Cyprus Property Market and Banking Crisis

n the middle of March 2013, for a few days, Cyprus became the main provider of news around the world and became the topic of discussion for most economists on the planet. Now, when the passions have subsided, we will try to analyze what, by and large, has changed on the island and how it will affect the Cyprus property market.

Account holders in Laiki Bank, which is being restructured, lose uninsured amounts above 100,000 euros, while in Bank of Cyprus 37.5% -60% of deposits over 100,000 euros are converted into shares of the same bank. Of course, such an outcome for the account holders at these two banks was far from pleasant. We are in this case wondering what effect this may have on the prices of Cyprus property.

Recent years, buyers of resort real estate in Cyprus were the British, Russians, residents of Scandinavian countries and the Chinese. The purpose of buying the vast majority was permanent residence or rest several times a year. The main reasons for choosing Cyprus were: favorable climate and warm sea, developed infrastructure, low crime, provision of residence permits, direct flights from major cities of Europe and Russia, 5% tax rate for pensioners (which is especially important for UK citizens), a large percentage of English and the Russian-speaking population, friendly local population ,. All of the above remains unchanged. Is that the banks will begin to give a mortgage only after the recapitalization, which will be completed by the end of this summer. For the past year and a half, we have actually worked in the absence of a mortgage. Naturally, this will lead to an increase in prices, coupled with a lack of confidence in bank deposits, which is a positive consequence of the banking crisis for the island’s real estate market. And finally, an insignificant percentage of owners of resort real estate on the background and due to the banking crisis will want to sell their villa or apartment, which in the short term will lead to investment attractive offers. What will hurry to use as quick-witted investors, and those who have long been looking for an interesting option at an affordable price. We will select our customers such a hot offer. In small economies, the crisis as quickly comes, so quickly passes, and real estate, acquired at an attractive price, remains.