At a particularly difficult time for the Cypriot economy, the real estate sector has managed to meet the challenges and show resilience. In an interview with the Alithia, the Vice President of the Cyprus Land and Building Developers Association and Director of Imperio, Yiannis Misirlis, stressed that the sector will continue to be a stable pillar of the Cypriot economic growth, emphasizing the importance of boosting domestic and foreign demand.
Going through the second wave of the pandemic and its significant negative effects on the economy, the real estate market could not be an exception. What would you list as the main effects on the real estate market?
Admittedly, the pandemic has brought all businesses, including real estate companies, faced with unprecedented challenges. Within 2020, there was a decline in real estate transactions, as the pandemic, as expected, created conditions of uncertainty. Those who were willing to invest in real estate chose to adopt a ’wait and see’ approach until the world returns back to normal. Significant effects of the pandemic in the construction sector also include the suspension of work on some large-scale projects and the indefinite postponement of the start of residential and commercial projects. It is worth noting, however, that during the period when there were just a few cases daily before the outbreak of the second wave of the pandemic, there was a strong interest in investing. During that period, the domestic demand for real estate increased, as a result of the measures announced by the government for first home buyers. In general, the real estate market of Cyprus managed to cope with the new data created by the pandemic, proving its resilience, especially at a time when the world’s largest real estate markets, such as London and New York, are at a disadvantage. Undoubtedly, the construction and real estate sector will continue to be a stable pillar of the Cypriot economic growth, with a substantial contribution to GDP and job creation.
Do you see some categories of real estate to have been affected more and some less?
At the moment, there is a worldwide concern about the purchase of office spaces (Office Market). The pandemic has changed the way we live and work, leading the majority of businesses to adopt teleworking. In fact, many companies are considering making teleworking permanent, turning to upgrading their technology infrastructure and reviewing their internal processes. This could lead to a significant reduction in the demand for business spaces. As far as Cyprus is concerned, the Office Market is not expected to be greatly affected, due to the increased interest shown by foreign companies in relocating their headquarters there. This is probably due to the measures taken by other countries to deal with the pandemic, with the new situation having rekindled interest in Cyprus. We expect to see significant developments after the lifting of the restrictive measures.
How much have the real estate market entrepreneurs themselves been affected, either in relation to their loans or in relation to the labour force they employ, and consequently how much has the implementation of their projects been affected?
In Limassol, five to six major projects are currently under construction, the implementation of which is guaranteed, as they have secured funding long before the pandemic broke out. For example, at Imperio, we have planned the completion of the Icon, which will adorn Limassol for the next decades, and the delivery to its owners in July 2021. Having set the safety of our staff and the wider community as our top priority by strictly enforcing health protocols and additional safety measures, works on the completion of the Icon continue at a rapid pace. With the recent completion of the 21st and top floor, the project is in the final stages of construction. Apart from that, it is true that entrepreneurs in the industry are considering plans to reduce their costs, which are at an early stage and are expected to be finalized once the effects of the pandemic reach the final investors. At the same time, another major challenge that entrepreneurs in the industry are called upon to face is to ensure the health of their office staff after the easing of restrictive measures and their return to their workplace, as concerns about the safety, health and human interaction is expected to continue to exist. Most likely, in the near future, a hybrid work model will gain ground, which will combine work from home and work from the office.
What measures or incentives would you expect from the State, so that the industry, which is considered as one of the driving forces of the economy, continues its work?
The measures announced by the Government last year to support first home buyers strengthened the domestic market. This is also evident from the data of the Central Bank, according to which, in July, August, September and October 2020, new housing loans of €287.5 million were granted, compared to €279.5 million in the corresponding period of 2019. The Government, however, is currently called upon to find ways to strengthen not only the domestic market but the real estate market by foreign buyers too, by providing, for example, limited-term tax incentives. In addition, the acceleration and completion of the integration of procedures and the introduction of e-government at all stages of the examination of urban applications will shorten all the procedures for the issuance of urban planning, with a consequent positive impact on development activities. Finally, maintaining good cooperation between the private and public sectors will be a catalyst for the restart of the real estate sector and consequently of the Cypriot economy, as the real estate and construction sector is of vital importance.