Buying Property in Cyprus
I have been asked for an
opinion on the real estate market in Cyprus.
The country is an economic basket case, and the situation is not likely
to improve in the near future. The fallout from the crash is such that
investor feelings are seriously bruised, and sentiment is not likely to
change in the next couple of years. The banking system is still in
shock, and mortgages will be difficult, if not impossible, to get.
This means land and holiday home prices are likely to continue to sag.
It also means that office space is likely to be difficult to shift. I
would not recommend anyone buy here for an upturn.
In the medium term the country will suffer from the general banking and
property crises which have been ongoing, and will continue, probably to
the end of the decade.
Looking further ahead, the prospects are much brighter as the oil which
has been found under the sea in that region will bring a measure of
prosperity back to the country. I am not sure how much of that oil is
mortgaged, but Cyprus is certainly in a better position for any
recovery than mainland Greece. The problem is, that recovery looks to
be a long way off.
One of the serious problems in Cyprus (as in Greece) is the youth
unemployment figure, which is close to 40%. There is going to have to
be a serious adjustment in population levels in many countries to cope
with this growing problem. Putting it as succinctly as possible, the
country cannot maintain its current level of population, and that will
have to decline considerably to be able to cope with any increase in
the standard of living.
The only sensible way this problem can be dealt with is to encourage
snow birds from Russia to settle in the country, and increase the
customers for the island's services. This is something that apparently
is being addressed, and Russian holiday makers are on the increase. A
big push is needed to encourage pensioners from the frozen end of
Russia (which is rather a lot of the country) to spend their winters in
the milder climate that Cyprus can provide. That will help the economy
and the real estate market. At the moment, however, it's early days.
Further mechanisation will only have a marginal affect on the Island.
In that respect, things will only improve if the fruit and vegetable
trades can improve their throughput. And, of course, when the oil comes
ashore that will improve the whole economy.
I think the bottom is still some way off, but investment opportunities
will arise, but not yet.
I have not factored in my belief that the real crash is still to come.
Debt levels across the whole eurozone are so high, and inflation so
low, that the weight of debt will impact very heavily on any attempt of
the country to grow, or for home incomes to rise substantially to allow
for expansionary buying. You cant get ahead if you are busy paying off
There are some bright spots in the island's future besides the arrival
of Russian visitors and the prospect of oil. Paphos is featured as
European Capital of Culture for 2017. That may lift the area a little.
Another plus is the project at Yeroskipou, near Paphos, which is
planned as a marina, art academy, plus hotel and apartment complex. The
whole project is expected to cover a square kilometre. This is
obviously good news for Paphos in general, but what happens in this new
complex is going to over-shadow everywhere else.
The project is headed by Hungarian business mogul Sandor Kenyeres and
includes the construction of an artificial island opposite Yeroskipou
beach – connected to the mainland by bridge – along with a 350 boat
marina. It will also include three five-star hotels, an art academy, an
aquarium, apartment complexes and other buildings.
Yeroskipou mayor Michael Pavlides, speaking to the Cyprus Mail back in
February, said that during the construction period around 6,000 jobs
will be created and when the project is finished it will employ close
When the last permit is issued by the authorities, Pavlides estimated
that it would take four years to complete.
I shall persuade my friend to accompany me to Paphos for the cultural
binge, but unless you intend to invest in Yeroskipou, I think Cyprus
still represents a waiting game.