Cyprus has long been a popular holiday destination. Many of us have relied on this fact for our financial stability, making money off tourism and foreign investment. Because of the island’s centrality, people from Europe, Africa, and the Middle East are regular visitors. This is why the property market is so dependent on borders being open.
Unfortunately, over the past year we have seen how easily the economy can be brought to its knees without international travel. The property market in particular has struggled, with thousands of international investors putting their purchases on hold. Even in Cyprus, potential property buyers have had to postpone their plans due to their economic troubles.
With the light at the end of the tunnel, the property market in Cyprus has begun to recover as lockdown restrictions around the world are being gradually lifted.
The fact that the Cyprus property market is recovering is unsurprising. The pandemic hit economies around the world hard, but most economies were able to rebound with the easing of restrictions. Tens of millions of people who had been left unemployed found new jobs fairly quickly.
This is not to say that there was no permanent damage done to businesses and individual finances.
However, the truth is that economies no longer represent the reality on the ground in most countries. The economy can be booming while individuals and small businesses struggle, simply because the big corporations and publicly-listed companies are raking it in.
The global economic recovery has benefited people on a micro level, but it is the big businesses and wealthy investors that are truly winning.
The Cyprus market
The Cyprus tourism industry may take some time to rebound. While people will want to travel as soon as they are able to, and there will definitely be a bounce, many nomads no longer have the funds to travel. Even those who do make it to Cyprus may have less money to spend than they would have had a year and a half ago.
But the Cyprus property market is not bound to tourism. It is not your run-of-the-mill tourists who are buying property in Cyprus. Rather, wealthy investors buy properties to rent out to travellers, or as holiday and retirement homes.
This explains why the property market has already reached 2018 levels, despite the fact that travel restrictions are still in place in many countries.
Most international property purchases are, at the moment, coming from EU countries. Non-EU investors are likely to take a little bit longer. This is also the case for British property buyers, who have not yet returned in significant numbers.
It is not just international investors who are helping the property market rebound. Domestic property purchases more than doubled in May 2021 compared to May 2020. This is in part due to government incentives including an interest subsidy scheme. The interest rate is in any case incredibly low at about 2.5%.
The end of British lockdowns?
The UK was set to ease lockdown restrictions at the end of June, but it is looking likely that this will only happen at the end of July. The infection numbers there are still high, and scientists are calling for a delay so that more people can get fully vaccinated before the country opens up.
This might prove to be an unexpected blip in the recovery of the Cyprus property market. After all, a lot of property in Cyprus is bought by British individuals and investors. While they can buy without having to come over to Cyprus, buyers are nonetheless wary of spending huge sums of money in still uncertain times.
Nonetheless, an extra month of lockdowns is unlikely to make a big difference in the long run. Potential property buyers will come through at the end of July. August will be the big month for Cyprus property.
One industry that is being impacted by the increase in property purchases is the international money transfer industry. Cyprus is the home to a number of these companies, or at least their head offices.
Non-bank international money transfer companies
When it comes to transferring big sums of money abroad, banks are not the best choice. They charge huge fees and commissions, and provide interest rates that benefit themselves, thus adding a type of hidden fee. For this reason, investors turn to international money transfer companies.
Over the coming months, we can expect to see non-bank international money transfers happening at a massive scale. These companies are gearing up for this, knowing that their systems need to be performing reliably if they are to take full advantage of these transfers.
Money transfer companies have been hit by the pandemic. This is not because people have stopped doing business overseas or living as digital nomads. On the contrary, in many industries this type of work has picked up. However, with international property markets struggling, the number of transfers of major sums of money has decreased.
The recovery of the Cyprus property market is great news for these companies, and many of them are likely to offer benefits and incentives to use their services.
This has already started to happen, and it will only increase over the next few months. We can expect August to be a huge month for these companies, as Britons start buying up Cyprus property once again.
The good news is that it is unlikely that the Cyprus property market will crash once the boom ends. While its growth will slow, it is unlikely to go below pre-pandemic levels. More people are struggling than before the pandemic, and formerly-thriving small businesses have ceased to exist. But those individuals and businesses are not the main source of international Cyprus property investment.
It is possible that we’ll even see an increase in these types of buyers. There will be people who decide to expedite their retirements, finding a way to buy their dream homes so that they don’t have to wait through potential future roadblocks. In the case of further shutdowns, they can see out the crisis from their beautiful Cyprus home.
Many wonder if property investors will hold off based on what has happened to tourism over the past year. However, what we are already seeing around the world is that people are choosing to return to normal.
It is not possible to return to business as usual if we continue to expect a once-in-a-century event like a global pandemic to stifle our plans. There will be those who lose their appetite for risk permanently. But business owners and investors will need to recover that appetite if they are to succeed.