ECONOMY

Investors eye Cyprus’s real estate market

Cyprus’s property market is feeling the positive effects of EU and eurozone membership prospects. Since mid-2001, the market has been on the rise, driven by the housing sector. It has also been attracting foreign capital, thanks to EU prospects and a possible solution to the thorny issue of the Turkish occupation of the northern third of the island. «Cyprus’s prospective EU membership imposed the end of state controls on interest rates,» says Andreanna Michael, chief property valuator at Danos & Associates Cyprus. «This accordingly affected mortgage loan rates and brought significant changes to the market. The Cypriots began to consider buying houses as an accessible endeavor. Thus, the market started rising in mid-2001,» she adds. Market prices also began to rise. As for the future, says Michael, «interest rates will continue to drop, providing investors will additional incentives. The property market will continue to expand, especially the housing sector.» Greek investors are also interested in the Cypriot property market. Of particular interest at the moment is a 12-hectare plot of land on the outskirts of Limassol, where, according to local property brokers, the city’s new business and commercial center will be built. The property belong to Mikelli Ltd in which Piraeus Bank has a majority stake, through subsidiary Redfin (40 percent) and Philoktimatiki LD, a subsidiary of Piraeus’s subsidiary Euroinvestment & Finance (20 percent). The rest belongs to a Cypriot family. The area has not been incorporated into the city of Limassol yet, but as soon as it does, it is expected that the owners will build office and retail space. As long as Cyprus is out of the eurozone it will be difficult to compete against other northern Mediterranean countries, says Michael. «Cyprus is not the only choice for investors. There are countries such as Spain, Portugal, France, Italy and Greece, members of the EU and with a single currency, something that facilitates transactions,» she says. A common currency allows a prospective investor to compare prices easily and avoid currency exchange costs. At least Cyprus has the advantage of lower property prices,» she adds. «It’s good news for CCHBC as it’ll increase its free float from 35 percent to about 40 percent,» said Costas Tzoutzourakis at Devletoglou Securities. But analysts also said the timing was worrying, especially because the company’s sales in some key markets may face pressure in the second half.