High property prices in the real estate sector have begun to deflate as the 3rd quarter of 2019, paints an entirely different picture to what Cyprus has grown accustomed to over the past few years.
While the first half of 2019 recorded a 25% increase over the corresponding period of 2018, Q3 2019 saw a 35% decrease in the total value of transactions, dashing hopes for further growth next year, according to a PwC report.
PwC’s ‘Cyprus Real Estate Market – First Half in Review’ noted: “Even though it’s too early to make any conclusions, there are indications that there may be significant instability and uncertainty in 2020”.
In comments to the Financial Mirror, PWC’s Constantinos Savvides said while Q3 results regarding the total value of sales are in sharp contrast with the first half of the year, the number of sales contracts has dropped only by 3%.
“The fact that there is such a great gap between the percentage drops in total value and the number of properties sold, is a clear indication the industry is overdependent on investors eyeing the Cyprus passport,” said Savvides.
He argued it may be too soon to conclude what the future holds, but the sharp drop in the value of properties sold in Q3 should act as a wakeup call for the construction industry.
“The industry should seize the opportunity and diversify its product. It is time for developers to start considering projects related to services, such as co-working facilities.”
The year started with a bang as the total value of real estate transactions in the first six months reached €2.5 bln, recording a 25% increase over the same period of 2018.
The residential real estate sector made up 77% of the total value of transactions in the first six months of the year, amounting to €2 bln, while land transactions amounted to €0.4 bln.
Limassol continues to attract the biggest share of transactions, with 44% of the value of transactions. Paphos, which mainly attracts foreign buyers, was second with 25%.
Meanwhile, even though Nicosia attracted 21% of transactions in the first half of the year, the value of these transactions comprised a mere 15% of the total, thus recording the lowest average value of transactions compared with Limassol and Paphos.
The data shows that there were 225 sales of luxury properties in total (residential properties ≥ €1.5 mln), recording a 68% increase compared with the same period last year.
Furthermore, there were 2,482 sales to foreign buyers in the first half of 2019, compared with 2,187 last year, marking an annual increase of 13%.
The increase in the value of new planning permits is also indicative of the momentum the sector has gained, having increased by 116% in the first half of 2019.
The construction of new hotels appears to have contributed to this increase.