Cyprus sales see first annual rise since 2010, as Russian buyers circle

Photo:   Sergey Yeliseev

Russian investors are setting their sights on Cyprus at the start of 2015, according to one developer, as buyers seek a safe haven away from the rouble.

The Russian currency plunged at the end of 2014, causing buyers to look abroad for secure places to place their cash. Indeed, Russian buyers have always had an appetite for overseas real estate, one that increased when investors’ gut instincts rumbled with trouble ahead.

In London, Knight Frank reported an increase in traffic from Russian IP addresses by 13 per cent year-on-year in November 2014, while prime London transactions increased to a total of more than £10 million.

The following month, the currency dropped by 19 per cent, thanks to a combination of plunging oil prices and economic sanctions imposed by the US.

In Cyprus, developer Imperio Properties told OPP Connect that Russian demand, together with buyers from the Middle East and Asia, pushed property sales up 20.1 per cent year-on-year.

According to official statistics from the Department of Lands and Surveys, property sales in 2014 saw their first year-on-year rise since 2010, climbing 20 per cent to reach a total of 4,527.

This remains more than 78 per cent down on the peak year of 2007, though, notes Cyprus Property News, as the market has a long way to recover.

Indeed, in December, just 21 per cent of sales were deposited by overseas buyers, as domestic buyers drove the rise in demand at the end of 2014. Sales to overseas buyers slipped 14 per cent .

Imperi is optmistic about 2015, but not unrealistic about the volatility of foreign interest: “We believe 2015 will not be a typical year; low oil prices are bound to affect our industry, at least indirectly. Needless to say, we are concerned about developments in the Russian market.

“At the moment, we see an interest from investors who are keen to invest in property, as a means of detaching themselves from the Rubble and the problems associated with that currency. However, we are also well aware that the Russian market will inevitably be affected by these developments this year.”

While Russian investors are keen to find safe havens during times of financial trouble, some also have the opposite reaction.

Nikki Field, who advises foreign buyers for Sotheby’s in New York, tells Business Week that in the wake of the war in Ukraine in 2014, one Russian client walked away from a deal: “Those guys will pass up a great opportunity rather than be exposed to unwanted publicity. Could I anticipate a deal maybe being done off-market? Maybe, but you’ll never hear about it.”

As for Cyprus, demand is also expected to come from Russia’s neighbours in Asia in the near future.

“We expect to see a somewhat similar trend, though much milder, among Arab investors, who are likely to be influenced by the prevailing climate,” notes Imperio.

“On the other hand, the economies of the Far East, particularly China and India, who import oil, are expected to benefit from the situation. We therefore expect increased demand from Asian buyers and investors.”

“There are ways and means to attract foreign investors through incentives,” the company adds, “as you can already see from the success of the measures taken by the government. These, in combination with private sector efforts and initiatives, have already delivered tangible results.

“Given the government’s support and our industry’s focus on attracting investments, we expect Cyprus to emerge as a preferred destination among foreign investors in 2015.”