Cyprus developers have been advised to diversify away from the Cyprus passport scheme that has been fuelling the property market over the past few years.
Property sales have dipped over the four months June to September bringing the boom to a temporary halt after almost 4 years of double-digit growth fuelled by the Cyprus passport scheme.
The drop has fuelled concerned over the industry’s reliance on the Cyprus passport investment scheme which has its limits, say experts.
Since the Cyprus passport criteria became tougher in May 2019, property sales have dropped by 6.6 per cent in the last four months according to Land Registry data.
Limassol and Famagusta seem to be facing the biggest crunch. In Limassol, sales dropped by 19.2 per cent in June to September compared to last year, while sales in Famagusta declined by 25.3 per cent.
A 1.3 per cent decrease was also recorded in Larnaca, while Nicosia and Paphos recorded a sales increase of 5.3 per cent and 7.4 per cent respectively, although much lower than the first five months.
According to the Land Registry’s data, the strong upward trend recorded in the first five months of 2018 has been reversed since June.
The drop, however, is partially attributed to the fact that earlier in the year sales had rocketed as a large number of foreign investors rushed to buy property before changes to the Citizenship for Investment scheme were in effect.
In the first five months, property sales soared by 34.2 per cent year-on-year, while sales declined 6.6 per cent in the next four months, from June to September. Since May, only tens of Cyprus passports have been issued compared to the hundreds issued earlier
Economists, however, are sounding the alarm over the construction industry’s dependence on overseas property investors eyeing the Cyprus passport, as they claim the industry, as it is currently set up, is not viable and developers will need to look into diversifying their activities.