It’s official, there will be a Brexit. Now that the UK has voted to leave the European Union, British expats in Cyprus are worried about what it would mean for them and for their property in Cyprus. Many are worried that Brexit would cause a drop in the value of their property.
Experts haven’t been too reassuring so far, but they agree on one point. There won’t be an immediate change in the situation and things will remain as they are till Britain starts negotiating its terms of withdrawal from the EU. The whole process can last as long as two years, which means are the many unknowns in the immediate future.
British expats in Cyprus are worried about the sterling, which has hit a 31-year low following the referendum. This is something that hits their buying power directly. Fiona Parsley of Currency Solutions says nobody really can predict what’s going to happen to the exchange rate and when it might recover.
Ms. Parsley says, “Unfortunately, we don’t know what will happen to the rate. However, forecasters are saying that we should be back to where the pound should be standing within six months. We will get more of a definite feel of how things are on Monday morning.”
Petridou Sharpe, a property says that things will no longer be the same as in the past for British expats: “This might not be the lifestyle they are used to. This change of quality of life might make some re-evaluate if they will stay.”
She adds, “Spain and Portugal may be cheaper options as they have over supply. In Cyprus, there is limited stock of land and with the basic rules of demand and supply, is possibly more expensive.”
She suggests that it would be better for British residents to sell their Cyprus property and change the euros into pounds, as this trade would allow them to benefit in the future when the sterling rebounds. So this may see many decide to sell property in Cyprus quickly.
To be fair, the property market in Cyprus has been doing very well in 2016. Property prices have been on the rebound and sales have been up by 25% in 2016. Indeed, real estate professional say that 2016 has been the best year for the property market in Cyprus since 2008, just before the economic crisis of 2009-14.
The European Central Bank says that properties in Cyprus are undervalued by 4% to 16%. The average yield from rental properties in Cyprus has been reasonable as well – 3%.
Cyprus depends heavily on tourism, which is the main business here. Tourist arrivals in Cyprus have surged by 30% this year, with tourists from the UK being the biggest contributors. Russians are visiting Cyprus in big numbers too, as can be seen from the fact that the number of Russian tourists visiting the island has increased by 100% this year; which is stunning.
As the Cyprus Central Bank says, improvements in the economy has had a positive impact on real estate in Cyprus, which has been reflected in increasing property sales and surging home prices. So, British expats in Cyprus who own a home here don’t have to worry anymore about the direction of the real estate market in Cyprus.
But Brexit has certainly led to serious concerns. The chairman of the real estate agents’ association in Cyprus, Marinos Kineyirou explains: “The way I see it, today’s developments are serious. This is something new and we can’t know if it’s good or bad.”
President Nicos Anastasiades focused on the “special relationship” between the Britain and Cyprus and said that there was no reason for expats to worry about anything. This is reassuring indeed, as the message comes from the very top leadership in Cyprus.