Cyprus's real estate sector will confront tough obstacles in 2023

In 2022, a year marked by uncertainty and global instability, the Council for Registration of Real Estate Agents took important steps to address critical issues affecting real estate agents and the general public in advance of a difficult 2023, according to the organization's president Marinos Kineyirou.

"After two years of having to deal with the pandemic, the war that broke out in Ukraine at the beginning of 2022 once again changed the situation," Kineyirou stated.

"Despite this, the real estate sector proved resilient, continuing to grow and strengthen, something which is reflected in the comparative sales figures, which the council now receives on a quarterly basis from the Land Registry, before processing them for publication," he continued.

According to Kineyirou, 5,566 transactions totalling €1.65 billion were registered in the third quarter of 2022 as opposed to €1.2 billion in the second quarter and €1.3 billion in the first.

Additionally, he added that a number of variables, such as the conflict in Ukraine, the government's incentive program to entice foreign businesses to Cyprus, and the subsidizing of interest rates that was in place until the end of 2021, had an impact on demand throughout 2022.

According to Kineyirou, "all of these factors contributed to the increase in demand for real estate from both locals and foreigners."

He continued, "We expect the coming months of the new year to be full of challenges, which may ultimately affect demand and, by extension, the real estate sector’s growth rate, potentially resulting in the sector slowing down."

The council president pointed out that high inflation will continue to put pressure on consumer purchasing power, and that Cypriot companies may delay making investment decisions until both uncertainty and high costs diminish.

He added that the low VAT rate of 5% may also add to the issues facing the sector. In addition, the rise in loan rates is another factor that may affect the plans of individuals who are thinking of purchasing a house or flat for homeownership purposes.

He continued by saying, "in addition to these factors, there is also the issue of increased raw material prices, which is also driving up the final selling prices of both houses and apartments as construction costs increase."

"It should be noted that elevated construction costs are also a problem concerning those renovating or upgrading properties," he said.

However, Kineyirou claimed that in 2022, the council took significant actions to address pressing problems that had long been of concern to the public as well as real estate professionals.

As an illustration, title deeds will now include a clarification clause stating that the general valuation assessment is only relevant for taxation and does not accurately reflect the property's market value.

Kineyirou added that the council is moving forward with the disclosure of all legal and natural people who have been tried for and found guilty of illegal real estate brokerage.

According to him, "it is satisfying to see that our actions to deal with illegality have been paying off, as we have on the one hand seen an increase in cases brought to court and on the other hand steeper fines imposed on those convicted."

The council president also recalled that in the summer of 2022, the council had launched its own online platform. This platform served as a benchmark for trustworthy offers and opportunities for the general public because it allowed them to search for and find properties from only licensed real estate agents.

He said that the platform already has thousands of properties listed, and that the volume of traffic it receives is considered to be extremely satisfactory.

According to Kineyirou, "We also give particular importance to the training of real estate agents."

For this reason, he continued, "in the context of our cordial cooperation with the Department of Land and Surveys, we have held various seminars, which contribute to the transfer of valuable knowledge pertaining to the management and utilisation of useful tools for real estate market professionals."

By fLEXI tEAM