Covid-19 has wreaked havoc in global capital and real estate markets since the beginning of this year, and Cyprus has been no exception. Since March 9 when the first infection was reported, the total number of cases has steadily increased to over 900. The country, so far, has fared much better than many of its neighboring Middle Eastern countries, thanks to the mobility restrictions that were imposed by the government. While this is good news, the abrupt end to business activities in the country and global travel restrictions have led to a significant contraction in real estate transactions in the first quarter of the year.

The pandemic-hit first quarter was disastrous to the real estate market

Housing prices in Cyprus plummeted during the global financial crisis in 2008, and 2019 was one of the best years in recent history for the industry and the demand from foreign investors helped this recovery.

Global Property Guide/Cyprus Statistical Service

Source: Global Property Guide/Cyprus Statistical Service


This growth in housing prices and the recovery of the real estate industry, however, came to a standstill in the first quarter.

The negative impact of the pandemic was felt across all the municipalities in Cyprus. According to data from the Land and Registry Department, the number of contracts of sales submitted to the department has been declining in each month since January, and the most devastating numbers were reported in April.

Land and Registry Department

Source: Land and Registry Department

Paphos Municipality, which accounted for the highest foreign transactions in the first half of 2019 according to data from PwC, was hit hard as a result of global mobility restrictions. Notably, transactions involving townhouses and villas dried out entirely in April, confirming the dire situation of the real estate market in Cyprus.

Property Canvas Research

Source: Property Canvas Research

The trend in other areas has been very similar to that of Paphos, which doesn’t come as a surprise considering the similarity between the macro-economic headwinds faced by all these municipalities.


Property Canvas Research

Source: Property Canvas Research

 Property Canvas Research

Source: Property Canvas Research

Both local and foreign transactions have declined drastically, and the first quarter numbers act as a warning sign for the outlook for the remainder of this year. The real estate industry has a high correlation with economic growth, and the Covid-19 pandemic has already led to revisions to regional and global economic growth. For instance, the International Monetary Fund expects the global economy to contract more than 4% this year, making 2020 the worst year since 1980. This pessimistic forecast played a role in the disappointing performance in the real estate market in Cyprus as both local and foreign investors retrieved to investing in safe-haven assets such as gold.

The outlook for the next quarter is gloomy but there are silver linings

The second quarter could turn out to be even worse than the first three months of this year as the real economic impact of Covid-19 will only come to light in the next couple of months. Many industrial giants such as the United Kingdom, the United States, India, and Germany are still in lockdown, and consumer spending can be expected to remain under pressure for quite some time. Therefore, foreign investments in the Cyprus real estate market will likely remain at depressed levels in the second quarter as well. The demand from local buyers will also continue to decline as household income will take a massive hit as a result of reduced business activities.

Even though the outlook is bleak, there are some silver linings amid the dark clouds. For instance, China, which is an important player in the Cyprus real estate market, is slowly returning to its normalcy. The two-month-long lockdown came to an end in the first week of April, and the second half of this year will be much better for the Chinese economy in comparison to the first half. This is good news for the real estate industry in Cyprus.

Global and regional travel restrictions are likely to be eased in the coming months as well, and this will open the doors once again for international investors. For instance, the United Arab Emirates is planning to open the borders in July, and countries such as Australia and New Zealand are already planning to resume travel. This is a positive indication as well. The Cyprus Investment Program will play a critical role in reviving the growth of this business sector, and the country is poised to benefit in the long term as a result of these initiatives aimed at capturing global investors to the island.

Finally, the expected recovery of the Cyprus economy will act as a tailwind for the real estate industry in the next couple of years as well.

The primary risk to the real estate industry would be a second wave of the pandemic. According to data from the World Health Organization, the second wave of the Spanish Flu in 1918 was deadlier than the first, and this will act as a reminder for governments around the world to remain cautious when resuming business activities. A fresh outbreak will certainly become a difficult-to-overcome obstacle for the Cyprus real estate industry.


The troubles might not be over yet for the real estate industry in Cyprus. However, there is hope for light at the end of the tunnel. The International Monetary Fund and the World Bank project the global economy to stage a spectacular recovery in 2021, driven by various tailwinds including the eventual rise in business activities around the world, trillion-dollar stimulus packages introduced by governments, and expansionary monetary policy initiatives introduced by central banks. The long-term outlook for the real estate industry in Cyprus, therefore, is promising, and it’s a matter of mitigating the impact from Covid-19 to remain relevant as a global hub for investors until things return to normalcy.

Disclaimer: All materials in this document are consider intellectual property of C.N. Property Canvas Ltd. No publication of any form is permitted. Registered and Licensed Real Estate Agency 826, 432/E
Christos Nikolaou

Author: Christos Nikolaou

BEng Mechanical Engineering, MSc Real Estate, ETEK Property Valuer, Register and Licensed Real Estate Agent.

Christos Nikolaou is the founder and Managing Director of Property Canvas, he holds a license as an Estate Agent from the Association of Real Estate Agents of Cyprus and he is a registered Property Valuer in the Technical and Scientific Chamber of Cyprus (ETEK). He is the author of our “CYPRUS REAL ESTATE MARKET – YEAR TO DATE REPORT (JAN-APR 2020)” and is a certified advance negotiator.


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