Real estate experts are pessimistic about the sector’s prospects, citing a drop in home sales compared to pre-COVID-19 levels.
Property sales in Cyprus fell by 17% in the first seven months of 2021, compared to the same time in 2019, prior to the coronavirus epidemic in March 2020.
Despite a 31 percent increase in property sales compared to the same time in 2020, analysts say that this is insufficient to reverse the industry’s bleak outlook.
According to Angelos Constantinou of BNP Paribas/ Danos Real Estate’s research department in remarks to the Financial Mirror, a decrease of 17 percent may not seem like much given that the business experienced one blow after another in 2020, but when one looks at the breakdown, disillusionment sets in.
“Essentially, the decline was mitigated by a 46 percent rise in real estate transactions in Nicosia, mostly home purchases.
“Sales declines in high-performing districts during the boom are now reporting losses of up to 45 percent,” Constantinou added.
According to Land Registry statistics, the overall number of sale documents was 5365 from January to July, up from 4097 in the same time previous year but down from 6456 in the first seven months of 2019.
The greatest decline, 45 percent, happened in Paphos, where sales papers decreased from 1646 to 904 in the first seven months of 2021 compared to the same time in 2019.
Limassol had a 26 percent drop in sales, with 1673 in the first seven months of 2021 compared to 2273 in 2019.
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In Larnaca, 843 property transactions occurred in 2018, compared to 929 in 2019, representing a 9% decline. In Famagusta, the decline was 14 percent.
Sales documentation fell to the lowest level since 2016 in 2020, at 7968 units, down from 10366 in 2019, a 23.1 percent fall year on year.
The decline in sales, according to Constantinou, is mostly due to the coronavirus and the death of the Citizenship for Investment scheme, which produced €8 billion in real estate.
Following a ‘gotcha’ Al Jazeera film claiming corruption in the ‘golden passports’ scheme, the government pulled the plug in November.
The undercover film showed high-ranking officials eager to help a Chinese businessman with a shady history acquire a Cypriot passport.
The video also showed how government employees would help to expedite the passport procedure while ignoring the applicant’s criminal past.
The Al Jazeera film sparked a public outrage and resulted in the resignations of the House Speaker and an AKEL MP.
“Obviously, the dissolution of the CIS was the most significant hit to the sector, but the coronavirus epidemic only made matters worse in 2020,” Constantinou claimed.
According to him, low visitor arrivals meant that many homes purchased by investors hoping to benefit from renting them to tourists made their way back into the market, lowering prices and interest in new properties.
“The same is true for housing units in Paphos, where 30 percent of properties are owned by British expatriates who often rent out their homes during the hot summer months that they would prefer spend at home.”
According to Constantinou, it is customary for Britons to rent out their houses over the summer.
“We are now seeing a number of these houses for sale since their owners are either unable to go to Cyprus as readily owing to COVID or are having difficulty renting them out to make ends meet.
“There are no visitors, thus there is no demand for this type of home rental.”
“These houses on the market have an impact on pricing, but they also have an impact on construction because individuals wanting to purchase a property will be drawn to a home that is already built.”
According to the property expert, the situation is no better in Limassol, where development projects have been halted due to developer concerns that demand would dwindle.
He stated that developers are expecting to reap the last CIS fruits, as 784 passport applications submitted by foreign investors prior to the scheme’s formal cancellation have still to be reviewed.
“However, in light of recent scandals involving questionable investors obtaining Cypriot passports, processing their applications is likely to be a lengthy process that may go until 2022.”
Developers have received down payments from these investors, which are nearly as good as cash in the bank, but their applications must be accepted before the acquisitions can be finalised and recorded with the Land Registry.
According to the statistics, sales to locals accounted for 67.3 percent of all sales in 2021, while sales to international customers accounted for 32.7 percent of total sales.
Sales to locals were 1660 in the first seven months of 2020, and 2902 in 2019.
Real estate sales grew by 5% year on year in July, compared to a 43 percent rise in June and an 81 percent increase in May.
In July, sales to foreign purchasers climbed by 16.7 percent year on year, reaching 314 from 269 in July 2020 and 429 in July 2019.