Prices on the real estate market in the context of the COVID-19

A lot of negative impacts on the economy of Cyprus were exerted by the COVID-19, including the real estate market. Precautionary measures taken by the government to reduce the impact of the virus give hope to protect the economy, which is just starting to come to life. We hope that the virus will be defeated in a short period of time, but no one knows exactly when this will happen, experts' opinions vary from July of this year to next year.

The basis of the Cyprus economy is tourism, which will not be able to reach four million visitors last year. Even with bookings at the beginning of this year, the number of arrivals, at best, will decrease by 50%. This will inevitably and seriously affect the economy, and the expected growth of 3% per year is unlikely to be achieved. The same situation with tourism is in competitive countries, but at the same time, we have a real estate market and the construction industry, which puts us in third place in terms of foreign investment.

The measures taken by the government will have consequences for the Cyprus investment program, for the income of workers and businesses, for outstanding debts of developers and so on. All this is expected to lead to a decrease in demand both among local residents and from foreign buyers. The reduction and uncertainty of income among local residents will also affect the demand for the purchase of local real estate. Of course, there is a possibility of lower prices for the sale of real estate, and the degree of decrease depends on the time frame in which these measures were taken.

But this will increase the demand for rent, at least for this and next year, especially for residential apartments in all cities, with the likelihood of a further increase in rents. In addition, the new restrictions on Airbnb, in addition to reducing tourist flow, will slightly increase supply, at least for the summer season, which is, in a way, a counterweight between supply and demand for rent.

There is no doubt that business will suffer, but, on the other hand, the created conditions could benefit us, and a new way of doing business, for example, working at home, can be adopted and developed even after the virus recedes (reducing the use of office space, Internet conferences, etc.). If successful, this can ultimately benefit the economy.

Currently, the world economy is in distress, but, apparently, real estate in Cyprus again remains the only "stable" investment, in terms of return and security of assets and rental income.