Investing in Cyprus, is it the right time?

Arguably Cyprus is a wonderful place to visit. It is the sunniest place in Europe, with some of the best beaches in the world, and some of the most well-known historical sites. For those reasons, more than 4 million tourists visit the island every year.

Settling these benefits aside, is Cyprus a good place for Real Estate investments?

In order to investigate whether investing in Cyprus today is a good idea or not, let’s examine both the economy and recent development in the country

Cyprus Economy:

In basic economic terms, the price of a good (or a real estate property in this case) relies on supply and demand. When the demand is high, and supply is low, the price rises. Similarly, when supply is high and demand is low, the price falls. The financial crisis in Cyprus has reduced the demand of properties dramatically, thus resulting in falling prices. Additionally, considering the market risk, the credit rating of Cyprus was downgraded to junk, discouraging external investors from the Cypriot market. As a result, the real estate market declined significantly and reached its lowest points in history.

In a prospering economy, people spend more money than what they spend in a contracting economy. Since salaries in Cyprus decreased while in crisis, people’s spending decreased as well, driving the prices of properties even lower.

Fortunately, Cyprus managed to break out of the crisis and consequently, its Moody’s credit rating was recently brought to B1 positive. This demonstrates a good progress in a relatively short period of time. It is worth mentioning though, that the price of real estate properties has just started to increase. Thus, an investment at this very moment is projected to generate great returns in the long term.

Recent development in Cyprus:

In terms of recent development, we can firstly elaborate on the companies that relocated to Cyprus in the last few years. The recent stability and increase in credit worthiness stimulated various finance and accounting firms to relocate to Cyprus. Accounting firms such as the ‘Big Four’, gaming giant Wargaming, and a big number of forex companies have relocated to the country, where they benefit from a strong legal system, in addition to tax heaven benefits.

Limassol One

Lastly, a good indication of the prosperity of Cyprus are the current developments in the country, which are growing at an unseen rate, especially around Limassol. New developments such as ‘Limassol Del Mar’, the ‘One’, and ‘The Oval’, as well as a new casino by Hard Rock, show the huge foreign investments in the island.

To conclude, taking into consideration the two most important pillars to be considered when analysing the real estate market of any country, it is undoubtedly a great time and opportunity for Real Estate investments in Cyprus.

Kyriakos Eleftheriou

Imperial College London, June2017