The bank’s zero interest rate and negative interest rate policies, led an increasing number of Cypriots to invest in real estate.
The last couple of years have seen an increasing demand for seaside homes and apartments, which led to the recovery and rejuvenation of the industry and therefore the region The Cyprus Investment Programme needs a responsible approach.
- Having entered into 2020, what is your outlook for the real estate sector?
I believe that there will be a mild drop in the interest of foreign investors and buyers, due to the pressure exerted on the Cyprus Investment Program, which has been the sector’s main driver of growth for the past five years. The consensus is that the political debate and turmoil that it caused, both domestically and internationally, had a negative impact on our country’s image and reputation as an investment destination. The various scandals caused more damage than industry professionals like ourselves, had initially estimated. In addition, the new rigorous due diligence procedures of the Central Bank and the commercial banks, create additional obstacles for investors. It will be interesting to see how the market forces will adapt to the new situation concerning the possibility to recover the losses with the help of new or alternative markets.
- It seems that Cypriots are returning to the real estate sector. Why do you think that is?
The banks’ zero interest rates, or in some cases sub-zero interest rates on deposits, are driving more and more locals to invest in real estate. I would say that Cypriots have always been emotionally attached to their land and property. As a result, they often prefer to invest in returnable assets rather than intangible investments such as shares, bonds, etc. Today, the Cypriot market offers attractive investment opportunities since many industry professionals have improved their product, both in terms of quality and design. Additionally, the continuous increase in rent prices in almost all areas of Cyprus, now offers a steady monthly income, which combined with increasing market values, makes real estate the primary choice for investment. Lastly, the banks' liquidity and their willingness to provide loans for housing developments, positively affect demand.
- Does the market have a sufficient real estate supply to meet the needs of Cypriot buyers?
The market offers a variety of high-quality options ranging from the inland to the coastland. There are various options for all budgets. Compared to ten years ago, one would say that today we have a market that offers commercial, tourist, residential or investment properties, as well as land of all types and for all preferences.
- Your company has a particularly strong presence in the free areas of Famagusta, which traditionally has been very popular for Cypriot consumer looking to buy holiday homes. Is this trend returning?
The past couple of years have seen an increased demand for seaside homes and apartments, which led to the recovery and rejuvenation of the industry and therefore the region. There is lively and growing interest. Cyprus has established itself as an attractive and high-quality tourist destination while, as it is well known, Cypriots also prefer to vacation in Cyprus . Therefore, those who are can purchase a holiday home, mainly choose Protaras and Ayia Napa.
- Where do things stand in terms of demand by foreign buyers? The statistical data of the Department of Lands and Surveys shows that there has been a significant drop in transactions since May.
As I have already said this is a result of the great blow on the credibility of the Cyprus Investment Programme. The political leadership must finally understand that arbitrary approaches to this issue, can only hurt Cyprus’ image. Several countries offer the same programme, and as such an irresponsible approach will simply push interested parties and their investments to other countries. It is clear that this programme has significantly contributed to the development of the economy. It has created thousands job opportunities, while other sectors of the economy have benefitted both directly and indirectly. It is also important to note that competing countries are benefitting from our domestic developments and never miss a chance to vilify our country by republishing negative stories. It is also worth noting that in 2016, Turkey introduced an investment naturalisation programme, which aims to attract investors from Asia or Russia and has been implemented with great success. In addition, Turkey’s special bilateral agreements with the US and the UK, which stipulate that Turkish nationals can stay or move to these countries, have made the Turkish passport particularly attractive. In 2019, investments in Turkey, through this programme, amounted to the astronomical sum of 10 billion. Responsible approaches are therefore needed, as this communication war against Cyprus also affects the country’s national interest.
- How do you expect that the Cyprus Investment Program will move forward from now on?
It will take time, perhaps about three years, to restore confidence in the system and the country. This is the normal step forward, before we can continue with ‘business as usual’. Until then, the programme will be in recession and under trial.
- What should we expect from Giovani Group in the upcoming period?
Well-thought out developments in coastal areas are what we can best promote, and this is what we will pursue in the medium-term.
- Have land development companies changed the way they work today? What are their priorities?
All land development companies that have managed to survive the financial crisis, have radically changed their business philosophy. It was imperative to adapt to modern market conditions. We have become more "sensitive" and more responsible towards buyers, and I would say with certainty that our constant competitive environment drives us to improve our product, without necessarily increasing the price.