NICOSIA, Cyprus -- Once a key driver of the country's economic growth, Cyprus' booming real estate sector has begun to slide. And while local buyers and a major government construction project offer some potential support, the market's biggest hope could come from much farther away, in the form of wealthy Russians looking to buy up island property.
Though Russians make up approximately 20 percent of Cyprus's foreign property market -- a relatively small percentage compared to the 60 percent share the British occupy -- real estate agents say Russian buyers are purchasing the island's most expensive properties, and doing so at far higher prices than most of their British counterparts.
"We've sold villas worth 5 million, 6 million euros recently," said Antonis Loizou, managing partner of Antonis-Loizou, a real estate agency based in the country's capital, Nicosia. "We've never had this sort of clientele before."
"There may be a reduction of [overall property] demand, but there may be an increase at the top end of the market," he said.
Loizou said the British have an average buying power of 340,000 to 350,000 euros ($475,000 to $490,000) per unit, whereas Russians on average shell out 450,000 euros for a single unit.
"Russians buy less, but they buy more expensive," Loizou said.
Athanasiou Construction and Development, which has operated in Cyprus since 1975, now caters to Russian property buyers with a separate Russian-language web site, www.cyprus-home.ru.
"Cyprus attracts Russians mainly because of its stable economy and vast opportunities for business," said Yevgenia Andrianova, director of the company's business development. "Russians have continued to invest in Cyprus property during the crisis."
Loizou said it was easy to see why.
"The type of Russian buyers who buy in Cyprus are mainly the wealthy ones who, by definition, are not very affected by this type of crisis," he said.
"To buy a 450,000 euro holiday house, you have to have some money," he added. "It's not like in Egypt, where you can buy 150,000 euro apartments. We don't have that here."
Loizou admitted, however, that he had seen a 10 percent drop in demand from local property buyers and a 20 percent drop in demand from foreign buyers since September.
Other market players also reported a fall in real estate-related services, as the slowdown in the global economy forces buyers to be more cautious.
"Last year we had four real estate seminars," said Stelios Platis, managing director of the Cyprus-based financial services group MAP S. Platis. "This year we canceled three and only had one."
"People are very, very careful, and very, very skeptical about the future of the real estate sector, which means they don't invest in it," he added, sitting in his office in downtown Limassol, the island's second-largest city.
Platis said wealthy Cypriot buyers looking to purchase property on the cheap could help sustain the country's construction and property sectors. More potential support could come from the development of four new marinas that the state is building to boost tourism -- several of which will require the construction of an artificial island between Limassol's new and old port, and cost roughly 4 percent of the country's 2007 GDP.
Platis said there had been cases where companies received permits, but did not go ahead with the construction. Andrianova said she expected the current economic situation to "winnow out smaller construction companies."
She stressed that her view of the real estate sector remained relatively optimistic, however. "In this situation, I believe, the formula for success is buying the right product at the right time for the best prices," she said.
Though Russians make up approximately 20 percent of Cyprus's foreign property market -- a relatively small percentage compared to the 60 percent share the British occupy -- real estate agents say Russian buyers are purchasing the island's most expensive properties, and doing so at far higher prices than most of their British counterparts.
"We've sold villas worth 5 million, 6 million euros recently," said Antonis Loizou, managing partner of Antonis-Loizou, a real estate agency based in the country's capital, Nicosia. "We've never had this sort of clientele before."
"There may be a reduction of [overall property] demand, but there may be an increase at the top end of the market," he said.
Loizou said the British have an average buying power of 340,000 to 350,000 euros ($475,000 to $490,000) per unit, whereas Russians on average shell out 450,000 euros for a single unit.
"Russians buy less, but they buy more expensive," Loizou said.
Athanasiou Construction and Development, which has operated in Cyprus since 1975, now caters to Russian property buyers with a separate Russian-language web site, www.cyprus-home.ru.
"Cyprus attracts Russians mainly because of its stable economy and vast opportunities for business," said Yevgenia Andrianova, director of the company's business development. "Russians have continued to invest in Cyprus property during the crisis."
Loizou said it was easy to see why.
"The type of Russian buyers who buy in Cyprus are mainly the wealthy ones who, by definition, are not very affected by this type of crisis," he said.
Courtney Weaver / MT
A Russian-language advertisement in Nicosia offering up elite properties.
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Loizou admitted, however, that he had seen a 10 percent drop in demand from local property buyers and a 20 percent drop in demand from foreign buyers since September.
Other market players also reported a fall in real estate-related services, as the slowdown in the global economy forces buyers to be more cautious.
"Last year we had four real estate seminars," said Stelios Platis, managing director of the Cyprus-based financial services group MAP S. Platis. "This year we canceled three and only had one."
"People are very, very careful, and very, very skeptical about the future of the real estate sector, which means they don't invest in it," he added, sitting in his office in downtown Limassol, the island's second-largest city.
Platis said wealthy Cypriot buyers looking to purchase property on the cheap could help sustain the country's construction and property sectors. More potential support could come from the development of four new marinas that the state is building to boost tourism -- several of which will require the construction of an artificial island between Limassol's new and old port, and cost roughly 4 percent of the country's 2007 GDP.
Platis said there had been cases where companies received permits, but did not go ahead with the construction. Andrianova said she expected the current economic situation to "winnow out smaller construction companies."
She stressed that her view of the real estate sector remained relatively optimistic, however. "In this situation, I believe, the formula for success is buying the right product at the right time for the best prices," she said.
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