Here's an overview of the main trends in the Cyprus property market over the next 12 months following on from 2018.
Increasing demand for Grade A office space
Nicosia, being the capital and financial centre of Cyprus, is home to the public sector and most of the large businesses operating on the island.
Traditionally, office space in Cyprus is found in the old common type multi-storey buildings which are mainly located in the heart of the cities.
However, in recent years a trend for decentralization began to occur. During 2018, the office market in Cyprus remained stable. In 2019 Grade A offices will be sought-after, especially those that are found in CBD or decentralized main areas.
Government incentives are stimulating investment
The investment activity for 2018 is correlated to the incentives given by the government which seems to have attracted both foreign and local investors.
The opportunity to obtain a Cypriot passport has attracted many foreign buyers all over Cyprus (especially in Limassol and Paphos). In addition, other incentives led to an increase in sales in the second half of 2018.
The Cyprus real estate market has historically been divided into two submarkets. On the one hand the major urban centres of Nicosia, Limassol and Larnaca primarily driven by local demand (the last two also by foreign demand since 2000) and on the other hand, the seaside resort areas of Paphos and Famagusta mostly driven by foreign demand.
Traditionally, the Cyprus property market is dominated by the residential sector, with the island’s geography and historical reasons partly dictating the dynamics of the various submarkets.
However, the trend of development companies in recent years is the construction of office facilities intended mainly for multinational companies attracted by the island. Grade A offices appeal to foreign investors and the prime yield reached 5.5% in 2018.
In 2019 the economy’s performance is expected to continue accelerating and support the investment market.
Residential rents on the rise
According to a survey conducted by DANOS / BNPPRE, the rent prices in the country have increased on average by 15 percent compared to 2017, while wages are also on the increase, but at a lesser pace.
The main reason for this rise is the wide-spread use of Airbnb-like platforms that create a distortion in the Cypriot housing market, the increasing number of foreign students and the trend of Cypriots to rent rather than to buy (also due to difficult bank financing).
The demand for flats and houses is constantly on the rise while the available flats are becoming hard to find over time, as their owners prefer the short-term rental options that these Airbnb applications offer.
The problem in Cyprus’s capital, Nicosia, is even bigger as many of the city’s suburbs, like Engomi and Aglandjia, saw a rise of more than 15 percent in 2018.
The situation in the centre of Limassol is uncontrollable with a rise of median 20 percent while Ayios Athanassios had a rise of 15 percent, compared to 2017 prices.
In Larnaca and Paphos, the trend is pretty much like Nicosia and Limassol.
On average, Larnaca and Paphos rents rose by 10 percent with the highest rises spotted in the city centre and coastal areas.
In 2019, residential rents are expected to stay stable as new developments are coming on the market and the banks plan to increase their residential sales of repossessed homes through auctions.
Source: Financial Mirror