PwC Cyprus presents its new edition regarding the Cyprus Land Development Market, which is published at a time of significant challenges for Cyprus and the global economy.
This publication contains information on the performance of the industry in the first half of 2020. Any comparisons with the first half of 2019 should be made keeping in mind that the market showed an unusually high number of transactions from foreign buyers during the months January - May 2019. The restrictions imposed during the 'lockdown' period and foreign buyers' inability to travel to Cyprus exacerbated the sector's already reduced activity, leading to a significant reduction of crucial trading indices throughout the market.
According to the analysis of PwC, the total value of transactions in the first half of 2020 amounted to € 1.2 billion. А decrease of 55% compared to the corresponding period of 2019. The coastal provinces of Limassol and Paphos presented a more significant decline in the value of transactions (65% and 61%, respectively) compared to the first half of 2019, while Nicosia (which depends mainly on domestic demand) showed the lowest blow (31%).
Based on the analysis, it seems that luxury real estate was perhaps the sector most affected in the first half of 2020, with residential real estate transactions worth more than €1 500 000 amounting to 51, marking a vertical drop of 78% first half of 2019.
As a result of reduced activity in luxury real estate transactions and travel restrictions, most transactions concerned local buyers. This resulted in a decrease in the average value of transactions compared to the corresponding period in 2019.
Regarding the construction sector, the number of new building permits decreased by 7% in the first half of the year (-35% in value of permits).
There is an urgent need to reform the sector and redefine priorities and strategies. Recognizing that returning to the old way of doing things is not a viable option, the version offers suggestions that can help redefine and reform the market.
Demographics / Housing for the Elderly: Encouraging the development of specialist housing communities for the elderly and assisted living and introducing incentives to attract specialist service providers in the sector are expected to attract private sector investment.
Affordable housing: Affordable housing policy is expected to attract housing development for society's lower-income strata.
Reuse of old buildings: Reuse of existing buildings, taking into account the ever-changing needs and helping to revitalize the city centers.
Focus on projects with a positive multiplier impact: Developing complex projects that positively affect the economy and support sustainable development.
Environment and sustainable development: Providing appropriate financial and other incentives to boost investment with a positive environmental impact in Cyprus.
Simplification of procedures and acceleration of the digital transformation: The simplification of the processes and the digital transformation during the execution of a real estate transaction in the land registry could enhance transparency, making the Cypriot market even more attractive for foreign investors.
Implementation of a central register of lease agreements: Implementing a mandatory registration process for leases of private housing and commercial real estate could help increase transparency and reduce tax evasion in rental income, especially in the private housing sector.
In his statements, the Head of Consulting Services of PwC Cyprus, Mr. Konstantinos Konstantinou, noted that "Recent developments make it necessary to accelerate the sector's reform and redefine the strategy and priorities. We stand by the real estate sector in these difficult times and support businesses so that the industry and the economy can return to typical growth rates. "