THE CYPRUS PROPERTY MARKET IN 2009

The New Year is traditionally the time when many experts look ahead and try and predict what’s in store for us. However, at the beginning of 2009, many of the experts, along with those who have long experience in the Cyprus property market, are having trouble with their predictions because of the unprecedented global economic crisis which seems to be touching almost every corner of the world.

So, what will happen to the Cyprus property market in 2009? We decided not to make any predictions at all and just stick to the facts, allowing you to come to your own conclusions, which of course will be different, depending on your circumstances.

Cyprus is one of the more mature European property markets, almost all of which have seen a significant downturn as buyers from the UK and northern Europe are finding it harder to release equity in their principal homes and have decided to hang on to their hard-earned savings. It took Cyprus longer than most countries to be affected by the crisis. Over the last 10 years its economy has seen healthy growth and the Cyprus property market, which has traditionally been one of the main drivers of the economy, experienced a boom period between 2002 and 2007 before stablising in 2008. According to a report in October 2008 by Cyprus financial services group, MAP S.Platis, house prices for the first 9 months of 2008 continued to rise, although at a slower pace.

Towards the end of 2008, the Cyprus property market began to feel the effects of the UK recession and this looks as if it will continue into 2009. Traditionally, around 70% of foreign buyers in Cyprus have been from the UK, but with sterling weakening against the euro, there has been a noticeable drop in sales. Figures from the Cyprus Land Registry at the beginning of 2009 showed that sale transactions for the period January to November 2008 had gone down by 27.9% year-on-year.

Economic growth in Cyprus followed the same pattern as the housing market and remained fairly stable in 2008, but is expected to drop in 2009, before picking up in 2010/11. According to The Economist, 2008 GDP for Cyprus is estimated to be 3.5% but the rate will slow to 1.5% in 2009, which reflects weaker domestic and external demand growth, as a result of the global economic downturn. The Cyprus Central Bank governor, Athanasios Orphanides, said 'We cannot overlook the fact that an open economy like ours cannot remain completely unaffected by the negative global developments.”

So, that’s the bad news but is there any good news?

Well, yes, particularly for those who can afford to stay the course and ride out the storm. The Cyprus government and the private sector have been investing heavily in several major infrastructure projects across the island, which, when completed, will attract up-market, year-round tourism, good news for the Cyprus economy.

The international airports at Larnaca and Paphos have both been upgraded to cater for increased visitor numbers and a total of six new luxury marinas will be built at Paphos (Kissonerga), Coral Bay, Paphos, Limassol, Larnaca, Ayia Napa and Paralimni.

Property professionals in Cyprus have noticed that the market in each area is reacting in a different way and also that there is a distinct change in buyer demographics. UK buyers are no longer flocking to the popular coastal areas of Paphos and Famagusta, where there is a reduction in demand of as much as 25%, nor to Larnaca where the demand is down on average, 10%.

Now Cyprus is seeing more buyers from further afield - there has always demand in Limassol from Russian – and of course Cypriot - buyers and this is being maintained. Now, we are also seeing more interest from buyer in countries like South Africa, Israel and the Middle East.

Limassol will be one of the prime areas to benefit from major infrastructure development including the massive marina project which will be constructed at the heart of the old Limassol’s seafront. The creation of the marina will transform the area and bring a more diverse range of tourists to the island. Nicosia, the capital, which is mainly a Cypriot-based market, remains active and stable. Wealthy Cypriots are interested in obtaining property across the island at lower prices and land, especially prime land or property near the beach is still very much in demand – Cyprus is a small island and there’s a limited supply of both land and of course, prime beach property.

So, should you buy a property in Cyprus in 2009? This, of course, very much depends on your personal circumstances and reasons for buying. At Cyprus Property World, we recognise that there are all kinds of buyers with differing needs. If you’re an investor looking for a good deal, you will probably find it in Cyprus at the moment. Or if you’ve found your dream home in Cyprus and are able to finance it, then you will be making a different kind of investment – one in your own and your family’s happiness – and one which you may, at the moment, be able to buy at a reduced price. Property is a tangible asset and, as we all know, property markets work in cycles.

This cycle may have a deeper trough than most, but if time and money are on your side and you decide to buy now, when the market recovers, you could be sitting pretty – in more ways than one.

If you’d like further information about the property and bargains we have available at Cyprus Property World, email us now at info@cypruspropertyworld.com, detailing your requirements or fill in the contact form on the right of the page. Let’s see if we can make 2009 your best year yet!

Here’s wishing you all a happy - and prosperous – 2009!

From the team at Cyprus Property World
www.cypruspropertyworld.com