The last financial year in Cyprus saw one of the biggest periods of growth in recent years, with financiers citing economic symptoms similar to a boom.
Especially regarding property sales and investments on the island, with similar growth in tourism; nominated investments for the Cyprus passport scheme; and demand for the sale of used houses and apartments in urban areas which have become up-and-coming, attractive neighbourhoods.
There was also a rise in venture purchasing of properties in primary locations for large development projects and plots of land. The following reasons constitute the key factors, which have gradually increased property demand in Cyprus:
- The interest of overseas investors obtaining Cyprus citizenship & residency.
- The decrease of deposit and loan interest rates.
- The increase in tourism & hospitality.
- Financial incentives from the government.
- Lenders being able to buy back properties for the settlement of debts.
- The reduction in prices from the double-dip recession.
How does this affect housing in Cyprus?
There is also an increase in the demand for housing, which increases rents. Investment funds and asset management companies are present, they purchase from the banks mortgaged properties relating to non-performing loans (NPLs). This growth in demand causes a direct increase in property prices.
It remains to be seen whether the rest of 2019 will be improved regarding the increase in demand and the variety of properties for sale (such as agricultural and mortgaged properties) is connected with the above factors keeping the demand at a high level, driving house prices higher and higher.
The expansion reassures investors to capitalise in real estate since their deposits aren’t accruing interest currently. Furthermore, the increased liquidity in lenders such as Bank of Cyprus allows the bank the option to offer more low-interest loans, attracting more purchasers to invest in property and the cycle continues.
Confidence in Cyprus is Growing along with the Property Market
The change of attitude by investing prudently in real estate through own funds rather than through loans creates a healthy and controlled property market. Investors looking at purchasing property in Cyprus is aware that the market is relatively secure due to the legislative reforms supporting courts in being able to issue separate title deeds for a large number of property buyers that were deemed to be “trapped” previously.
However, a potential purchaser should still establish and physical status before proceeding with the purchase of land or immovable property in Cyprus. This includes researching any responsibilities, burdens or tax obligations of the seller and property.
The solidification of the Cyprus real estate market is also linked with the implementation of major building projects in various areas, such as the marinas, consortium's and casinos all requiring:
- Multi-story buildings creating many new jobs in the construction sector.
- The use of new technologies.
- The use of design innovations, all things that grow in a boom.
All these factors promote the Cyprus’ development, by tempting new investors and further increase the competitiveness of the country.
The objective for both the private and public sector in Cyprus should be steady long-term development; the real estate sector establishes a main attraction together with low tax rates, the high standard of facilities and the Mediterranean quality of life that the island of Cyprus has to offer.