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Cyprus real estate investment: prospects & risks

The figures, trends and the state of the Cyprus real estate market over the last few years are a clear indication that Cyprus is becoming more and more interesting for property investors.

Cyprus real estate investment WHEN it comes to investing in real estate, the Cypriot market is considered to be an increasingly attractive investment destination, which has been gaining more and more importance over the past 15 years.

We should now concentrate to establish Cyprus as a transparent, easy, safe and straightforward country to invest in.

The real estate market is moving in cycles and consists of several stages, expansion, stagnation and contraction. Cyprus is now in an up-market phase of the cycle in all market segments.

For several years, the housing sector has been continuously recording the demand that is two times higher than the new offer.

Large Complexes with 40 or more units, which are also the primary choice of local but mainly foreigner buyers, imply a phased construction that carries a price increase of an average of 5 percent with each new phase, which motivates buyers to opt for purchases at the earliest phases of the complex, because it takes 2 to 3 years on average for the completion of the construction of the entire complex, and the value of the property purchased at the beginning means there is an increase in the value of this property by as much as 20 percent.

On the other hand, the activity in the part of the retail market where we have about 180,000 square meters of malls currently under design or construction is also impressive, and it will increase the total offer of such space by almost 50 percent within the following two years.

A similar situation exists in the office space market, where record levels of demand are also being recorded, creating the needs for new business buildings, keeping rent levels very high – so the investment risk needs to be reduced.

The relatively inelastic offer and the fact that, in relation to the demand growth at this moment, the offer takes a few years to respond to it with a specific product, are precisely the reasons why real estate investment is riskier than investing in other forms of assets.

In order to reduce the potential risk, investors must try to anticipate trends in parts of the market in which they want to invest and to assess how and in which way the fundamental economic indicators will flow on one hand, and, on the other hand, how will the supply and demand flow on the part of the real estate market which is interesting to them.

In other words, the excess supply of a real estate type may result in a fall in prices, especially if it coincides with a negative economic environment.

It is desirable to consult experts who are engaged in this business, so that they can assess from a professional point of view whether the real estate has the potential for improvement and, as such, be adapted for a wider circle of buyers or tenants – it should be noted that, in all likelihood, Cyprus is competing with other EU countries such as Malta, Greece or Portugal with its offer and quality of construction.

Readers' comments

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  • Austrian says:

    Can I ever sell my small cottage with small garden in Kato Paphos with dignity? Over 30 years I only met dishonesty in every respect, (in spite I possessed the title deed,) what a scum! ( An error to have ever put my feet and money in this island ).

  • Phil says:

    My counter argument to your foolish statement “We should now concentrate to establish Cyprus as a transparent, easy, safe and straightforward country to invest in” is simple “Angry Pissouri residents block highway” you are obviously not of this world.

    Phil

  • Alex says:

    My homes, purchased in 2006 are worth much more to me today. Unfortunately nobody else agrees with me….

  • Steve says:

    I wondered if P Danos has been chewing on a banned substance, but then then I remembered that he is addressing the current speculators who are attracted now to the Cyprus property market and might be on the verge of investing in it.

    Mr Danos maintains that the CYP proprty market has been gaining more and more importance over the the past fifteen years, so let’s go back exactly those fifteen years to May 2004, the month that Cyprus joined the EU and lots of property buyers felt this was a buy signal. For the next four years the market continued to climb, before it repeatedly crashed downwards under the combined horrors of communist president Christofias and the securitsed mortgages fiasco. Those buyers of 2004-2008 can currently expect to sell at around 50% of what they paid fifteen years ago. We read now routinely of the healthy increases in property prices in Cyprus, but most of those buyers from 2004 will be dead long before their properties get anywhere near those 2004 – 2008 buying prices.

  • Deanna says:

    Oh Panos Danos, this might impress the inexperienced but for those of us still waiting for Title after thirty years – – we aren’t fooled.

  • sky says:

    So, we’ve got there a “real estate valuator” who explains to us the law of supply and demand, and advise us to consult his kind before buying any real estate… of course… this on top of considering Cyprus as a “a transparent, easy, safe and straightforward country to invest in.”

    One more Cypriot “professional” obviously…

  • Richard says:

    “We should now concentrate to establish Cyprus as a transparent, easy, safe and straightforward country to invest in.”

    Where have you been for the last fifteen years … ‘Panos Danos’?

    Sure – when Cyprus is what you describe – all you have to do is move onto easier things, like finding lasting peace in the Middle East, cure all known diseases and end all wars.

    Sorry – I must stop now before the hysterical tears of laughter start shorting out my keyboard…

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