The total value of Cyprus real estate transactions in 2020 reached €3 bln, recording a drop of 32% compared to 2019, with Paphos feeling the worst of it while Nicosia was more robust, according to PwC analysis.
The decrease is mainly attributed to the significant drop in transactions from foreign buyers due to the pandemic’s adverse effects, which exacerbated the already reduced activity levels observed during the earlier months of the year.
Following the lift of the first lockdown measures in May 2020, increased activity levels were primarily driven by the domestic sector.
All districts of the island experienced double-digit drops in the value of properties transacted during 2020.
Limassol and Paphos, where the foreign segment predominantly drives demand, demonstrated a steep decline in transaction value terms (36% and 47%, respectively) annually.
Nicosia, on the other hand, being the domestic segment stronghold, was relatively more resilient, recording an annual 12% drop in transaction value.
According to the analysis, the high-end residential property segment was perhaps the most badly hit segment, with total sales of residential properties (≥€1.5 mln) plummeting to 176, recording an annual drop of 45%.
“Given the high-end residential property segment has been linked to Cyprus Investment Programme (CIP) buyers, the termination of the programme creates uncertainty as to the future of this segment and intensifies the need to re-focus and transform the industry and its product offerings,” the PwC Cyprus report said.
It noted, “one of the most resilient segments of the sector during the year relates to residential properties in the range of €100,000 – €300,000, following the first lockdown, recorded accelerating levels of demand.
“This is mainly the consequence of strong demand for primary residences and also increasing activity for private-rented housing and buy-to-let transactions.”
The number of new building permits recorded a marginal annual decrease of 3% in the construction sector.
However, in value terms, the drop amounts to 27%, indicating that new projects were on average of a smaller scale.
The drop observed is mainly attributed to the first COVID-19 lockdown, as following the lift of these measures, there were signs of partial recovery.
Specifically, the volume and value of new permits during the second half of the year recorded an increase of 23% and 44%, respectively, compared to the first half of 2020.
Constantinos Constantinou, Head of Advisory at PwC Cyprus, highlighted the need for reforms in the real estate sector.
“Given the challenges posed by the COVID-19 pandemic, there is an urgency to pursue a much-needed reform of the real estate sector, set new priorities and devise new strategies for the future.
“In our new edition, PwC’s experienced professionals provide a snapshot of the sector and present their suggestions for the development of a sustainable long-term plan that will allow the industry to return to its upward course, contributing to economic growth.”
PwC Cyprus has launched its latest Cyprus Real Estate Market publication, which comes in an unprecedented period for Cyprus and the global economy.
The publication “Cyprus Real Estate Market – Year in Review 2020” provides insights on the sector’s performance during 2020, which was impacted by the pandemic.
The publication is available online at www.pwc.com.cy/real-estate.