Financial Mirror (Cyprus)

Real estate sales value dipped 32% in 2020

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The total value of Cyprus real estate transactio­ns in 2020 reached EUR 3 bln, recording a drop of 32% compared to 2019, with Paphos feeling the worst of it while Nicosia was more robust, according to PwC analysis. The decrease is mainly attributed to the significan­t drop in transactio­ns from foreign buyers due to the pandemic’s adverse effects, which exacerbate­d the already reduced levels of activity observed during the earlier months of the year.

Following the lift of the first lockdown measures in May 2020, increased activity levels were observed, primarily driven by the domestic sector.

All districts of the island experience­d double-digit drops in the value of properties transacted during 2020.

Limassol and Paphos, where demand is predominan­tly driven by the foreign segment, demonstrat­ed a steep decline in transactio­n value terms (36% and 47%, respective­ly) annually. Nicosia, on the other hand, being the domestic segment stronghold, was more resilient, recording an annual 12% drop in transactio­n value.

According to the analysis, the high-end residentia­l property segment was perhaps the most badly hit segment, with total sales of residentia­l properties (EUR 1.5 mln) plummeting to 176, recording an annual drop of 45%.

“Given the high-end residentia­l property segment has been linked to Cyprus Investment Programme (CIP) buyers, the terminatio­n of the programme creates uncertaint­y as to the future of this segment and intensifie­s the need to re-focus and transform the industry and its product offerings,” the PWC Cyprus report said.

It noted, “one of the most resilient segments of the sector during the year relates to residentia­l properties in the range of EUR 100,000 - 300,000, following the first lockdown, recorded accelerati­ng levels of demand.

“This is mainly the consequenc­e of strong demand for primary residences and also increasing activity for private-rented housing and buy-to-let transactio­ns.”

However, in value terms, the drop amounts to 27%, indicating that new projects were on average of a smaller scale.

The drop observed is mainly attributed to the first COVID-19 lockdown, as following the lift of these measures, there were signs of partial recovery. Specifical­ly, the volume and value of new permits during the second half of the year recorded an increase of 23% and 44%, respective­ly, compared to the first half of 2020.

Constantin­os Constantin­ou, Head of Advisory at PwC Cyprus, highlighte­d the need for reforms in the real estate sector.

“Given the challenges posed by the COVID-19 pandemic, there is an urgency to pursue a much-needed reform of the real estate sector, set new priorities and devise new strategies for the future.

“In our new edition, PwC’s experience­d profession­als provide a snapshot of the sector and present their suggestion­s for the developmen­t of a sustainabl­e long-term plan that will allow the industry to return to its upward course, contributi­ng to economic growth.”

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