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Is the Cyprus construction boom sustainable?

Questions raised about the latest Cyprus construction boom and whether there is a sustainable demand for new homes or is it just the result of the ‘passports for cash’ scheme?

Is the Cyprus construction boom sustainable?THERE is an evident upswing in the sale of construction materials and what appears to be a nascent revival in the whole property and development sector.

More homes and other development projects are being built than in recent years, especially after the bubble at the beginning of this decade that gave way to the mortgage crisis and near collapse of the banking sector.

The question that needs to be asked is whether there is sustainable demand for new houses or is it just the result of the investment-for-passports scheme attracting overseas buyers of homes, expensive high-rises and other such high-value projects.

Some fear that what is happening in the property sector is another bubble in the making with two or three more years before it bursts.

Nearly half of all property contracts deposited at the Land Registry offices in the first half of the year were for properties purchased by non-Cypriots, a number that could dwindle if the government continues to restrict the number of property-for-passport investors to 700 a year.

This means that instead of the property development sector relying on more sustainable markets (student housing, locals buying first homes and holiday homes, buy-to-let investors, etc.).

We are seemingly, again, rushing to desperately find overseas buyers, with the hope that apart from boosting state coffers, these investments will also subsidise efforts to bring down unemployment.

Limassol could soon face the possibility of hosting yet another Costa Del Sol bonanza with open spaces and green areas being sacrificed in the name of high-rise development and quickly-found prosperity.

Then again, apart from the accountants and lawyers, what other sectors of the economy are benefitting from the sale of expensive properties to foreign investors? And how many of these luxury developments are going to be occupied permanently?

With many of these properties expected to remain empty, it will not take long for them to fall into disrepair, projecting an image of a ‘ghost town’ or shabby skyscrapers.

For sure, the establishment of a casino resort will greatly contribute to supporting the property sector, but gaming alone is not a sustainable reason for holidaymakers to become property buyers.

Cyprus needs to look at alternative scenarios and think more seriously about how to maintain steady, even if small, growth in tourism numbers, as long as these will generate the sort of repeat visitors we need.

Otherwise, this will be just another boom-bust cycle in our tourism/property sectors, with economic growth and employment levels held hostage to the whims of greedy developers who are in it for a quick buck and are not obliged to see the bigger picture or the longer-term view.

Therefore, the authorities are urged to consider sustainable construction growth when issuing town planning and building permits.

Readers' comments

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  • Batty says:

    I agree with everything I’ve just read.

    I am a Uk citizen lived here for nearly 4 years I have been forced to move because landlords are getting greedy because here in Limassol they see all this development and think they can cash in on this so called boom time.

    Many of my friends have already left Cyprus because of this.

    Even the local Cypriots who work the bars and restaurants can’t afford to live in Limassol it’s a shambles.

    Local government and central are not interested just want to line their own pockets (brown envelopes spring to mind)

  • Brian McSkimming says:

    I agree with Antony, you would be completely barking mad to consider buying a property in Cyprus. You have been warned, best look elsewhere.

  • Antony Codd says:

    Nothing has or will change.

    I say again ” Anybody who is contemplating purchasing residential property in Cyprus must either be MAD or have more money than SENSE”

    Ed: I know many people (including myself) who bought property in Cyprus without problems. But it is vital that anyone buying must do their homework and independent research – and restrict their search to properties with their all-important Title Deed.

  • Aggie says:

    Same argument as usual we need title title deeds to be issued when buying property in Cyprus, common scence is all that’s needed !!!!!!! Employ more staff get the market moving bring in experienced staff, come on Cyprus get this red tape shredded and help yourselves to bring more people to this lovely island without trying to bribe them with a EU passport,there are so many properties lying empty also I know of at least 2 couples who have locked up and walked away leaving mortgage debt how can they get away with this what a mess the Cypriot system is so unprofessional in my opinion so get moving by employing more experienced staff and watch the market boom and fill all those empty flats and houses it is so sad to see the mess of the property market here in Cyprus.

  • Peter Davis says:

    Ask a developer why he’s building and he will tell you “We know nothing else”. People must understand the market comes second to instinct.

    When building gives you a purpose in life, don’t blame the developer they know nothing else, blame the bankers who lend the money, the Government who are happy to leave half completed developments to fester and decay because making new buildings brings in full employment.

    I see new shops being built next to empty shops with signs in the window for “sale or let” which are fading they’ve been there so long.

    And we will never run out of land to build on or money to buy new raw materials, well not today anyway.

  • MartynG says:

    The Financial Mirror have covered all this pretty darn well: reiterating and reinforcing what some of us have been saying since late last year, some before that even!

    Distinct lack of medium-longer term planning, that’s planning with a small p: it needs to be in Capitals, and it needs to be Evaluated, Controlled, Managed, Phased. PLANNED!

    And perhaps, Maybe even, there is, somewhere behind all this, a Hope rather than a Plan, an over-reliance on the soon-to-be-developed Casino, with its little sub-casinos dotted around the Island.

    S-l-o-w Down Cyprus, you are well-positioned, growing, slowly sorting out some major construction /economic hangovers – please don!t create another Huge Boom or Bust!

  • Chris Solomon says:

    A sensible article. There is already an abundance of empty property, both unsold and resale. I know of several persons who have abandoned their Cyprus property and returned to UK, being unable to sell. I believe real estate agents push potential clients towards developers and expensive new properties rather than resale as they make more money that way. Resale property is 30% cheaper but still can’t sell. Why? Does a foreign investor have to buy new in order to get a residency?

    Ed: You can find details of the citizenship by investment program (a.k.a. passports for cash) at Cyprus Investment Programme.

  • Chris says:

    @ Editor should say 100% Bust cannot change a gready short sighted culture that is Cyprus

  • adam Lomas says:

    the question is asked IF this is just another bubble, caused by the governments passport schemes, and greedy lawyers and banks, with the inevitable result that most will remain empty.
    the answer of course is “yes” its a result of yet more greed

    what a dreadful scenario

    and there are still so many left out in the cold by the governments refusal to accept responsibility and act on the Deeds issues, despite their recent statements on a “gentleman’s agreement” between banks and the executive.

    nothing has changed, there will be a new excuse in september

    i have spent a small fortune on lawyer fees to get my title deeds, each time I get the same answer: you have to be patient, please give me some more money to pay your lawyer bills.

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