Inside Cyprus’s Real Estate Industry
Subtitle: Real estate remains one of Cyprus’s most successful sectors despite the effects of COVID-19, policy changes
Cyprus’s economy is booming right now, and a variety of different industries are on the rise in the island nation. Meanwhile, the country’s warm weather and welcoming population have made it attractive to digital nomads, entrepreneurs, businesses seeking company headquarters, and foreigners looking to purchase a second home. As a result, global interest in commercial and residential real estate in Cyprus has been heating up over the past decade. This sector was responsible for 17 percent of the nation’s Gross Value Added in 2020.
While the current real estate boom began in 2014, real estate was a hot market in Cyprus long before that point. Chris Michael, CEO and founder of the Chris Michael Property Group, an investment manager specializing in structuring and managing real estate in Cyprus, and working with private equity investments for decades, said, “We have been offering the best advice on where to purchase homes and investment properties in Cyprus since 1982, and over the past 40 years, I remember steady growth in Cyprus’s economy, especially in tourism and real estate. There are obvious reasons behind this growth – those include our sunny climate, English-speaking population, improving infrastructure, beneficial tax system, and high level of security. In addition to these factors, our country’s location in the Mediterranean Sea has been important. Especially since we entered the European Union, we have seen a massive increase in foreign investors looking to purchase real estate here.”
How are geopolitics and global events affecting real estate in Cyprus?
As a safe and stable nation within the EU, Cyprus attracts companies within the greater region to shift part of their operations to the island. This is particularly prevalent with ongoing security concerns in the Middle East, the Ukraine-Russia war, the Lebanese liquidity crisis, and other complicated regional geopolitical events.
In addition in 2019, Cyprus’s annual property sales were higher than they had been in any year since 2008. However, the COVID-19 pandemic temporarily slowed the pace of economic growth in this sector. A total of 14,000 property transactions were recorded in Cyprus in 2020 – a 19-percent drop compared to 2019.
Along with the pandemic, 2020 marked the end of the Cyprus Investment Program. That initiative was based on property sales and allowed foreigners to attain citizenship status in Cyprus. While it remains hard to say how long it will take the nation’s real estate market to recover fully, early signs are encouraging, and the pace of incoming FDI is ramping up. As of October 2021, property sales in Cyprus to Europe-based clients were 68 percent higher than they were at the same time in 2020. And domestic property sales have also been doing well, particularly at the lower end of the market. Furthermore, the average number of employees being relocated to Cyprus has sharply increased, and is forecasted to continue to grow.
The future of Cyprus real estate development
The real estate market in Cyprus has overcome significant challenges in the early 2020s, but is set to emerge from these issues as a more resilient industry than ever before. With the affordable side of the domestic market proving to be a bright spot, significant opportunities exist for the construction of homes targeted at first-time buyers and the conversion of existing units into more affordable properties. Meanwhile, the easing of pandemic-related restrictions could help motivate foreigners who were previously interested in buying properties in Cyprus but opted to hold off while COVID-19 was at its worst.
The demand for offices in prime locations across Cyprus, high quality investment properties, and well-planned property developments are also on the rise. Chris Michael Property Group has managed the property portfolios of investors on the island for decades offering a full range of services. Chris Michael noted, “Property investments on the island of Cyprus have offered stable returns for years, and outperformed expectations. We see potential to develop in demand properties in traditional segments, and also in many niches. For example, the recent stream of incoming foreign companies has created an increase in demand at local schools, as employees are relocating with their families. In turn, this has created ongoing discussions on not just how to house more and more families, but how to develop commercial school properties, and all of their other needs. At Chris Michael Property Group we advise the buyer on the legal and financial aspects of property ownership in Cyprus, and have historically guided foreign clients in developing real estate properties from inception, and we can also manage properties after sale, offering clients rental income. We have done this for decades, and with our experience we are confident we can advise American investors seeking regional opportunities.”
Although residential properties are a prominent aspect of Cyprus’s real estate market, the nation’s commercial real estate industry is also strong. Cyprus currently has limited office space, and the demand for these properties is going up. As countless industries in the nation continue to grow, domestic businesses may seek to expand their operations. Meanwhile, multinationals planning to set up shop in Cyprus will need to buy or rent properties of their own.