Property market losses from Middle East crisis

1 min read

The recent events in the Middle East and the war between Israel and Hamas caught Cyprus by surprise (as in most countries).

It is a terrible, primarily humanitarian situation, the effects of which are difficult to predict at this point, not only relating to immigration and tourism but to more serious events, such as the widening of the conflict involving other countries.

Also, the economy will affect most other countries, including the oil prices and the cost of living, health, and medical care.

I have stated that the misfortune of other countries, in one way or another, can help Cyprus.

Starting from the Lebanese war (1975) to the Yugoslavian civil war, the collapse of the Soviet Union, the Russian transformation of its political system, and so on.

All these events benefited the Cyprus real estate market, with numerous foreigners forming permanent living communities in this country.

The British market apart, local foreign groups include Israelis, Arab nationals, Yugoslavs (mainly Serbs) and Russians, whereas other foreigners refer to business groups relating to shipping, IT firms, capital investment funds, and hotel investors.

Whatever excuse or reason one uses that Cyprus will or will not be affected, look at the map of the Middle East.

Cyprus is in the centre, and this deters numerous people who are unaware of the whole picture of the geography and politics of the Middle East.

Israelis have recently been the second largest tourist visitors to Cyprus, reaching almost 300,000 p.a. who we suspect will not return with the same numbers, which, coupled with the loss of the Russian market of almost one million visitors over the war in Ukraine, is a very large loss which is difficult to replace in the 2023-2024 tourist seasons.

According to press reports, approximately 10,000 Israelis live permanently in Cyprus and buy real estate on the island; some have built hotels, investment and development, whereas others opted for investment in hospitals (takeovers) or building new ones in Nicosia and Limassol.

If the conflict ends within a short period, the loss will be not so much, but if it carries on, the expected loss in real estate demand will be unpredictable.

This will inevitably harm the local market, but we expect that the 40% share by foreign investments will drop to at least 30% (always depending on the war’s duration).

It is “unkind” in the least to worry about human suffering, and on the other hand, we in Cyprus worry about our economy.

If there is a positive note, we expect some investors will show an increased interest in businesses and home buying (or rent), offsetting some of the losses.

I hope this very cruel conflict will end soon, and with it, the human suffering, whereas our economy can endure for a short period.