Recent data on property sales in Cyprus reveal distinct trends in different provinces. Notably, the real estate landscape in Nicosia contrasts sharply with that of coastal provinces.
In Nicosia, the market is predominantly driven by domestic buyers, while coastal areas, witnessing a surge in real estate transactions, owe this growth largely to foreign investors, particularly those from non-EU countries. Many of these foreign investors have chosen Cyprus as a new base for their businesses and homes in the wake of events like the Russian invasion of Ukraine and the tragic explosion in the Lebanese port.
Examining the broader picture across Cyprus, out of the 22,500 real estate sales and transfers, 7,408 involved foreign buyers, constituting roughly 33% of the total. However, it's essential to note that this percentage varies by province. For instance, Limassol records 7,262 transactions, with 31% involving foreign buyers. Surprisingly, Paphos emerges as the top choice for foreign investors, with 57% of the 4,573 transactions involving them. In this province, 19% of buyers are from Europe, while 38% hail from non-European countries.
Paphos Takes the Lead
Paphos is undeniably the preferred destination for foreign investors, unlike Nicosia. The capital's market remains closely aligned with the domestic market, with only 11% of buyers coming from within the EU or beyond. Property sales and transfers in Nicosia amounted to 5,447 by August of this year.
In Limassol, of the 7,262 sales, 69% are attributed to domestic buyers, while around 30% involve foreigners. Larnaca presents a higher foreign buyer percentage, with 34% of the 4,661 property transactions in the province involving foreign investors. Famagusta province stands out with foreign buyers outnumbering Cypriot buyers at 56%, though the total number of properties sold here remains relatively low at 617.
A Divided Market
Pavlos Loizou, CEO of Ask Wire, suggests that these figures highlight a division in the Cyprus real estate market. Coastal areas heavily rely on foreign buyers, while Nicosia primarily caters to local residents. This makes the capital's property market more susceptible to factors like rising living costs and interest rates. These challenges do not favor property purchases, home ownership, or investments.
According to Mr. Loizou, property market rates are already showing signs of decline, with a gradual normalization of prices by up to 10% expected in the medium term. Developers will need to shift their focus toward creating residential products that appeal to the Cypriot market, which often requires bank financing and is more sensitive to construction cost increases.
Moreover, the characteristics of domestic buyers and the decreasing rate of foreign investor influx are expected to contribute to price normalization. Rising property costs are linked to the boom in short-term leases on the island, driven further by increased tourist arrivals in recent years. To stabilize prices, Mr. Loizou suggests tapping into unused land and increasing the supply of apartments and houses, with potential government incentives or disincentives playing a pivotal role in this endeavor.
[This article was translated from its Greek original]