In a recent statement, Dr. Giorgos Mountis, CEO of Delfi Partners, highlighted the robust performance of the Cyprus economy amidst challenging times, noting that the nation recorded “comparatively one of the highest growth rates in the European Union.” The economy’s resilience is particularly noteworthy given the strategic monetary policy decisions implemented to curb inflation, which appears to be effective in Cyprus.
The European Commission’s latest forecasts indicate a positive trajectory for the Cypriot economy, with a growth rate of 2.4 percent in 2023, and an anticipated increase to 2.8 percent in 2024 and 3 percent in 2025. Inflation, a significant concern at 8.1 percent in 2022, has been reduced to 3.9 percent and is projected to fall further to 2.4 percent in 2024 and 2.1 percent in 2025.
Mountis acknowledged the short-term sacrifices made by citizens due to policies aimed at inflation containment, including increased interest rates that have put pressure on household incomes. However, he remains optimistic about the future, suggesting that European Central Bank decisions are temporary and interest rates might begin to decrease domestically as early as June 2024.
This potential easing of interest rates is vital for the financial health of households, businesses, and banks, helping to prevent the creation of new Non-Performing Loans. Mountis also noted the low levels of unemployment and the approach towards full employment conditions, which has led to a lack of personnel across various sectors.
To address this issue, strategies for employing and attracting foreign labor are being implemented by the government, which could lead to a general population increase and subsequent economic development and consumption growth.
Despite geopolitical instability, Cyprus’ real estate sector demonstrated remarkable resilience in 2023. Delfi Analytics data shows a 16 percent increase in sales contracts compared to 2022, reaching the highest level since 2008. This surge was driven by increased demand from non-European buyers, offsetting a decrease from European demand.
The rise in residential property purchase prices has caused many to opt for renting, leading to a significant uptick in rents, particularly for apartments. Mountis revealed that apartment prices in 2023 surpassed those of 2010 for the first time, according to data from the Central Bank of Cyprus. This trend has encouraged investment in real estate for rental returns.
Mountis stressed the need for appropriate policies to sustain the momentum of the real estate sector, including measures to balance demand and supply, create affordable housing projects, and address staff shortages that delay building projects.
The future of the real estate sector and its role in Cyprus’s sustainable economic development will be influenced by international developments. Mountis emphasized that timely decisions are essential to protect the sector and prospective buyers.
