Luxury property construction boom.
Recent years we have been observing a real luxury property construction boom in Cyprus. Is there a sustainable demand for new homes or is it just the result of the “Citizenship through investments” programme?
There is an evident upswing in the sale of construction materials. That appears to be a revival in the whole property and development sector.
More homes and other development projects are being built than in previous years. The bubble at the beginning of this decade gave way to the mortgage crisis and near collapse of the banking sector.
How long will it last?
The question is whether there is sustainable demand for new houses or is it just the result of the investment-for-passports scheme? This caused a big attention of overseas buyers of homes, expensive high-rises and other such high-value projects.
Nearly half of all property contracts deposited at the Land Registry offices in the first half of the year were for properties purchased by non-Cypriots. Though this situation can be changed if the government continues to restrict the number of passports for investors to 700 a year.
This means that developing companies are still paying not enough attention to more sustainable markets instead of luxury property construction. There should be a chance for student housing, locals buying first homes and holiday homes, buy-to-let investors, etc.
But, there is a hope that apart from boosting state coffers, these investments will also bring down unemployment. Apart from the accountants and lawyers, what other sectors of economy are benefitting from luxury property construction? And how many of these expensive developments are going to be occupied permanently?
Cyprus needs to look at alternative scenarios. With many of these properties expected to remain empty, it will not take long for them to fall into disrepair, projecting an image of a “ghost town” or shabby skyscrapers.
Therefore, the authorities are urged to consider sustainable construction growth when issuing town planning and building permits.
Source: Cyprus Property News
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