Cyprus’ economy has shown robust to external shocks and grew by 2.2% in 2023. The country’s economy’s modest size and extroverted style provide flexibility and resilience. The PwC Cyprus 2023 Real Estate Market Review reveals pertinent statistics and trends in the country’s real estate industry.

According to the most recent PwC Cyprus 2023 Real Estate Market Review, Cyprus’ real estate market displayed extraordinary durability and adaptability in 2023, with total transaction value reaching 5.5 billion euros, which seems to be the same as in 2022.

Cyprus’s Real Estate industry plays a crucial part in the country’s new economic model and is undergoing reform to comply with its objectives. Industry participants must prioritize sustainable concepts, goods, and infrastructure solutions to meet the country’s future demands.

Throughout the year leading up to Q2 2023, the residential property price index across the country increased steadily, with the latest quarter showing a rise of 7.42% (5.41% after adjusting for inflation). This follows a series of year-on-year increases: 7.66% in Q1 2023, 6.6% in Q4 2022, 6.28% in Q3 2022, and 4.57% in Q2 2022, as reported by the Central Bank of Cyprus (CBC). Prices rose by 1.46% (1.15% after adjusting for inflation) in the second quarter of 2023.

Essential Statistics from the PwC Cyprus 2023 Real Estate Market Review

Inflation has slowed to 3.9% in 2023 from a year-end peak of 8.1% in 2022. The Central Bank of Cyprus (CBC) attributes the large decrease in inflation to the normalization of energy prices and the influence of ECB monetary measures. The government’s assistance measures and lower energy costs are predicted to keep inflation around 3% by 2024.

During the year, Fitch Ratings upgraded the country’s sovereign rating to BBB with a positive outlook and Moody’s to Baa2 with a stable outlook.

Cyprus’ credit profile has improved due to economic, fiscal, and financial reforms and resilience to external shocks such as the war in Ukraine.

On April 4, 2023, Cyprus entered the market with its first-ever €1bn inaugural sustainable 10-year fixed-rate benchmark bond. The bond featured a coupon rate of 4,125% and attracted demand surpassing €12bn, setting a new record for Cyprus.

As of December 31, 2023, the 10-year Government Bond Yield of Cyprus (issued in January 2022) was at 3%, while the sustainable Bond showed a yield of 3.2%.

Banks’ conservative lending policies and decreased demand for new loans by households, largely due to interest rate increases, resulted in a 14% decrease in new mortgage loan facilities in 2023. Loan restructurings saw a significant increase during the year, rising to €925mln from just €108mln in 2022.

Fiscal Year 2023 Key Highlights in the Cypriot Real Estate Sector

€5,5BN TRANSACTION VALUE (IN LINE WITH 2022 LEVELS)

In 2023, transactions amounted to €5.5 billion, continuing the high levels seen in 2022.

• The transactions in Larnaca district saw the most significant increase in transaction value (22%).
• Despite experiencing an 8% decrease in transaction value in Limassol, the district still dominates the majority of transactions, accounting for 41% of the total value.
• Paphos came in second place, accounting for 20% of the total transaction value, with Nicosia following closely at 18%

24.200 TRANSACTIONS RECORDED (3% INCREASE COMPARED TO 2022)

Throughout the year, a total of 24,200 transactions were recorded, slightly surpassing the transaction volume of 23,600 in 2022, which was the year with the highest number of transactions.

• Larnaca and Paphos districts saw volume increases during the year (20% and 3% respectively compared to 2022), while Limassol, Nicosia, and Famagusta districts had slight decreases of 3%, 3%, and 1% respectively.
• Limassol dominated the transaction volume in 2023 with 30%, followed by Nicosia at 25% and Larnaca at 22%.

16% INCREASE IN TRANSACTIONS FROM FOREIGN BUYERS

In 2023, foreigners acquired 6,900 properties in Cyprus, as per sale contracts filed at the DLS. This marks a 16% increase from the 5,928 properties acquired in 2022.

Overseas trends seem to be linked to the ongoing increase in foreign businesses moving their operations and employees to the island, although the pace is slower than last year.

Limassol and Paphos accounted for the majority of foreign transactions at 34% each, with Larnaca following at 21%.

You can find even more pertinent data in the PwC Cyprus 2023 Real Estate Market Review (*.pdf)

To conclude, Cyprus shows great potential in the Real Estate market

As per Statista’s data, by 2024, the market is expected to reach an impressive US$116.30 billion.
The market is mainly led by the Residential Real Estate segment, which is expected to reach a market volume of US$89.58bn in the same year.

In the future, the market is projected to see consistent growth, with an annual growth rate of 4.05% from 2024 to 2028.

By 2028, this growth is projected to lead to a market volume of US$136.30bn. Finally, the real estate market in Cyprus is currently seeing a rise in global investors’ interest in high-end beachfront properties.