In terms of sales and investment in real estate in Cyprus, last year was one of the best since the financial meltdown of 2013. Especially property that is in one way or another associated with tourism witnessed a very welcome revival in parallel with the record-breaking number of tourist arrivals. Also boosting the market was the interest in large plots of land in prime locations, suitable for investments in major projects.
Foreign and Locals Invest in Cyprus Property
Both foreign and local investors demonstrated increased interest in investing in real estate in Cyprus, which was driven by a combination of factors that led to very promising opportunities. The key factor was, of course, the reduced prices due to the financial crisis which practically paralyzed the market. At the same time, interest rates on bank deposits were – and still are – negligible, while interest on loans is also relatively low, making investments in real estate a very sensible option, especially for local buyers. The exchange of real estate for repayment of debt further increased the supply and held prices at low levels.
There is little doubt, however, that foreign investors still account for the bulk of transactions. That demand is driven by various government incentives including the Cyprus Investment Program and the Residency by Investment program, which allow non-EU investors to apply for Cyprus citizenship or permanent residency respectively.
Overall Benefits of Cyprus Real Estate Sector
The overall regeneration of the market thanks to renewed confidence among both local and foreign prospective buyers has benefited not only the construction and development industry but various other services and suppliers that feed the sector. In particular, the larger investment projects have attracted ‘fresh money’ and created new jobs that have noticeably reduced the rate of unemployment. Projects of this large scale include marinas, shopping centers, mixed developments, multi-story ultra-lux apartment buildings with the use of new technologies and design innovations, which have attracted serious international buyers and have increased the country’s competitiveness and upgraded its profile. The combination of all the above has also raised rents, which have reached unprecedented highs in the most desirable locations.
It is important to mention that investing with caution in real estate through equity instead of loans has created a healthier and controlled property market by giving more value to properties and avoiding the mistakes of the past which led to unhealthy levels of debt in the country.
Indeed, the successful recovery of the property market must now be protected by both the private industry and the public sector at all costs to avoid a relapse. The goal should be reasonable and long-term economic growth, with the real estate industry serving as one of the key pillars, along with low tax rates, high quality of services and the quality of life that Cyprus is known to offer.