Cyprus derives its economic strength from its tourism sector, which is closely linked to the real estate sector. People from all over the world come to Cyprus with the aim of relocating and settling down, leading the country to witness a growing number of new construction projects that have benefited the real estate sector in achieving steady and stable growth. In this article, you will learn about the evolution of the real estate sector in Cyprus.
The growth of the real estate market in Cyprus
Analysts reveal that the real estate market in Cyprus has achieved a high annual growth rate of 3.5% until the year 2022, and this prosperity has had positive implications and outcomes for the Cypriot economy, The International Monetary Fund (IMF) expects the Cypriot economy to grow by 3% by the end of this year. However, the Ministry of Finance holds a more optimistic view, anticipating growth of 4.5% to 5%.
Increase in demand since 2000
Going back in time, the real estate sector in Cyprus experienced consecutive surges in the mid-2000s, driven by an increase in demand from foreign investors, This led to a 22.06% increase in home prices in 2007. However, with the global financial crisis, prices dropped by 30% in the years following the crisis until 2016, according to data from the Central Bank of Cyprus.
The housing market in Cyprus began to stabilize in the first quarter of 2017 amid economic improvements. Property prices across the country increased at an average rate of 2.2% annually from 2017 to 2019.
During this period, the government implemented various initiatives to revive and strengthen the real estate sector, including the development of residential and commercial projects, new businesses, and modern infrastructure, These measures have yielded significant results and contributed to paving the way for a stable and thriving economic system.
The prominence of Cyprus in Europe
Cyprus recorded a notable 21 % year-on-year increase in property sales last January, with total transactions rising to 1,275 units compared to 1,056 in January 2024. This robust performance underscores growing demand, particularly given the attractive investment yields on offer: short-term (tourist) rentals can deliver an expected return of up to 9 %, while long-term leasing yields average around 5%.
Moreover, property values across Cyprus continue to appreciate at an average annual rate of 5 %. In certain areas, gains have been even stronger; for example, in Larnaca the average price per square metre has risen by 7.8 % year-on-year, further enhancing both capital growth and rental income potential.
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