Property Inspector: Business as usual in Cyprus?

by Charlotte Ashton
TheMoveChannel.com’s Property Inspector, taking a closer look at global real estate each month.
Go back two months and everyone was talking about Cyprus. Taking drastic measures to secure an EU bailout and keep the island’s economy afloat, the crisis dented confidence in the country’s property and the euro at large. With British expats reportedly looking to leave and prices continuing to drop, Cyprus looked sunk.
  • “Probably the most active period since the recession”, agent tells TheMoveChannel.com podcast
  • Residency permits “definitely helping” the market, attracting buyers from China, US, Lebanon and Jordan
  • Paphos property most popular with Chinese investors
  • Weak euro and strong dollar to boost Asia investment in Europe, says UKForex
  • Scandinavian bargain hunters taking advantage of low house prices and weak euro
Now, though, figures from the Department of Lands and Surveys suggest that overseas buyers are starting to return. Attracted by low prices and a new residency scheme designed to bring in non-EU buyers, transactions jumped in Larnaca, Famagusta and Paphos in April 2013 compared to March, while sales to foreign investors in Paphos are now 7 per cent higher than April last year.
With Cypriot enquiries on TheMoveChannel.com on the up, we ask: it business as usual in Cyprus? And is now really the time for non-EU investors to be looking at the euro?
The Inspector interrogates Denise Kay, Sales Manager of Sold on Cyprus, to find out the state of the market and tracks down David Nicholls, Alliance Manager at currency broker UKForex, to see which way the exchange rates are blowing.

Click here to listen to the full investigation.

Denise, now the panic has died down a bit, what’s it like in Cyprus? How would you describe the property market?
“It’s probably the most active period since the recession, particularly with our local buyers – possibly a slight loss of confidence in the banks has made them look at putting money into property. It’s been a positive period after such a difficult few weeks.”
Is interest from overseas buyers still there, despite that lingering image?
“I think overseas buyers are quite attracted by the fact our prices have lowered – not only lowered, but because of the banking situation, we now have opportunities of properties that are being returned to the bank, which means Cyprus has a market that we haven’t had in the past 11 years since I started working here. We also have the incentive of permanent residency, which is getting a lot of interest from non-European countries.”
Lots of agents are now focusing on Chinese demand for the residency permit. How important are non-EU buyers to keeping Cyprus’ property market active? 
“We have actually got an agent based in Beijing and yes, there has been interest there, mainly for people who are business clients who wish to travel around Europe freely. Not just from China, also the Middle East. I’ve had for the first time ever American and Canadian clients, people from Lebanon, Jordan… We’ve had really mixed interest and that’s helping the international market definitely.”
Are there specific areas you find buyers are looking at?
“My company concentrates mainly on the East side between Larnaca and Famagusta but Paphos has always been very popular with the British market. That’s been mainly attractive to the Chinese. They have confidence once they see other Chinese investors buying in the area.”
What about people who have already bought properties? Have you seen a notable increase in sellers in the wake of the bailout?
“I don’t see that there’s been a massive change in the numbers, not according to my statistics anyway. There’s always a cycle, this is mainly my British market, they do so many years and then put their property on the market. It seems a normal amount of people are returning to Britain for one reason or another, just as we have a normal amount of people coming out to retire and it’s all personal reasons really. I haven’t seen a massive rush to sell.”
So would you say it’s business as usual? 
“The main business that suffered during the recession was the investment side; the relocation and retirement business continued. The reasons people come to Cyprus have still remained. It’s the buy-to-let market that did suffer but they’re coming back because the prices are lower so the figures work.”
What do you think the outlook for the future is like? Will the market remain as it is?
“This year, the last couple of months, it’s really increased. The relocation business has slightly increased, investors are coming back, international buyers are coming… I’m not sure the prices will go up but buyers will increase without a doubt.”
David, estate agents may be fairly confident about the state of the Cypriot property market, but what about the wider euro?
“The eurozone as a whole is obviously not in a great state, to be honest… In terms of the strength of the euro, generally it’s euro vs. the US dollar and the US economy is doing better, so you expect dollar strength, probably further euro weakness. That will feed through into Asian currencies as well. If you’re seeing Asia demand in Europe at the moment, you’d expect that to increase.”
Cyprus is one of the worst-hit countries by the recession. As in Italy and Spain, house prices have dropped – or are still dropping. How much are the current exchange rates helping investors to find bargains? There’s a feeling that the weak pound is encouraging people to invest in the UK…
“The pound isn’t doing that great against the euro. The London market is massive for people in the eurozone, particularly Italians and French. I think you still have Brits buying overseas and you might find people in the UK taking interest in places where house prices have gone down a little more but they do tend to want financing – apart from the wealthy Brits. We see them in France and the US. You might see similar movements in Cyprus over the course of the next 12 months as things start to calm down.”
There are an increasing number of countries who have introduced – or are looking to introduce – residency permits for non-EU buyers…
“The residency permits in Dubai have been a pretty big boon over the last eight months, but although attracting outside investment from Asia is very appealing, the Scandinavians are big buyers in Europe for the very simple reason that their currency has gotten a lot stronger. It’s still cold in Scandinavia so they still like buying in the hot countries and if they can pick up a bargain, they do it. Spain is in there but Cyprus may be as well.”
Is it business as usual in your part of Europe? Get in touch with the Property Inspector at Facebook.com/TheMoveChannel or tweet @TheMoveChannel.