Real estate – stabilisation with a scent of growth
The Lands and Surveys Dept. recently announced the results of real estate sales in Cyprus for the month of October. As expected, a steady recovery in sales has been maintained. It is expected that the growth in sales will continue until it reaches the normal levels of 10,000-12,000 sales annually.
The 2014 sales were 4,527 properties, rose to 4,952 in 2015 and are expected to reach 6,200 in 2016. The upward trend is supported by the fact that there was considerable 32% increase during the first ten months of 2016 compared with the same period in 2015. The annual increase between 2014 and 2015 was a mere 9%. This shows that economic activity is rising as time goes by, also boosted by a better buyer psychology and resulting in a higher sales volume.
In actual numbers, sales contracts deposited at the land registry in the first ten months rose by 1,285. Properties bought by foreigners during the same period rose by 18% to 195 properties.
Foreigners bought 24.1% of properties sold in 2016. Thus, 85% of the increase in properties sold in 2016 were purchased by Cypriots and 15% was attributable to foreigners.
These percentages do not support the notion that the main reason behind the sales increase was due to foreign investors. It is true that foreigners buy higher value properties on average, to serve the purpose of obtaining either citizenship or a permanent stay permit.
The RICS organisation recently published their real estate sales index for the April-June period. The prices for the year ending on 30/06/2016 in comparison to those of 30/06/2015 show a 0.50% for flats and 1,1% for houses. These were borderline increases, but it is the first time since 2008 we register an annual increase.
In conclusion, it is understood that the acquisition of many properties by banks (through debt-to-asset swap) and their subsequent placement into the real estate market will exert pressure on prices. Property auctions will also have a similar effect. It is estimated that this pressure will not reverse the upward trend described above but rather contain it into a more gradual but steady growth.