In its overview of real estate activity in Cyprus during the first quarter of 2022 RICS Cyprus with KPMG in Cyprus reports that transactions continued to recover from the pandemic, showing significant year on year increases.
During Q2 a 31% increase in transactions were observed compared with the first quarter of 2021, together with a 52% increase in the number of contracts of sale.
On the other hand, the number of contracts of sale by non-EU nationals fell 14% compared to the first quarter of last year.
In terms of capital values compared to the previous quarter Larnaca performed particularly well with the exception of holiday apartment, where values fell by 1.18%. (Holiday houses in Larnaca rose by 5.74%.)
Compared to the first quarter of 2021 average real estate price changes were reported as follows:
- Apartments +2.75%
- Houses +1.86%
- Retail +0.96%
- Warehouse +1.81%
- Office +0.89%
- Holiday apartments +0.43%
- Holiday houses + 1.95%
The index also reports that the recent increase in inflation and rising construction costs are issues that are expected to impact prices and potentially volumes of transactions in the forthcoming quarters.
Speaking to StockWatch , Simon Rubinsohn, RICS Chief Economist, commented that “the real estate sector today remains resilient, but is expected to diversify over time. In particular, the supply chain turmoil will continue to put upward pressure on inflation and this is likely to be reflected in somewhat higher borrowing costs and a softer economy in the coming months.
“Therefore, future climate indicators for both prices and rents remain relatively optimistic despite these challenges.”
Further reading
The Russia/Ukraine war has had a significant impact on the cost of construction materials and human resources that were already inflated following the pandemic. The cost of land is also extremely high and when added to the full cost of a build, will result in new properties that no one can afford to purchase.
I suspect that this will lead to even smaller houses/apartments being built with very smaller rooms that no one want will want to live in.
Can you please report on what this means for Cyprus real estate going forward because I do not see a quick fix any time soon and only a significant correction will change things…
Mr C.M.Cosmas