2016 does promise to be a very tense year for those with property in Cyprus. Most people buy property in Cyprus for the great weather, excellent international schools and low taxes and easy to get residency permits. But now a lot of people are waiting anxiously for the situation to develop.
Russian investors are the most active buyers of real estate in Cyprus. But as the island’s economy deteriorates, a lot of Russian investors are considering moving out. One of the top Russian developers in Cyprus says that the Russians have lost close to $3 billion in Cyprus since the start of the economic crisis. As things stand today, it can get worse, still.
So, if you are looking to sell your overseas property in Cyprus, you have every reason to be concerned over what’s happening there. Russian investors have invested over $10 billion in Cyprus over the last 10 years. Any capital outflow from Cyprus could lead to property prices collapsing further.
Already, prices in Cyprus have fallen by 25 to 30 percent, especially in Paphos and Limassol. These are the places where many Russian investors have villas and townhouses that cost between 500,000 EUR to 1 million EUR. Indeed, Russians account for 5 percent of all property transactions in the country.
Most Russians who buy property in Cyprus are residents of Moscow, closely followed by those from St. Petersburg. A majority of Russians with property dealings in Cyprus claim to have been on the island purely for investment purposes. Others say they are here for family purposes, as the climate here is way better than what they get in Russia.
Aziza Mukhametshina is a pop singer from Moscow who has bought a townhouse in Cyprus along with her husband. She says that she was drawn to the island nation by its clean water and great weather. However, even Ms. Mukhametshina is now considering selling her property in Cyprus because of the financial crisis in the country.
A Russian businessman who has a house in Cyprus talks about how Cyprus was once a safe place for investments, but now there’s a lot of fear in the air. The situation is not different from the subprime crisis in the US back in 2008, which brought the property market in the whole country down and homeowners lost money across the board.
There is a feeling that Cyprus can no longer be considered as a safe overseas property destination. The demand for property here has fallen by quite a lot over the last few months. Predictions are that it can get worse, at least over the short-term.
Agrees Stanislav Zingel, the president of Gordon Rock. He says, "In a three- to six-month period, it is possible to predict that the demand will be lower, so there will be a certain cut in prices."
"If the partial expropriation of deposits is enough to improve the situation in the Cypriot economy, property prices might return to their current level." Mr. Zingel adds.
Another major Russian investor in Cyprus, Sergei Filatov of Pafilia, says, "We received information from our department for pre-owned property sales that some owners have cancelled the sales of their houses. In a long-term perspective, everyone understands that property remains the most trustworthy way to keep money.”
A lot of investors have already cancelled their real estate deals in Cyprus because of the fear that they may not be able to withdraw money from the island later. There is palpable fear in the air.