As we come around to the 10th anniversary of the start of the economic crash that plagued the international property market for half a decade, it would appear that the last remaining clouds of pessimism are lifting on EU property prospects. Looking at data from around Europe, an optimistic outlook prevails throughout most of the major property markets, as we see investors not only pouring into the prime locations and cities that have been the backbone of European real estate for many years, but also into smaller, riskier markets in search of better yield. House prices continue to climb in almost all EU states, with average price increases at around 4% for the first quarter of 2018. Strangely, London is making an unusual appearance as an anomaly to this trend, with sales falling 26% so far this year. A mixture of the ever-looming possibility of a hard Brexit and an increased interest rates are causing foreign investors to look elsewhere in Europe.
Monaco remains king with respect to prices, with property monopolies ensuring that the average price per square meter stands at an astonishing €44,522. Meanwhile, significant increases have been noted in Ireland and Cyprus as of late – the latter using its European Citizenship investment program to fuel its rise from the depths of the 2013 bailout. Looking more closely at Cyprus, while property has been increasing in value island-wide, the driving force behind this growth has been the coastal city of Limassol. With its luxurious 5 star hotels and restaurants, Limassol has been successful in capturing the attention of wealthy foreign entrepreneurs looking for solid ROI as well as the opportunity to obtain European citizenship. So much so, in fact, that the skyline of the seafront city is changing in an almost Dubai-esque manner. Further, the attraction of so many foreign investors has allowed for large scale projects that simply would not have been otherwise viable. Another large investment is the island’s soon-to-be only Casino – a project which, once completed, promises to employ around 4,500 people. It is one of the many new high-rise, high-profile projects to add to the horizon of Limassol. Additionally, we are beginning to see well established international property companies investing – one such example is Oxley Holdings Ltd, a large (investment) Development and holdings company based in Singapore with projects spanning the globe who recently joined forces with local developers Planetvision Properties Ltd, and revealed plans for a brand new, mutli-million euro state of the art hotel on the beachfront. This megaproject will accompany their other numerous investments in Limassol and Cyprus. Not bad for the city that started out as a little trading port.
So what is causing this mad rush towards property in Limassol? Apart from now consistently ranking inside the top 100 of ‘best cities in the world to live in’, Limassol offers a very advanced business infrastructure and is becoming a well-established business center. The city has always been home to many foreign nationals, most of whom enjoy the cosmopolitan ‘home away from home’ environment thanks to the weather and culture, while the last fifteen years or so have also seen the setup of many foreign banks, numerous international brand boutiques and schools, making Limassol a very accommodating and easy place for any foreigner to work and reside. More recently we have even seen the beginning of a similar movement catering to the Far East – consequently drawing considerable Asian investment.
To find out more on this topic, I spoke to a Russian entrepreneur living in Cyprus. He provided some interesting insights.
‘Without a doubt it is the advance in technology that is allowing a lot of people like me to live in places like Limassol. Its 2018! I can manage my entire company from my phone. So why would I want to live in an industrial, crowded place? Here I walk on the beach road every day and I can do my windsurfing and enjoy very nice food. Why would I live anywhere else?’
While it must be said there are other contributing factors to Limassol’s consistent growth, he does make an interesting point. Today’s technology allows for people and companies to remain unprecedentedly interconnected, whether it be for social or business purposes, and we are only going to improve from here on. According to researchers at Samsung, the next stage of 5G connectivity and superfast Wi-Fi as well as the commercial integration of virtual reality systems will allow for real time conferencing in ‘incredible, life-like quality.’ But how does this relate to rising house prices in Limassol? Technology is allowing more and more people to work from home – wherever that might be, and taking a commute out of the equation means that people can choose where they want to live based almost entirely on the quality of life that is offered. Therefore, it is not unreasonable to think that property in places with good climates will continue to increase in value over the coming years. Unsurprisingly, this is having a profound effect on the property market, as average rents in the city of Limassol are up 25% in just the last two years. Saying this, from an investor’s standpoint there has never been a better time to get involved in Cypriot property. Only time will tell with regard to its long term sustainability, but having been through so much in the last 10 years of so, it appears Cyprus is finally becoming the investment hub that its climate and geographical location have always set it up to be.