A lot of negative impacts on the economy ofCyprus were exerted by the COVID-19, including the real estate market.Precautionary measures taken by the government to reduce the impact of thevirus 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 oneknows exactly when this will happen, experts' opinions vary from July of thisyear to next year.
The basis of the Cyprus economy is tourism,which will not be able to reach four million visitors last year. Even withbookings at the beginning of this year, the number of arrivals, at best, willdecrease by 50%. This will inevitably and seriously affect the economy, and theexpected growth of 3% per year is unlikely to be achieved. The same situationwith tourism is in competitive countries, but at the same time, we have a real estatemarket and the construction industry, which puts us in third place in terms offoreign investment.
The measures taken by the government willhave consequences for the Cyprus investment program, for the income of workersand businesses, for outstanding debts of developers and so on. All this isexpected to lead to a decrease in demand both among local residents and fromforeign buyers. The reduction and uncertainty of income among local residentswill 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 thedegree of decrease depends on the time frame in which these measures weretaken.
But this will increase the demand for rent,at least for this and next year, especially for residential apartments in allcities, with the likelihood of a further increase in rents. In addition, thenew restrictions on Airbnb, in addition to reducing tourist flow, will slightlyincrease supply, at least for the summer season, which is, in a way, acounterweight between supply and demand for rent.
There is no doubt that business willsuffer, but, on the other hand, the created conditions could benefit us, and anew way of doing business, for example, working at home, can be adopted anddeveloped even after the virus recedes (reducing the use of office space,Internet conferences, etc.). Ifsuccessful, this can ultimately benefit the economy.
Currently, the world economy is indistress, but, apparently, real estate in Cyprus again remains the only"stable" investment, in terms of return and security of assets andrental income.