Cyprus real estate market will recover in 2021
The new reality from the moment of strict isolation in Cyprus has affected the real estate sector. Many transactions, even agreed and almost completed, were frozen or postponed.
In recent years, Cyprus has seen an increase in the number of new expensive residences, the price of which was based on the advantages of the Cyprus passport program, and not on the real state of the market and economy.
The bulk of the buyers of these "passport objects" were citizens of Russia and China, but the demand for them began to weaken slowly over the past 12 months. Chinese activity has been virtually absent on the market since the advent of COVID-19 in December 2019, due to severe restrictions for potential buyers from abroad on trips to the island and made it impossible for many to complete the already planned transactions.
Many developers, keeping abreast of the pulse, began to freeze their projects at the end of 2019, but, of course, not all. The rest, who were late with the construction of residences for obtaining Cypriot passports, now have a large supply of unsold housing. Such developers are now planning to change the profile of residential premises to office or hotel, they hope that real estate will be in great demand when activity starts again in the market.
Now the construction has stopped, and a large number of unfinished projects remain. According to experts, the famous marinas, casinos and port projects of Larnaca will suffer in the short and medium term. This can only mean a softening of pricing in the market, but how exactly prices will go down remains to be seen. And now it’s very difficult to make any forecasts in this sense.
Most likely, the retail sector will suffer the most due to stopping plans to expand the area for trading companies. The residential real estate market will also be affected by isolation, as new foreign investors will need some time to enter into new transactions and invest. As you know, for Cyprus, the number of foreign real estate investors is 50%.
Experts believe that the years 2020 and 2021 will be difficult for the country and the property market in Cyprus, and the government will have to step in and create an “investment environment” in order to regain interest in the Cyprus market.
Demand from Russians, Chinese and Israelis, the main buyers of real estate in Cyprus, will be delayed at least until the end of 2020. Loss of demand will lead to a decrease in both the sale and rental value of real estate in the country. The rate of decline in housing prices will depend only on when demand resumes and what incentives the Cyprus government will be ready to introduce for foreign real estate investors.
The office real estate sector also remains in doubt, as social isolation in the country has created a new trend - working from home, and many companies have seen that the productivity of employees from home can be at the same level and even higher. This experience will force many organizations to rethink their plans for new offices.
Logistics, warehouses and industry benefited from this crisis thanks to the massive increase in e-commerce. According to experts, the Cyprus property market has always been and will continue to be a good investment option, and is expected to recover as early as 2021.