A Review
The Cyprus real estate sector is one of the most powerful sectors within the Cypriot economy. It sees national and international interest each year. In this article we are going to show you some of the most important data regarding this sector.
Cyprus Real Estate Sector
During 2019 the Cyprus real estate sector added €3.24 billion into the Cypriot economy. This contribution was greater than the Financial and Insurance as well as the manufacturing sectors combined and a positive increase from 2018 (16%).
In the 11th edition of the KPMG Cyprus Real Estate Market Report it was announced that the Cyprus real estate sector directly employs 42,770 people. Again, this is more jobs than the sectors mentioned above when combined. It also means that there was a 4% increase in workforce when compared to 2018.
Building Permits
One of the greatest outcomes from the report is the volume and value of permits. 2019 saw a total of 7,218 permits issued whereas the year previous saw 6,408 making it an increase of 13%.
With this 13% also came a large increase for the value of permits. An increase of 81% was seen in comparison to 2018. Limassol has accounted for 30% of the permits issued and 56% of the total value of permits. Nicosia saw the highest number of building permits with a total of 35% but only 18% of the total value.
The bulk of these building permits were issued in regards to residential development in Cyprus with a percentage of 72. Although hotel developments only accounted for 3% it must be noted that the total permit value was at 17%.
Furthermore, 9% of the building permits that were issued during 2019 were for projects bigger than 900m2 with a value of €2,7 making it a 71% share of the total value of building permits. Also, the value of large projects more than doubled to that of 2018.
Construction
Over the past 5 years the construction sector has recorded high growth rates. In fact, this sector has almost doubled in the last 4 years. However, during 2019 construction only saw a growth rate of 8%, which notably lower than previous years.
In terms of construction cost per building permit, Limassol saw the greatest average construction cost per building permit, with €959 thousand. Famagusta followed just behind Limassol at €597 thousand, which are mainly hotel building due to it being a tourist area.
Building Permits in 2021
Due to the ongoing pandemic, the issue of building permits slowed down dramatically. This has caused an overall y-o-y decreased for both volume and value of 18% and 53%. However, the first 3 months of 2020 saw positive numbers for volume and value of building permits.
Residential buildings accounted for 72% of the building permits between January to April 2020, this was a decrease of 19% regarding volume and a 13% decrease for value. Non-residential developments also saw a decrease for both number of permits and value. These decreases were mainly seen in regards to hotels and other similar projects.
Sales Activity in 2019 and 2020 H1
Limassol recorded 34% of the transactions in 2019, making it the clear majority. It was followed by Paphos, which account for 26%.
Nicosia saw the largest growth in terms of number of transactions, recording a 24% increased (biggest annual increase for the second year in a row). This was followed by both Larnaca and Paphos who both saw an increase of 17%.
Due to the current pandemic and lockdown restrictions, the island saw a significant decline in sales; these were between 18% to 53% across all the districts. However, the current numbers are restoring positivity after the lockdown restrictions were ease.
Price Evaluation
Residential price evolution is monitored by the Central Bank of Cyprus, CyStat and the Royal Institution of Chartered Surveyors; each of these companies use different methodologies but have given similar data until 2017. According to the data collected by CyStat, Cyprus saw a decrease in prices during the last quarter of 2019 whereas the other two saw increases.
Moving on to commercial property, office prices saw a sharp increase from 2016 and this has maintained a higher growth rate than other commercial properties. We recently published an article talking about the commercial property and the trend regarding office space.
Property Yields
Yields for apartments and houses have remained stable after the 2013 economic crash however, yields for commercial property have had more instability as a result of 2013. Office space yields have been the one of the best performing sections of commercial property and has seen notable growth (yields around 5.7%).
The warehouse industry has seen a constant decline whereas retail property yields have remained stable, showing a small increase from 2016.
Student Accommodation
This section within the Cyprus real estate sector has seen continuous growth, estimated at +7% from 2018 to 2019. The start of the 2020 academic year is set to add another 200 rooms in Limassol due to the number of university students growing (6.5% in 2019). Although, due to the pandemic students are more likely to begin the academic year by distance learning. As it stands, 28.2% of students registered in Cypriot universities are distance learning but as mentioned, this is likely to grow.
Conclusion
The Cyprus real estate sector has been positive growth in regards to most aspects. Although we continue to navigate through a pandemic the numbers from the first 4 months of 2020 showed a positive impact, and from June onwards we have seen this.
