Cyprus Property Market Report 2016
- Oct 22, 2016
- 2 min read
Summary of the major drivers of the Cyprus real estate market in 2016.
The Cyprus economy has experienced positive growth in 2015 and the expectations are that this growth will continue in 2016. Fiscal indicators are improving, the yields of the Cyprus Bonds have been reduced, while the interest for investments is rebounding.
Confidence in the Cyprus real estate market is improving. In 2015 the total Cyprus property sales increased by 10% compared to 2014, whereas the interest of foreign investors in the Cyprus real estate market keeps growing (25% of transactions). The total value of building permits increased by 18% and the total area by 14% compared to 2014.
Cyprus property prices and rental rates have continued to fall at a slower pace, indicating that they are reaching their lowest levels and recovery is imminent. In order to stimulate growth in the economy and the Cyprus real estate industry it is important to attract foreign investments that will finance new and existing Cyprus property developments.
The incentives offered to investors in the Cyprus property market, such as the 50% reduction in Cyprus property transfer fees for all real estate sales and the 100% exemption from capital gains tax for profits on Cyprus properties purchased until 31st December 2016 have also stimulated the Cyprus property market.
The legislation that was adopted in autumn 2015 dealing with the longstanding problem of the inability to issue Cyprus property title deeds in the name of purchasers, who have paid in full the property developer, has enhanced the credibility of the Cyprus real estate market.
In October 2015 the Cyprus government successfully issued a €1 billion 10-year bond at an average yield of 4,25%, the lowest rate at which the Republic of Cyprus has ever issued a 10-year bond.
In autumn 2015 the Cyprus economy was upgraded by all main credit rating agencies, bringing it closer to an investment grade. The yields on the Cypriot bonds reached a five year low, as the yield on the Cypriot 10-year bond fell below 3%.
The Central Bank of Cyprus has begun purchases of Cypriot government bonds in the secondary market, in the context of the European Central Bank Quantitative Easing Program. This will further facilitate its next attempts to issue government bonds and thus attract liquidity from the international markets.
Finally, the great natural environment, the highly developed infrastructure, the growing tourism market, the low Cyprus property tax and the climate, make Cyprus ideal for property investment. Added to this, is the benefit of obtaining the Cypriot citizenship as a result of an investment in Cyprus property.
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