Property sales have dipped over the four months June to September bringing the boom to a temporary halt after almost 4 years of double-digit growth fueled by the Cyprus passport scheme.
Since the passport criteria have become tougher, property sales have dropped by 6.6% in the last four months according to Land Registry data collected by Stockwatch.
Earlier in the year sales shot up as a large number of foreign investors rushed to buy before changes to the Citizenship for Investment scheme.
Economists are now sounding the alarm over the construction industry’s dependence on foreign investors eyeing the Cyprus passport.
According to the land registry’s data, the strong upward trend recorded in the first five months of 2018 has been reversed since June.
In the first five months of 2019, property sales soared by 34.2% year-on-year, while sales declined 6.6% in the next four months, from June to September.
Cyprus has introduced stricter criteria for granting citizenship to investors, following an international outcry over its naturalization program. According to information, Cyprus has issued about 2,000 passports to investors since 2013.
Since May, tens of passports have been issued compared to the hundreds issued earlier.
Economist Marios Clerides told Stockwatch that since May there has been a decline attributable to the fact that is now tougher for foreigners to obtain passports, and many applicants do not conform to the new criteria.
"The evidence shows that the real estate sector would be in trouble if not for the crutches provided by the passport scheme,” said Clerides.
He added: “The industry is not viable without the CIS, and we have to be cautious as the EU and other institutions are keeping a close eye on the scheme.”
Clerides argued the economy has to find real sources of revenue and growth rather than relying on “artificial and transient” sources of revenue.
Limassol and Famagusta seem to be facing the biggest crunch. In Limassol, sales dropped by 19.2% in June to September 2019 compared to last year, while sales in Famagusta declined by 25.3%.
A 1.3% decrease was also recorded in Larnaca, while Nicosia and Paphos have recorded a sales increase of 5.3% and 7.4% respectively, although much lower than the first five months.