The summer season in Cyprus promises to be hot not only according to the predictions of weather forecasters but also realtors.
The real estate market has reached the peak of activity, and foreigners are investing in apartments, cottages, and land on the island without fear. A significant increase in construction over the past year, primarily driven by overseas consumers, has created a large number of jobs in the industry.
In the first quarter of this year, real estate sales, in monetary terms, amounted to 1.7 billion euros and exceeded the same figure for 2022 by 24%. The average growth, year-on-year, showed all types of objects, namely: apartments (+11%), houses (+8.5%), offices (+10%), and retail space (+4%).
Buying
The geography of the island is represented by five regions, each of them offering different options for investment.
Limassol
The number of transactions in the first quarter is 23% higher than in 2022. The business capital of Cyprus has firmly established itself on the Olympus of the real estate market and is positioned as the most attractive region for foreign investors. To date, Limassol has become a center of attraction for migrants from other countries, due to which in the city and its surroundings are in demand for almost all types of objects offered for sale. The region is leading the way in terms of price level, with demand for Premium segment properties and land plots growing significantly.
Apartments in the price category of 300-500 thousand euros are in high demand and are increasingly moving away from the coast. The city lacks well-appointed residential complexes in the middle price segment, which is promptly responded to by local developers. Office real estate, which in some areas has become in short supply, demonstrates here the most intensive growth in value. Limassol - the region with the highest dynamics of development and active life rhythm. A large intellectual community has been formed in the city from representatives of the high-tech sector. Thanks to the largest port in Cyprus, the city is developing as a center of international tourism with a progressive infrastructure and entertainment industry. Limassol creates favorable conditions for comfortable living.
Real estate in Limassol
Paphos
The number of transactions in the first quarter by 33% exceeded the same indicator of 2022. Today the city attracts increased interest among foreign investors, primarily British families. The local market mainly offers a variety of private developments, on sales of which Paphos is ahead of other regions of the island, and apartments in low-rise complexes. Particular attention is paid to the central part of the city and the nearest areas to the coastal strip. The gradual growth of the local population stimulates sales of commercial real estate, primarily for trade and services.
According to most Cypriot experts, Paphos offers the best quality of life on the island. This world-famous tourist region combines many architectural and historical monuments with a variety of natural landscapes. Paphos is ideal for families and those moving to Cyprus in search of tranquillity and natural beauty.
Real estate in Paphos
Larnaca
The number of transactions in the first quarter is 34% higher than in 2022. The region is showing strong sales growth, including due to more favorable prices compared to Limassol and Paphos. The advantage of Larnaca is the main airport on the island, giving foreign investors easy access to their real estate. The government of Cyprus is making efforts to move the city from the category of "fly in and forget" to the category of prestigious and comfortable. In Larnaca actively developing and implementing new infrastructure projects, consumers are offered a wide range of real estate.
Wealthy investors are attracted by new high-quality residential developments in promising coastal areas (e.g. Finikoudes promenade) and comfortable villas in the suburbs. The redevelopment of the port and marina has encouraged developers to build luxury apartment buildings in the area. Office space and other types of commercial real estate are currently profitable and show a steady price growth. Having assessed the dynamics of sales it is easy to see that Larnaca is becoming a rising star for real estate investment in Cyprus.
Real estate in Larnaca
Free areas of Famagusta
The number of transactions in the first quarter is 29% higher than in 2022. The popular Cypriot resort offers investors real estate at attractive prices. The greatest demand is for rental housing: from small apartments to luxury villas. A few years ago, in the high season here came thousands of tourists from around the world, in the low season - freelancers for the winter and those who escaped from the bustle of the big cities. However, after the end of the pandemic, Ayia Napa has attracted foreign buyers as a place of permanent residence.
The number of inquiries for self-catering accommodation has increased markedly, as have sales of land plots for the construction of hotels and resort infrastructure. Famagusta is attracted by the azure sea and picturesque beaches marked with blue flags. On the coast, there are comfortable hotels, and a developed entertainment industry. To date, the region has great potential for those wishing to invest in real estate for recreation. Soon, Ayia Napa and Protaras can become a real alternative to Paphos on the other side of the island.
Real estate in Ayia Napa, Protaras, and Paralimni
Nicosia
The number of transactions in the first quarter decreased by 15% compared to the same period in 2022. The trend is due to the decline in purchasing power of the local population, as well as the preference of foreign investors of real estate on the coast. At the moment, there is a stabilization of the capital's market, which continues to offer consumers ample opportunities for deposits. Nicosia is the financial and political center of Cyprus, there are many offices of foreign companies. It is quite natural that the most liquid real estate in the capital are apartments for rental business and office premises.
The leading educational institutions of the country are located in the city, so many investors are interested in university dormitories. The commercial real estate market is on the rise: objects for restaurants, retail, and exhibition space, especially in promising areas, do not appear for long on the sales lists. Nicosia's well-developed infrastructure makes it suitable for families, with many islanders working and preferring to live in the capital.
Land plots, especially in coastal towns and within easy reach of the sea, become the subject of a transaction in a very short time. In Cyprus, they appear to be profitable assets with the prospect of increasing market value in the future.
Real estate in Nicosia
Renting
Short and long-term rental property in Cyprus continues to be a lucrative business. In the current season, the tourism industry reasonably expects a record attendance of the island lovers of quality vacations for reasonable money. Large-scale resettlement of international companies, citizens of northern Europe and the post-Soviet republics inflates the rental value of all types of premises. The average price increase for the first quarter of this year amounted to: apartments - 19%, houses -12%, retail space - 3.5%, offices - 7.5%. In the capital of Cyprus - Nicosia - the growth rate amounted to 14%, while the record-breaker was again Limassol (+23%). Such an increase is not too happy for the locals, most of whom are deprived of the opportunity to rent housing in the city, especially near the coastline.
The opening of modern office centers and the expansion of service infrastructure is moving the rental business to a higher level. For investors wishing to purchase real estate for the purpose of renting it out, the main market indicator is yield. To date, its indicators are as follows: apartments - 5.4%, cottages - 2.8%, offices - 5.3%, retail space - 5.8%. The yield of residential real estate in Cyprus is one of the highest in the European Union, so the practical interest of foreign investors in the foreseeable future will be maintained.
Real estate for rent in Cyprus
Building materials
One of the objective reasons for the growth in the cost of Cypriot real estate is the rise in the price of building materials, which took a global character. According to the Cyprus Statistical Service, their prices, on an annualized basis, rose by more than 8% at the end of the first quarter of this year. From April onwards, the rise in prices has decreased, which makes developers very much expect this positive trend to continue in the future. The rise in the price of construction materials has led to an increase in the cost of objects from 7% to 15%, depending on their type. The most vulnerable from this point of view are private cottages, where the cost of components exceeds 60% of the total construction budget. To reduce the price dependence of objects on market fluctuations builders in Cyprus apply the latest technologies.
Loans
A characteristic feature of 2023 is the reduction in the number of natives of Cyprus, grasping the opportunity to purchase real estate in the primary market. The primary reason for this was the foreign financial investment and, as a consequence, the increase in prices for all categories of properties. In addition, since the beginning of the year, the demand for housing loans fell by almost 40%, which is directly related to the increase of the European Central Bank of the key interest rate of the Eurozone to 3.75%. In addition, the state stopped subsidizing payments to banks on housing loans. As a result, lending becomes unprofitable for most Cypriot households. Locals are forced to turn to the secondary real estate market and choose remote from the coastal areas for the construction of houses.
To date, the preconditions for a significant correction of the Cypriot real estate market is not observed. Demand for objects in seaside towns and resort areas remains high, while the rate of increase in prices has slowed, compared to the first quarter of this year. Against this background, investment in real estate in Cyprus continues to be a profitable and promising placement of capital. The time to sell previously acquired hectares and square meters has not yet come.
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