Significant potential for growth west of the city
Limassol continues to be the most important real estate market in Cyprus, and this is supported by all available information: sales, rentals and prices. Contrary to popular opinion, the Limassol real estate market is not showing signs of saturation, and despite existing issues and occasional fluctuations, it continues to be dynamic. The repeal of the Cyprus Citizen by Investment Programme, for example, has had an evident effect, yet interest for high-end properties in Limassol has not completely disappeared, with real estate companies adjusting accordingly. In 2020, 54% of the transactions for Real Estate assets with worth over €1.5 million were recorded in Limassol, according to a PwC Cyprus report. Given that there are still quite a few available high-end properties in the district, the developers behind them must make appropriate adjustments. At any rate, in 2020, Limassol was well ahead in terms of transactional value (the total amount exceeded €1.1 billion) and it was second in the volume of transactions (28% of the total).
With the pandemic and its effects on economic growth coming under control, we estimate that property development in the city and the wider Limassol area will continue at a rapid pace. After all, it’s not a coincidence that the Limassol district has historically absorbed the greatest number of building permits issued.
There are two main reasons as to why the sector’s growth will mostly head west of the city: firstly, there are several important projects west of Limassol that are currently under construction or being planned, like the casino-resort, a golf course, the expansion of the local mall and large residential developments; secondly, the largest available plots are west of Limassol. To the east of the city, the available areas for development are quite limited. We could potentially see some tourism-oriented projects, some of which have already been announced and some new ones, however, there isn’t much room for further development.
For residential properties, which mainly involve locals, the areas of Agia Fyla and Agios Athanasios, north of the highway, have more potential for growth. These areas have seen solid development in the last few years, they are relatively close to the city centre and there’s still available land for further development.
We’ve seen, in the last few years, how the city centre and the coastal front were utilized or purchased for future use, as well as how many vacant plots have remained. In this specific area, rather than new developments, we estimate that, in the next few years, existing buildings will be converted, modified, renovated and upgraded. As shown by the 28% drop in the sales contracts submitted in 2020, compared to 2019, the real estate market in Limassol largely depends on foreign buyers. Despite the drop, Limassol was able to consolidate its position as the front-runner in Cyprus, having accumulated 31% of the total sales contracts.
The future of the Real Estate sector in Limassol might be full of challenges, but brims with potential that will allow the city to continue to be the country’s capital in property development.