to the

Analysis of the property markets and where they are likely to be going. -- Buying property in the EU.

Back to the Blog Index
Back to the Unique HomePage

Unique Property Blog

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 debts.

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 to 10,000.

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.


Subscribe to our email alerts on the housing markets both in the UK and abroad.

Disclaimer     Privacy Policy
HTML Comment Box is loading comments...