By Panos Danos
The effects of the pandemic on Cyprus real estate are intensifying as the uncertainty in conjunction with the government lockdown of the past three months has literally frozen the market, which had been on an upward trend in recent years following the previous economic crisis.
The COVID-19 pandemic, with the government’s necessary restrictions on movement and the forced-shut down of business activity to limit its spread, has inevitably affected the real estate market, as well as the banks’ processes of promoting their properties on the market.
Demand from abroad, which has led to a market recovery in recent years, primarily in Limassol and Paphos, is now almost non-existent.
Statistical figures regarding property transactions for the past few months reveal the dramatic effects that the pandemic is having on sales activity.
The figures are quite alarming, as, for the whole of Cyprus, we have seen a reduction in the number of contracts of sale submitted to the Land and Registry Department of about -36% for the period January to April 2020, compared with the same period last year.
More specifically, there was a reduction of -3% in January, – 11% in February, -33% in March (when the outbreak began) and the staggering figure of -80% in April!
Regarding Paphos and Limassol, the two markets recorded the highest reductions:
Contracts of sale submitted to the Land Registry Department for Limassol during January-April 2020, were down by -49% compared to the same period last year (-83% in April), while Paphos recorded a reduction of -39% for the 4-month period, with -68% for April.
Domestic interest in real estate transactions has stagnated both in terms of supply and, in particular, of demand, as uncertainties about the duration of the current crisis and its impact on the economy are very high.
Therefore, it is extremely difficult at this time to identify market trends and consequently, the new market equilibrium point.
The new, unpredictable conditions, with significant implications for the entire real estate market, justify estimates for lower prices after the upward trend in recent years.
Buying a home, however, both in times of crisis and otherwise, is always a necessity.
People will never stop buying or renting homes. In Cyprus, most developments are qualitative and if their price levels remain reasonable, they will soon be met by demand.
In addition, property as an investment vehicle during the current situation gains popularity as the deposit interest rates are virtually zero (soon, one will probably have to pay banks to deposit their money!).
Of course, everything will depend on the length as well as the depth of the crisis and the economic aftershocks it will leave on the property market.
Finally, keep in mind that there are not many opportunities in the market, in the sense of lack of liquidity and that leads to price lowering, while both sellers and buyers now have the experience to negotiate prudently and pragmatically, through reputable real estate agents and not in a hurry, based solely on investor sentiment.
However, the very few sales, due to practical reasons such as inability to visit the real estate, closed factories, closed Land Registry, set the tone for reduced cash flow for developers and businesses.
The writer is CEO of DANOS & ASSOCIATES