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Limassol property market’s dependence on Russians

The number of real estate transactions for December 2012 was recently announced. Once again the number of transactions was reduced compared with the same month last year (-24%) and 2012 ‘ended’ with an 11% reduction in transaction volume compared with 2011.

ALTHOUGH the property market is in a depressed state, I am disappointed by the analysis of the data and specifically by statements made by market participants that “Limassol is doing fine”, compared to other cities, “because of the Russians”.

I would ask all to spend a few minutes analyzing the Land Registry’s data.

Cyprus’ property market is significantly dependent on foreign buyers. Specifically, foreign buyers accounted for 22% of transactions in 2009 and 24% in 2010, 2011 and 2012 (note that in 2007 they represented about 50% of transaction volume). But if we study the data further, we see that each district has, as we would expect, different percentages of foreign buyers. In 2012 foreigners accounted for 12% of buyers in Nicosia, 21% in Limassol, 21% in Larnaca, 34% in Famagusta and 35% in Paphos.

We can see that Limassol has nothing special when compared to other towns in terms of the influence of foreign buyers and that one could even go as far to say that it may be better off because of the low percentage of foreign buyers in relation to that in other coastal cities as overseas demand tends to be more volatile.

Why have we been having large percentage fluctuations in the number of transactions in other cities, but not in Limassol? The answer lies in two different places.

The first is that due to the overall low transaction volume, small numbers create what is termed the “percentages fallacy”. If you have €1.00 and you lose €0.05, you lost 5%. If you have €0.20 and you lose €0.05, then you lost 25%. Because Limassol and Nicosia represent 50% of transaction volume and because of the reduction in the number of transactions in other cities in previous years, the percentage changes in Larnaca, Famagusta and Paphos appear to be apparently huge even though in absolute numbers they are not. For example, in absolute terms, in 2012 Famagusta had a drop in transactions of 131 (from 714 transactions in 2011 to 583 in 2012) and Limassol a drop in transactions of 491 (from 2,118 in 2011 to 1,627 in 2011). Although the decrease in transaction volume is almost four times more in Limassol, in percentage terms the annual reduction is 18% in Famagusta vs. 23% in Limassol.

The second part of the explanation lies in where the reduction came from. The decrease in transactions by locals accounted for 77% of the total reduction (573 fewer properties were purchased by locals and 176 fewer properties by foreigners). Of this reduction, the biggest percentage drop in local buyers was in Limassol (-26% compared with 2011) whilst the biggest reduction in foreign buyers was for properties in Nicosia (-33% compared with 2011). Paphos was the only district to have an increase in transaction volume by both foreign and local buyers. It seems that the main reason that Limassol has been ‘holding on’ until now is not because of foreign buyers, but that the locals (who form 79% of its market) continued to acquire property until relatively recently.


Foreign buyers play an important role in Limassol’s real estate market, which can seem larger than it really is because of their high concentration in specific areas (especially to the east of the city) and property types (houses or apartments with sea-view or in close proximity to the beach). A simple analysis of the data however, clarifies that it is the locals who continue to trade and “motor” its property market and that as local buyers begin to curtail their acquisitions Limassol’s property market will turn faster southwards than many seem to expect.

As aptly put by my childhood hero, Sherlock Holmes “The temptation to form premature theories on insufficient data is the bane of our profession.”

About the author

Pavlos Loizou MRICS is the lead consultant at Leaf Research

Leaf Research is a real estate consulting firm, providing high quality real estate market research, strategic consultancy, valuation, and financial modelling.

Readers' comments

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  • Martyn says:

    A useful and interesting set of insights from Pavlos Loizou into a fairly complex subject. And a timely reminder of Conan Doyle’s own insights into hasty human tendency toward ‘pattern entrainment’. Thank You!

    One quotation I have liked over the years, attributed to Winston Churchill:

    “Statistics are like a drunk with a lampost: used more for support than illumination.”

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.


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