Limassol is losing the top spot to Larnaca as Cyprus’ emerging investment hub, according to the analysis of ‘Cyprus Real Estate Market Report for the 2nd Semester 2023’, published by Danos & Associates.
The report notes that commercial properties are increasingly intended for professional purposes and workspaces rather than residential areas, although not limited to them.
These range from small restaurants to large-scale retail parks. It also highlights potential disadvantages of commercial properties like any other investment, such as damages to properties and malfunctioning internal spaces.
However, tenants are likely to care for commercial ownership as leases are usually for longer periods.
Another benefit of this type of investment is that the value usually increases at a faster rate than residential properties.
For Limassol, the report states that this city has undoubtedly been the major area of interest for foreign investors. However, with apartment prices rising by 8.1% last year, investors are shifting to smaller towns for commercial developments due to Cyprus’ work/travel culture.
Demand for office spaces has increased as predicted, the report states. The capital values of Limassol’s office spaces began rising in 2016.
By the end of 2019, the average office value was €2,639 per sqm, representing a gain of 42% compared to the end of 2015 (€1,859 per sqm).
The report by Danos & Associates acknowledges the market’s resilience and increasing challenges that arise, which should not be underestimated.
“The real estate sector significantly contributes to the Cypriot economy, and it’s crucial for the government to find ways to support and maintain its momentum. Data reveals that in the second quarter, a total of 5,974 transactions were made, amounting to €1.52 billion in property sales.” On an annual basis, it is noted that the transaction volume in the second quarter of 2023 remains similar to the corresponding period in 2022.
However, the value of properties sold has significantly increased compared to last year, reaching €1.2 billion.
Nicosia and Famagusta are the only provinces showing an increase in property value during the second quarter compared to the first quarter.
In Nicosia, despite a decrease in the volume of sales transactions (1,549), the value of properties sold reached €299.8 million. Similarly, in Famagusta, an increase in value (€59.7 million) is accompanied by an increase in the volume of sales transactions (303).
In contrast, the Limassol province recorded a significant decrease. The value of properties sold in Limassol decreased by €200 million compared to the first quarter, reflecting a significant decline in sales volume.
In the Paphos and Larnaca provinces, there was a decline in the property market during the second quarter. Paphos showed a more significant decrease both in value and volume of sales compared to the previous quarter.
In Larnaca, while the volume of transactions increased, the value of properties sold was slightly lower. Sales in the second quarter of 2023 reached 7,689, representing a 23% increase compared to the second quarter of 2022.
The report also mentions that the abolition of citizenship by investment programme did not affect the real estate market in Cyprus.
The housing market continues to grow, amidst increasing property sales due to strong domestic demand, combined with returning foreign investors. During the year until the second quarter of 2023, the national housing price index increased by 7.42% (5.41% adjusted for inflation), following increases of 7.66% in the first quarter of 2023, 6.6% in the fourth quarter of 2022, 6.28% in the third quarter of 2022, and 4.57% in the second quarter of 2022.
On a quarterly basis, prices increased by 1.46% (1.15% adjusted for inflation) in the second quarter of 2023.
