It includes an in-depth analysis of transaction activity during 2020 demonstrating the impact of the pandemic on the real estate sector
PwC Cyprus has launched its latest Cyprus Real Estate Market publication, which comes in an unprecedented period for Cyprus and the global economy.
The publication entitled “Cyprus Real Estate Market – Year in Review 2020” provides insights on the performance of the sector during 2020, which was impacted by the pandemic, with significantly reduced transaction activity during the first half of 2020 and signs of partial recovery during the second half of the year.
According to PwC analysis, the total value of transactions during 2020 reached €3bn, recording a drop of 32% compared to 2019. The decrease is mainly attributed to the significant drop in transactions from foreign buyers due to the adverse effects of the pandemic, which exacerbated the already reduced levels of activity observed during the earlier months of the year. Following the lift of the first lockdown measures in May 2020, increased levels of activity were observed, primarily driven by the domestic sector.
All districts of the island experienced double-digit drops in the value of properties transacted during 2020. The coastal districts of Limassol and Paphos, where demand is predominantly driven by the foreign segment, demonstrated a steep decline in transaction value terms (36% and 47% respectively) on an annual basis. Nicosia on the other hand, being the domestic segment stronghold, was relatively more resilient, recording an annual 12% drop in transaction value during 2020.
According to the analysis, the high-end residential property segment was perhaps the most badly hit segment, with total sales of residential properties (≥€1,5mln) plummeting to 176, recording a drop of 45% compared to 2019. Given that the high-end residential property segment has been linked to Cyprus Investment Programme (CIP) buyers, the termination of the programme creates uncertainty with regards to the future of this segment and intensifies the need to re-focus and transform the industry and its product offerings.
It is also interesting to note that, one of the most resilient segments of the sector during the year relates to residential properties in the range of €100.000 – €300.000, which following the lift of the first lockdown measures in May 2020, recorded accelerating levels of demand. This is mainly the consequence of strong demand for primary residences and also increasing activity for private-rented housing and buy-to-let transactions.
As regards the construction sector, the number of new building permits recorded a marginal annual decrease of 3%. However, in value terms the drop amounts to 27%, indicating that new projects were on average of a smaller scale. The drop observed is mainly attributed to the first lockdown measures, as following the lift of these measures there were signs of partial recovery. Specifically, the volume and value of new permits during the second half of the year recorded an increase of 23% and 44% respectively, compared to the first half of 2020.
Commenting on the publication, Mr Constantinos Constantinou, Head of Advisory at PwC Cyprus highlighted the need for reforms in the real estate sector. «Given the challenges posed by the COVID-19 pandemic there is an urgency to pursue a much-needed reform of the real estate sector, set new priorities and devise new strategies for the future. In our new edition, PwC’s experienced professionals provide a snapshot of the sector and present their suggestions for the development of a sustainable long-term plan that will allow the industry to return to its upward course, contributing to economic growth» he noted.
The publication is available online at www.pwc.com.cy/real-estate.