Nicosia office demand boosts real estate sector

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Nicosia is keeping the real estate market alive with high demand for office space from foreign high-tech companies looking to be based in the capital expected to revive a sluggish property sector.

“All bets for the real estate sector are on the capital. Nicosia has gone from being left out of the development boom generated by the Citizenship for Investment scheme to becoming the driving force for the industry,” said a property analyst.

While overall demand for property from foreigners crashed in the first four months of the year, Nicosia was the only district to record an increase in sales to foreigners with a whopping 69.7%.

According to Land registry Department data compiled by the website Stockwatch, demand from foreign buyers dropped by 16.5% in the first four months to April.

Between January and April, foreign buyers purchased 883 properties or 29.6% of all property sales (2,817), compared to 998 in 2020, 45.2% of total sales.

Of the 833 foreign sales, 458 were buyers outside the EU and 375 within the bloc.

The corresponding distribution in the first four months of 2020 was 657 sales made by non-EU buyers and 341 EU sales.

Paphos was the focus of foreign investors, making up 30.5% of sales in the district.

Limassol followed with a 26.5% share (221 property sales), and Larnaca with 20.8% (173 sales).

Only 13% of property purchases by foreigners were made in Nicosia, with 112 properties sold.

Just 73 properties (8.8%) were sold to foreigners in Famagusta.

In comments to the Financial Mirror, Angelos Constantinou of BNP Paribas/ Danos Real Estate’s research department, said Cyprus hopes to convince companies, especially fintech firms, to relocate or open shop on the island since its “golden passport” scheme sunk last year.

The demise of the golden passport scheme came about after an Al Jazeera Gotcha video portrayed senior politicians willing to secure a Cypriot passport for criminals.

When it came to issuing passports to dubious investors, an avalanche of wrong-doing was discovered, sinking the scheme last November.

In the past eight years, the real estate sector had been refashioned to cater to foreign investors eyeing a Cypriot passport in exchange for a €2.5 mln investment in new property.

Brexit factor

“Cyprus’ real estate sector is rebuilding momentum banking on interest from firms to set up an EU base following Britain’s exit from the union,” said Constantinou.

He said Cyprus is seen as an alternative base in the EU in the wake of Brexit.

Foreign firms and investors are mainly eyeing new offices and warehouses in the capital.

“They are not looking to invest in land or homes but are in the market for high-quality offices to house their headquarters or Cyprus branch,” said Constantinou.

He explained that such companies are in the market for new offices, for which supply currently does not meet demand.

“This demand will boost the real estate market, as the construction sector will be warming up their engines to cater to demands for offices.

“There are already several high rises to accommodate top-of-the-line office space.”

Constantinou said there are projects ready to launch in central Nicosia, Engomi, Strovolos, Aglandjia and Latsia.

“Nicosia is also driving the local housing market, according to data. Following the first lockdown, increased activity levels were primarily driven by the domestic sector.”

According to a recent PwC study, all districts 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).

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, with total sales of residential properties (≥€1.5 mln) plummeting to 176, recording an annual drop of 45%.