Any reasonable guess about the real estate market in Cyprus is right, the residential real estate market in Cyprus has been proven resilient and always a good investment.
The market, though, has recently been in doubt, under the cast of the bad geopolitical developments mainly concerning the Russian – Ukraine war, but also Korea, Taiwan and a more difficult relationship between East and West. More clouds came from rising energy prices, a spiral increase of necessity goods and utility bills, inflation, banking turbulences and increasing lending interest rates, to mention the most important ones.
However, the bad psychology and the decrease in family spending capability did not deter Cypriots and foreigners alike from buying residential properties for investment. For Cypriots, keeping their money in the bank with a very low interest rate does not make sense, and investing in bonds or shares seems too risky. Brick and mortars are inflation-proof multipurpose (can be rented and/ or mortgaged, sold or occupied by the owner and or left as an inheritance). Foreigners will buy for an extra reason, too, that of obtaining a residence visa.
Buyers usually tend to buy new properties to avoid the risk of not meeting EU directives for energy and emissions targets, which in due time, will become stricter. In any case, an old property, e.g., an apartment, may not rent well and or may need a high renovation and/ or maintenance cost. But, it is also down to the available budget and expected return on investment to decide old or new. Note that the new ones are burdened with vat. Then again, the old ones may be a nuisance when it comes to management and repairs.
Coming to Demand and Supply in all towns in Cyprus, it seems that demand, at present, supersedes supply. Especially in Nicosia and Limassol, any new residential project is sold on paper and during the construction period, while apartments to rent at a ‘reasonable ‘price are scarce.
So, on the one hand, the geopolitical uncertainty and the rising cost of living deter investors from buying real estate, but on the other hand, especially for any cash buyers, the purchase of real estate is the best possible investment. It offers merits and capital appreciation, a sense of financial security and wealth.
Pessimists may look only on the ‘one hand’ while optimists may look on the ‘other hand’. In any case, it is advisable that both sellers and buyers should look into any prospect with the assistance and guidance of registered estate agents and valuers.
Panos Danos
Managing Director of DANOS
