The Cyprus Realty Sector : Is The Boom Over ?
Whilst real estate sectors and markets have collapsed in most markets world-wide in the past 6-9 months, it seemed according to analysts and experts that Cyprus was holding its own despite the global crisis.
Now with the weak and weakening British Pound and a collapse of the traditional mortgage market it seems that Cyprus too has been hit hard by the crisis but some feel that the many appeals of this Mediterranean island will make it less vulnerable to the crisis.
Let us see what is being said and written about Cyprus lately.
Assetz, a reputed UK real estate news provider and portal, quotes the readership of investor magazine Jet-to-Let for having Cyprus a preferred place to invest for 2009 :
For some of those buying in various places with lots of sunshine, golf may be a particular attraction, both for investors keen to tap into this part of the tourist sector and those who enjoy playing themselves, but in the case of Cyprusthe issue of water supply had been raised as a potential stumbling block to further development, until the recent vote by the government to allow 14 new courses to be built. As government spokesman Stefanos Stefanou commented: “It was taken for the purpose of strengthening the tourism product in Cyprus and boosting economic activity.” The courses will have to provide their own desalinated water, he noted.
While these plans have attracted much media attention of late, it would be an exaggeration to suggest that Cyprus is about to shoot to the top of the leader board among some overseas property investors because of these developments. The reason for this is simple - it is already there.
The readership of investor magazine Jet-to-Let revealed this in the annual survey of buyer intentions for 2009, which found that the island remains the single most popular place to invest, just as it was last year, with France still in second place and the US up to third, a position previously occupied by Spain.
Assetz conclude in their article that despite the apparent lack of golf courses on the island, Cyprus seems to have a very promising future in terms of its real estate investment sector :
So Cyprus, golf courses or not, is already a top performer. While whacking a white ball around a large open space may appeal, so too will sunshine, beaches, nightlife, history and culture, food and even the chance to go skiing on the island’s high mountains. For all the recent talk of 14 new golf courses, it may be suggested there are already many more than 14 reasons to visit - and invest on - this popular Mediterranean island.
Renowned property blog, International Property Investments, disagrees and reports in their latest article on the Cyprus market that the property market has now collapsed :
The Cyprus property boom is over. Whatever the internet investment websites and realtors claim, the Cypriot property market has irreversibly collapsed. The worldwide economic crisis has completely deflated the speculative bubble, and many property owners are desperately trying to sell properties on an already flooded market. Sadly, they face a long wait or must sell at an obscenely low cost, losing around 30%.
The turmoil in the British economy has completely finished off the Cyprus property boom. The weak pound means that the British are not buying and are, in fact, desperately trying to liquidate their assets and export the money back to the UK. In addition, the collapsing UK housing market has ensured that the days of second mortgages for holiday homes are a distant memory. With no British buyers, there is no market. Whilst many Cypriots, especially the construction industry, made money from the boom, backing a single horse is unwise if it falls at the final hurdle. Constructors are laying off workers on an unprecedented scale, and the whole sector is suffering an enforced streamlining process.
Banks, constructors, realtors and the government all shared the blinkered belief that the property values for foreign buyers would continue to rise, unabated. They made no attempt to prepare for the inevitable, and the whole economy is now suffering. Just as with British and American companies, they lauded the free-market when times were good, but now demand governmental interference when they begin to suffer. Deal with it, Guys - you backed the wrong horse and you lost. Just as in the rest of the world, prices will sink to a more realistic ‘bricks-and-mortar’ level.
On the positive side, the article admits that for those with money and if one is on the look-out for a nice luxury home in the Mediterrenean, now is not a bad time to be buying in Cyprus :
Of course, when there are losers, there are also winners. Whilst the days of making a quick buck have gone forever, for those wanting to buy a beautiful holiday home, now is the time to buy from a strong bargaining position. Developers are desperate to sell, you can knock at least 30% off the asking price. If you drive a hard bargain, and offer a quick deal and quick turnaround, they will fall over themselves to sell.
Their finishing comments, however, are not to be mis-understood though :
The Cyprus property boom is over, dead, kaput, finito, ciao, auf wiedersein, goodbye……..
It will be interesting to see if Cyprus with its fragile economy and its heavy dependance on tourism and real estate can come through the global credit crunch and recession unscathed.