One of the biggest questions that everyone is concerned about now is what will happen to the Cyprus real estate sector in 2021.
We must admit that the cancellation of the Citizenship by Investment Program, the economic and social consequences of the coronavirus pandemic, as well as complete uncertain future of all sectors of the economy, make any predictions extremely difficult.
However, an in-depth analysis of the data fr om previous months can provide some important insights into what should happen in the Cyprus property market when making the appropriate decisions.
Thus, looking at the number of transactions, we are safe to assume that Cypriot buyers interests show upward trend.
If in the first quarter of 2018, the average number of sales and purchase agreements concluded with Cypriots was 48% of the total number of transactions, then since June 2020 this figure has exceeded 60%. In fact, in the last four months of 2020, the number of sales contracts with local residents amounted to 66% of the total number of transactions concluded.
By the way, this growth is explained not only by an increase in the purchase of real estate by Cypriots, but also by a decrease in the number of transactions with citizens of non-EU countries.
It is worth noting that the percentage of sales contracts with foreign buyers in 2020 decreased dramatically.
If in the first quarter of 2018 the average number of sales contracts concluded with citizens of non-EU countries amounted to 36% of the total number of transactions, then over the last three months of 2020 this figure dropped to 20%.
For the first time, a sharp decline in the number of transactions occurred in July 2020. Most likely, the reason was not the coronavirus pandemic, but the cancellation of the Cyprus investment program. Indeed, if we analyze by months, in October (the last month of the investment program), the number of transactions, on the contrary, was at a record high level - 81%.
It is noteworthy that if before 2020 year foreign investors did not particularly want to invest in the capital's real estate, now a completely opposite situation has developed.
The total volume of real estate transactions in Nicosia is constantly increasing. Even despite the quarantine, in 2020, in the capital of Cyprus, there were more transactions for the purchase and sale of housing by foreigners than in 2019.
On the other hand, in Limassol, in the most popular city for investments, there has been a decrease in the number of transactions of foreign buyers. If we compare the average number of sales contracts signed with citizens of non-EU countries in the first quarter of 2018 (91) with the last quarter of 2020 (66), then the difference will be about 25% - 30%. By the way, it should be noted that in October 2020 (the last month of the investment program) the number of agreements increased to 104, and in November and December it dropped to 60 and 34, respectively.
In Larnaca, a similar situation was observed over the same period as the decrease in the number of transactions of citizens from non-EU countries was 25-30%. However, Larnaca saw steady growth throughout 2020, excluding months of self-isolation.
In Paphos, the number of transactions of non-EU citizens decreased by about 40%, compared with the average of the first quarter of 2018.
In Famagusta, a similar situation has developed, but the numbers are small enough to draw any unambiguous conclusions.
As for the amount of transfers, from the beginning of 2018 to the end of 2020 it amounted to 9.1 billion euros.
It is important to note that although Nicosia had more transfers (15,276) than Limassol (13,777), the cost of transfers was significantly higher in Limassol as Nicosia had almost € 2.5 billion versus over € 3.2 billion which Limassol had.
The figures in Larnaca and Paphos were also interesting. In particular, the average amount of transfers in Paphos was 175 million euros, and in Larnaca - 127 million euros.
As for the reduction in transfers, it is likely that the quarantine in April-May significantly influenced the decision of investors to temporarily freeze transactions, not the least role was played by delays in some procedures for processing transactions.
Okay, what can we expect in 2021?
Unfortunately, this question cannot be answered unambiguously. Moreover, it is impossible to make any substantially accurate predictions.
One thing is clear that the society and economy of the country needs time to return to normal life. As we can learn from the data above, the situation will be more stable in those areas of the real estate market that are focused on the local population.
On the contrary, great uncertainty will prevail in areas of real estate wh ere foreigners have traditionally made up the largest percentage of buyers.
Anyway, the coronavirus pandemic, the cancellation of the investment program, the bad reputation that the country was able to acquire due to the scandal with the "golden" passports, and, of course, Brexit promises the real estate sector another very interesting and boring year.
Anyway, the coronavirus pandemic, the cancellation of the investment program, the bad reputation which the country got because of the "golden" passports scandal, and, of course, Brexit indicate that the real estate sector should have another interesting and not boring year.