PwC Cyprus has launched its latest Cyprus Real Estate Market publication, which provides insights on the performance of the sector during 2021, demonstrating strong signs of recovery, despite the disruption caused by the pandemic and the termination of the Cyprus Investment Program (“CIP”), as of 1 November 2020.

According to PwC’s analysis, total transaction value reached €3,8bn during 2021, recording an annual increase of 26% (-14% drop compared to 2019). In terms of volume, properties transacted during 2021 reached 19.100, up 32% on the previous year and even surpassing 2019 levels by 11%, driven by a surging domestic demand.

The districts of Nicosia, Limassol and Larnaca recorded double-digit increases in transaction value terms during 2021, compared to 2020, with Limassol accounting for 42% of the total value of transactions. Although the recovery of the market is evident across all districts, the value of transactions during 2021 appears reduced when compared to pre-pandemic levels (i.e. 2019), with the exception of Nicosia, which is the only district that experienced growth. This is mainly due to Nicosia being a market predominantly driven by the local segment, which has been a key driver in the recovery and growth of the sector during 2021.

The residential segment demonstrated strong signs of recovery with the value of transactions for apartments and houses reaching €2,4bn during 2021 (Apartments: €1,3bn and Houses: €1,1bn), demonstrating an overall increase of 16% in terms of value and 23% in terms of volume, compared to 2020. Land assets proved to be the key drivers of the market during the year, with the value of land transactions reaching €950mln, contributing 44% to the overall growth in transaction values of the sector. In terms of volume, a total of 7.300 land transactions were recorded during the year, recording a significant annual growth of 43%.

Despite the termination of the CIP, a total of 139 transactions of residential properties ≥€1,5mln were recorded in 2021, representing a 21% drop compared to 2020. In terms of sales value, the high-end residential property sector (≥€1,5mln) totalled €380mln during 2021, corresponding to a 5% decrease compared to 2020. This indicates that although lower in volume, transactions are on average of higher priced assets.

Perhaps the most resilient segment of the sector during 2020 and 2021, was that of residential properties between €100k and €300k. This is mainly a consequence of strong demand for primary residences, as well as increasing activity for private-rented housing (particularly apartments) and buy-to-let transactions. In terms of transaction value, residential properties within the particular range totaled c.€1,1bn during 2021, representing a 33% increase compared to 2020 and a 15% increase compared to 2019.

During 2021, properties acquired by foreign nationals increased by 24% on an annual basis. From August 2021 onwards, monthly transactions by foreigners appear to consistently surpass pre-pandemic levels, demonstrating the overall momentum of the Cyprus real estate market.

Looking at the construction sector, the continuous hike in the cost of material prices has been ceaseless during 2021, recording an annual increase of 11%, mainly driven by inflation in the price of metallic products (c.23%) and products of wood, chemicals and plastics (c.10%). Despite these increases, during the first 10 months of 2021, the volume of new building permits appears increased (17%), whereas the value of such permits dropped by 8% compared to the same period in 2020, indicating that new developments were on average of a smaller scale.

Commenting on the publication, Mr. Constantinos Constantinou, Partner in Advisory at PwC Cyprus, noted that “despite the disruption caused by the pandemic and the termination of the CIP, as of 1 November 2020, the Real Estate & Construction sector maintained its position as one of the fastest growing sectors of the economy, fuelled by increasing levels of transaction activity from a surging domestic market”.