significant risk that prices will stabilize or decline. Thus, in order to estimate the trajectory of prices, it is necessary to rely on inflation rates, interest rates, economic''growth (Cyprus, EU, US, UK) and on whether foreign investment flows will remain active in the Cypriot market. Based on the overall economic situation, the most likely scenario is for prices to stabilize initially, with possible downward pressure (which is less likely in the short run). Nevertheless, a significant price drop on a large scale is unlikely in the medium to long term under the current economic conditions (barring major political events). Nevertheless, it is important to note that if inflation remains high and nominal prices remain stable for an extended period of time, "real" real estate prices will inevitably decline. Haralambos Pirosh''is a lecturer in real estate at the American University of Cyprus (AUCY) and an expert valuer at Zyprus Real Estate, a company of valuers and real estate agents.

All opinions and views expressed in this article are solely those of the author.