The real estate sector has always been a key pillar of the development of the economy of Cyprus. There is no doubt, that any change in the turnover of the sector affects the whole economy, the labour market, as well as the standard of living and well-being of citizens. At the same time, it is well known that each period brings new challenges and opportunities, which are sometimes unpredictable, by redefining the terms of the game which must be won.
- Decline in demand due to Corona Virus
The rapid spread of the corona virus and the restrictions imposed on Asian countries are already affecting the economy of Cyprus and thus the real estate market. Due to the deadly epidemic, it is expected that there will be a bigger decline real estate purchases by Chinese buyers. Therefore, the companies that focused on this market are expected to be significantly affected. In addition, it is commonly believed that if the problem persists by the second quarter of the year, it will be extremely difficult to recover lost ground.
- Pressure on Cyprus Investment Program
The strict restrictions imposed on the Cyprus Investment Program (scheme for naturalization of investors) are expected to bring about a reduction in property sales. Property worth more than €1 million, designed for investors, who would participate in the Program, is expected to face the greater pressure. Limassol and Paphos are expected to be more affected than other cities.
- Improving the business environment
It is imperative to reduce bureaucracy, simplify procedures and modernize laws, structures and practices. International competition is fierce, and any malfunctions simply ‘push’ investors into more business-friendly destinations.
The real estate market, which in recent years has been greatly affected by unpredictable events and exogenous factors, is called upon to redefine its strategy, by facing new challenges and seizing opportunities.
The openness of the sector to new markets is crucial. Various ways and attractive incentives must be found in order to continue to be attractive to foreign buyers. Foreign investors are the lifeblood of our economy, making a huge contribution to vital productive sectors. The key to this endeavour is flexibility and versatility.
- Focus on quality
Particular emphasis should be placed on the quality of the projects, the overall design, the architecture, the quality of the materials and their sophistication. Combined with the comparative advantages that Cyprus enjoys as an investment destination, the 'quality' factor adds value to the product we offer.
- Negative Interest Rates
Local buyers somehow benefit of developments as they gain access to attractive investment opportunities because of the discounts and incentives offered by developers in the light of new developments. As a result of the negative interest rate policy, many Cypriot depositors choose to invest in real estate because it is considered a low risk investment with stable returns.
In conclusion, it is imperative to examine the new situation and trends in the market in depth and through collective effort to strive to achieve the best possible outcome for the economy of Cyprus. We are called upon to work methodically and creatively, to accelerate our speed to the market and to correct any distortions, so that the sector remains the engine of the economy of Cyprus.
* by Antonis Antoniou
* Executive Director Giovani Group