Like many other EU countries, the Cyprus property market is in a state of great uncertainty caused by the protracted Covid-19 pandemic. However, despite this uncertainty facing the real estate and construction business, there is hope that in 2021 the decline in home sales will stop, and prices will either decrease or remain stable.
The main hopes for improving the situation in this sector of the economy, which accounts for about 15% of Cyprus’ GDP, are associated with the lifting of restrictions on movement between countries. Apparently, the first step towards this should be vaccination and the introduction of so-called “sanitary passports”, which some leading airlines have already agreed on, and their example will likely be followed by the governments of many countries.
Before the coming summer, an influx of tourists and potential people wishing to buy property in Cyprus is not expected, despite the fact that during the pandemic, selling housing on the Internet was practiced – without a visit to the island in order to select an object and complete paperwork. Remote purchase and sale transactions have been carried out here before, but this is the first time they have acquired such a scale. Interaction with official bodies was also transferred online, which partially made it possible to speed up some registration processes.
However, the number of foreigners considering Cyprus as a “second home” or primary residence continues to remain consistently high. Suffice it to say that since January 2020, foreign buyers have accounted for almost 40% of all transactions with Cypriot real estate, while in many EU countries the same figure does not exceed 10%. And this takes into account closed borders and a sharp decrease in international flights, which in itself is confirmation of the interest of foreign investors in investing in local real estate.
However, despite some signs of stabilization, there is no talk of a return to pre-crisis levels. However, the implementation of large projects for the construction of new residential complexes in various cities of the country can be taken as an encouraging factor. Such cities include Limassol, Paphos and Larnaca, which is more or less focused on Russian-speaking buyers.
However, the greatest demand among immigrants from Russia, Ukraine and Belarus is in Limassol, which is both the main resort of the country and its main business center. At the same time, every year more and more Russian citizens are interested in housing in the western part of the island. Among other things, this is facilitated by the absence of any legislative restrictions in relation to foreigners, although in order to avoid any problems it is recommended to first seek advice from an independent lawyer.
This step makes sense after the Government of Cyprus decided to terminate the Citizenship by Investment program due to numerous violations of its terms and conditions. Last fall, the European Commission began to suspect that the island government was selling Cypriot passports to wealthy investors without taking into account compliance with the rules established for them.
As follows from the latest Central Bank of Cyprus House Price Index (RPPI), their growth was recorded during the first half of the year by approximately 0.9%. On an annualized basis, detached houses rose in price by an average of 0.7%, while apartments in residential complexes fell in price by 0.3%. This is largely due to a decrease in demand for property in Cyprus due to the introduction of stricter criteria for foreigners in the Citizenship by Investment investment program, which has now effectively ceased to exist and is in “standby mode”.
However, the island is still refining existing projects and launching new ones, and construction permits are being issued at the same rate (exceptions were March and April, when the refusal rate reached almost 50%). This is explained, first of all, by the fact that it was during these months that the most stringent quarantine measures were introduced in Cyprus, which did not allow the country to realize its full potential.
At the moment, it is expected that in all the main resorts of Cyprus (Limassol, Paphos, Polis and Larnaca), prices will remain at the same level. For example, a villa in Polina will cost 0.5 million euros, in Larnaca – half as much, and in small towns in the Paralimni area – up to 150 thousand euros.