Everybody is against Cyprus real estate, is it time to buy?

Historically, whichever investment market you care to look at, you will see times when every investment adviser is recommending the purchase of shares in a particular company. The fact is that investment advisers and investment researchers very often act like pack animals which can often lead to a self-fulfilling prophecy if they turn positive on a particular real estate market or they turn negative. This is the reason why we are now taking a look at the Cyprus real estate market which has fallen from favour, which has been neglected and the truth is there are various reasons why this has happened.

If we take a look at the simple fact property sales in Cyprus have fallen by 80% between 2007 and 2013 this starts to tell a story. This is a phenomenal figure and one which quite rightly sets fear in the hearts and minds of international and domestic real estate investors. The market has ground to a halt, sellers are taking any price they can get and domestic and overseas buyers are disappearing. So, why on earth would you even look at acquiring property in Cyprus?

Problems with the Cyprus real estate market

Where do we start with problems associated with the Cyprus real estate market? There are many different factors to take into consideration which include a depressed economy, alleged outstanding taxes from property development companies, issues with ownership deeds, allegations of fraud and corruption not to mention currency movements which have left many people nursing heavy losses. There is more but do we need to go on?

Quote from PropertyForum.com : “The Cypriot government has extended the deadline for lodging legal claims against alleged property mis-selling in Cyprus. A number of lenders and property developers in Cyprus have been cited in legal proceedings by an array of investors from around the world with a significant number from the UK.”

If you considered an investment against this particular backdrop you might automatically assume you would be crazy for even thinking about it?

Is anybody buying Cyprus property?

If we take a look at sales figures we will see that domestic sales peaked in 2002 at just over 15,000 per annum with overseas sales peaking in 2006 at just over 11,000 per annum. Figures also show that 2006 was most certainly the best year for the Cyprus real estate market with over 21,000 transactions although this has now fallen to just under 4,000. Overseas transactions have collapsed to just over 1,000 in 2013 with domestic sales contracts totalling 2,750 which is again a massive drop. So, what does the future hold for the Cyprus property market?

At this moment in time it is all doom and gloom for Cyprus, the economy is struggling, the real estate market is under pressure and overseas investors seem to have left in their droves. However, if you dig a little deeper you will see there are signs of a recovery with tourist revenues towards the end of 2013 up by over 20% compared to 2012, new offshore natural gas discoveries set to come online and a better-than-expected performance from financial, legal and shipping sectors. It would be wrong to suggest that Cyprus is over the worst, but perhaps some observers have erred very much on the side of caution and overdone the “nightmare scenario” facing Cyprus.

Conclusion

While it may not yet be time to start investing in Cyprus real estate, it is worth noting that property development companies in Cyprus are now targeting Russian and Chinese investors as opposed to those in the UK in the past. We have seen similar moves in Spain and Portugal, resulting in a significant increase in overseas investment, and the fact that total foreign investment in Cyprus (including real estate) during the last eight months of 2013 totalled €500 million should not be discounted.

The darkest hour is very often before the dawn and while there may still be a few more hours of darkness for the Cyprus real estate market, perhaps the bombed out prices available today are beginning to offer some value?