Cyprus real estate ‘resilient’, says RICS

The Cyprus real estate market, based on its sturdy economy, has so far resisted the negative consequences of the global credit crunch. According to a recent survey by the Royal Institution of Chartered Surveyors (RICS) on the second quarter of 2008, Cyprus is one of the few countries that displayed strengthening tendencies during this period.
The latest RICS Global Commercial Property market survey confirmed that Cyprus was one of the few economies which showed strengthening trends into the second quarter of this year. Tenant demand expanded at the fastest pace of any country within western Europe as a still robust economy underpinned demand for business space. Furthermore, rental expectations remained positive into Q3.
However, despite a still expanding economy, the investment market will inevitably show slightly weaker tones at some point in the near future, as cross border investors remain under pressure, the report said.
According to the RICS market survey, the October 9 interest rate cut by the ECB adds renewed support to the Cypriot economy, which has fared relatively well, one year on from the start of the global credit crunch. Also, the economic growth in Cyprus has held firm over the course of 2008 with the International Monetary Fund expecting an expansion of around 3.4% in 2008 and 2.8% in 2009. Whilst these numbers have been revised down since the previous IMF outlook report, expansion at this rate remains “only a shade below the 5-year average of 3.5% since 2003,” RICS said.
The survey’s results have been confirmed by Finance Minister Charilaos Stavrakis, who stated that “the Cypriot banking system has been largely unscathed by the global economic turmoil due to its minimal exposure to high-risk and complex financial instruments. With estimated exposures of only EUR 17 mln to these products, there was less cause for panic in the financial sector.”
“Indeed, the adoption of the Euro this year has come at an opportune time and has reduced the probability of currency instability” he added.
Additionally, Varnavas Pashoulis MRICS, member of the board of RICS Cyprus, said that the Cyprus real estate market and economy are rather small in size and manageable, compared to other much bigger countries.
“The Cyprus banking system is secure, as it has been announced by the Central Bank. Also, our commercial banks do not deal in special investment packages, as opposed to the U.S.”, Pashoulis said.
He added that that “investors or owners can not acquire loans in Cyprus, unless these are considerably secured, unlike what we have experienced in countries like the U.S. and UK”.