What lies ahead for real estate?

The end of the year 2021 saw no major alterations in Cypriot real estate. The lower end of the housing market directed towards locals, with properties in the region of €300.000-€500.000, had a good demand and prices were rising. There was a drop in the prices of more expensive units, which came about primarily as a result of the end of the citizenship by investment scheme with Limassol and Paphos hit the worst, as well as marina and golf course projects.

The question now is, what will 2022 be like for real estate?

The situation in Ukraine has affected Russian demand, as well as Ukrainian, which was the fastest growing market. We see now that not only has demand fallen drastically, but also some from these two countries who had already bought property here are putting it up for sale.

We live in a global economy and the situation in any country affects others.

The extent of the fallout will depend on the duration of the situation and the sanctions imposed by the EU/Cyprus.

We are hearing complaints from advocates and accountants that they are losing business from their foreign (mainly Russian) clients, and this is bound to affect the local market, both for rentals and sales, since these firms employ over 5.000 highly paid employees.

Also as a result of the situation, the tourism market, which is the forerunner of real estate interest, is expected be the halved this year.

Rising inflation and petrol prices have resulted in a roughly 10 per cent jump in total building costs over recent months. Travel costs have risen, as well as cost of living, making living in Cyprus less affordable. Interest rates are set to rise, making borrowing more expensive and this notwithstanding the subsidies provided to locals.

As if all this was not enough, presidential elections are due in 2023, with political parties already trying to outdo each other in ways that win them votes, creating uncertainty and instability in the market.

Part of this is the pending VAT charge on houses being discussed.

All these factors as well as others will definitely impact the market both for locals and foreign buyers, likely shifting demand towards exiting properties.

We are now targetting other tourist markets, such as Germany and Denmark, which should help with demand for local real estate.

So, in 2022 there will be many uncertainties which is worrying, though there are various public and other infrastructural projects under way, which will make Cyprus more attractive.

Antonis Loizou & Associates EPE – Real Estate Valuers, Estate Agents & Property Consultants, www.aloizou.com.cy, [email protected]