Cyprus’

RealEstate
Insights

12th Edition
Key trends and major drivers of the Real
Estate Market in 2022 and beyond

May 2023
 Foreword
KPMG Cyprus Real Estate Market Report – The Insights

We are pleased to present our latest edition of the real estate sector
performance publication. In recent years, the Cypriot economy and the
Real Estate sector in particular, have proven their robustness and
resilience. Given recent developments, including the aftermaths of
COVID-19 pandemic and of the Russian-Ukrainian war, the outlook is
hard to predict, however the real estate sector performance has exceeded
our expectations.

Our report provides valuable information about the Cypriot economy and
the local real estate market for 2022 and beyond. Offering a snapshot of
key economic conditions and invaluable insights into the real estate
sector, including demand and supply, price evolution, notable sectoral
developments, alongside certain observations portraying 2022 and early
2023 conditions.

We hope that you will find our report enlightening and useful in supporting
your future business decisions related to the real estate sector. Kindly feel
free to contact us for further inquiries. KPMG’s wide-ranging real estate
service offering covers advisory, audit and tax related matters, customised
to provide real added value to your specific needs and environment.

We hope you find our publication insightful and valuable.

Kind Regards,

Christos V. Vasiliou
Managing Director of KPMG in Cyprus

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Document Classification: KPMG Public 1
 Contents
1 Cyprus at aglance

2 EconomicOverview

3 Real EstateSector

4 Notable Real Estate sectormatters

5 LendingMarket

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
6 Real EstateServices
Document Classification: KPMG Public 2
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Insights €5,7 billion of transactions
6%
Nicosia
27% Limassol
18%
Larnaca
Paphos
19%
Ammochostos
31%

1.143
Building
16% of the
GVA for
permits inJan-
Feb 2023 2022 is
generated by
-12,7% Real Estate &
compared to Jan-Feb Construction
2022

©2023
©2023KPMG
KPMGLimited,
Limited,aaCyprus
Cypruslimited
limitedliability
liabilitypartnership
partnershipand
andaamember
memberfirm
firmofofthe
theKPMG
KPMGglobal
globalorganisation
organisationofofindependent
independent
memberfirms
member firmsaffiliated
affiliatedwith
withKPMG
KPMGInternational
InternationalLimited,
Limited,aaprivate
privateEnglish
Englishcompany
companylimited
limitedby
byguarantee.
guarantee.All
Allrights
rightsreserved.
reserved.
Classification: KPMG Public
Document Classification: Public 3
Cyprus ata
glance
 a glance
Cyprus at
Cyprus at aglance
Kyrenia
Ammochostos
Tax System

Nicosia
• Attractive tax regime: modern and low rates (e.g. corporate tax Capital
12,5%)
• A huge network of Double Tax Treaties (circa 67 countries) Paphos Larnaca
Limassol
Legal and
Regulatory
framework

• Robust regulatory structure, closely aligned to the English

common law legal system Two Deep sea ports (Limassol
• Strong protection for investment and intellectual property (IP) and Larnaca)

Two International Airports

• Access to talent, youngest population and workforce in the EU, (Larnaca and Paphos)
55% of the workforce has tertiary education (investcyprus.org.cy)
Human
capital

Currency: Euro (€)

• More than 73% of Cypriots speak English (investcyprus.org.cy)
(since 2008)
• Best island economy for 2019/2020 in terms of economy
potential (fDi magazine ) Political System: Presidential
Democratic Republic
• One of the best climates worldwide, ranked as the 5th best
High quality

Memberships: EU member
relocation destination worldwide by the latest Knight Frank (since 2004)
life

Global Lifestyle Review (2013)

• Value Penguin, ranked Cyprus 5th safest country in the world
(2015) Official languages: Greek,
Turkish

Population: 918.100
(Census 2021)

Source: Cystat, Ministry of Finance.

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Document Classification: KPMG Public 5
Economic
overview
Cyprus performs slightly better than Eurozone both in GDPand
inflation…

Economic overview
Gross domestic product (y-o-y % change)
10,0
6,6
5,7 5,6 5,5 6,6
5,0 3,4 4,6
5,3
3,5
2,0 1,9 2,6
1,4 1,8
%

0,0 1,6
-0,2 -4,4
-1,8
(5,0)
-6,6
-6,1
(10,0)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Euro area - 19 countries (since 2015) Cyprus
Source: Eurostat, ECB

Inflation (y-o-y % change) Forecast

10 9,20
8,40
8
8,10 5,35
6 4,00
4
%

2
0
-2
-4
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Source: Eurostat, ECB

Cyprus Euro area EU

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 7
But lagging behind inemployment

Economic overview
Unemployment rate
18
16
14
12
10
%

8 6,80
6 6,70
6,10
4
2
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
EU Euro area Cyprus
Source: CyStat

1 2 3 4
Unemployment Rates The latest CyStat figures show a Inflation in Cyprus for 2022 stood
Positive GDP y-o-y growth in
drop of unemployment to 6,8% in at 8,10%, while Eurozone’s
Information and 2022 at 4,6%
+9,07% in Cyprus in 2022, dropping below average stood at 8,4%
communication
Cyprus’ annual GDP growth rate the Euro area average of 6,7%. Inflation is expected to drop to
Construction +5,78% has been consistently above the 5,35% and 4% for Europe in
Tourism, Wholesale Euro area average since 2015. 2023 and 2024 respectively.
+22,03%
and retail trade
Real estate activities +8,69%

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 8
Latest ratings of long term debt at BBB with a stableoutlook
Long - term interest rates Credit ratings

Economic overview
5
4,19
• Fitch latest ratings,
4 upgrade the long term
4 3,31 debt to BBB and
3,23 change the outlook to
3
Interest Rate (%)

2,94
3 “stable”
2
2,19

2 • Moody's latest report

1
identifying Cyprus as
1 a “potential rising
0 star”.
-1
Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Government bond
yields
Cyprus, Euro (Percent) EU (changing composition), All currencies combined (Percent)
• The average long term
EU 15 (fixed composition) as of 1 January 1995, All currencies combined (Percent) Germany, Euro (Percent)
return on Cyprus
EU 25 (fixed composition) as of 1 May 2004, All currencies combined (Percent)
government bonds
rose significantly
DBRS Fitch Moody’s Standard & Poor’s between January 2022
Long term debt
and January 2023,
Long term debt BBB Long term debt BBB Ba1 Long term debt BBB
from 0,91% to 4,19%
Short term debt R-2(h) Short term debt F3 Short term debt NP Short term debt A-3 • The average long-term
Outlook Stable Outlook Stable Outlook Positive Outlook Stable
return on Cyprus
government bonds
Latest evaluation 7/10/2022 Latest Latest evaluation 19/8/2022 Latest evaluation 2/9/2022 remains higher than
13/03/2023
evaluation
the EU25 and
Next evaluation 29/9/2023 Next evaluation 16/6/2023
Next evaluation 29/9/2023 Next evaluation 1/9/2023 Eurozone average.

Source: DBRS, Fitch, Moody’s, S&P, Eurostat

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 9
Interest rates across Europe risesignificantly

Economic overview
• Both household and corporate loan
interest rates have increased since
2022 Europe new
1,76%
corporate deposits
• Loans to Cypriot corporations are still
more “expensive”, compared to their
Eurozone counterparts Households deposits 1,35%

• The interest rate spread between

loans and deposits has been reduced
in Cyprus for both households and
corporations. However, Cypriot Banks
are still enjoying a higher spread than
the Euro area average.

Loans – Deposits interest rate sp read (%)

Households Corporate
Dec-21 Dec-22 Dec-21 Dec-22 Cyprus new
0,61%
corporate deposits
Cyprus 2,21 3,34 3,25 4,71
Eurozone 1,34 3,07 1,72 3,69 Households deposits 0,35%
Source: ECB

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 10
Deposits increase slightly and loans decrease in2022

Economic overview
Loans - Deposits trends in Monetary Financial Institutions in Cyprus
70 160%

60 140%
51,53 52,12
48,21 120%
50
100%
€ billions

40
31,78 29,90 80%
30 26,12
60%
20 40%
10 20%

0 0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Total deposits Total Loans Loans to Deposits Ratio (right-hand axis)

• The aggregate level of total bank deposits remains •The loans to deposits ratio has decreased significantly
relatively stable since 2013 during the last five years, indicating the banking system’s
surplus liquidity.
• Loans have more than halved since 2013
• There was a decrease of circa 2,81% in loans between
2021 and 2022.

Source: CBC

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 11
NPL have significantly reduced in CyprusBanks

Economic overview
Deposits in Cypriot Monetary Financial Institutions

60.000 • Local deposits have been gradually

increasing, while foreign deposits
50.000
were stable over the last four years
€ million

40.000
• The decline in loans is multi-faced; it
30.000 is attributed to the banks’ efforts to
20.000 de-leverage their balance sheets via
debt for asset swaps, write offs and
10.000
cash collections, but more
0 importantly, in 2021 and 2022, the
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 shift of NPL portfolios outside the
banking system.
Domestic residents EU residents Foreign residents

Non-Performing Loans in Cyprus

30.000 60%

25.000 50%

20.000 40%
€ million

30%
28%
15.000 30%
18%
10.000 20%
11,1% 9,5%
5.000 10%

0 0%
2014 2015 2016 2017 2018 2019 2020 2021 2022

Total NPLs Total provisions % of Total Loans

Source: CBC, ECB, KPMG Analysis

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 12
 Tourism, trade and real estate remain the mostimportant
sectors

Economic overview
Cyprus Gross Value Added (GVA) by sector 2022 Tourism
Arts,
Agriculture, Mining & quarrying,
forestry and
• Tourism has been the traditional growth driver of Cyprus
entertainment electricity, gas,
and recreation
fishing water supply & • “Sun & sea” branding has been the main force of
4% 2% management
attracting tourists
2%
Manufacturing • The Cyprus government is aiming to enrich this by
6% promoting all year round tourism and upgrading Cyprus’
offering.

Real estate &

Public
administration and Construction
defence
20%
Tourism, wholesale • Real estate and Construction activities contributed 16% of
and retail trade
23%
the GVA 2022
Information and
• The sector has recovered strongly since 2013, mainly
communication because of the external demand.
8%
Financial, Professional
and Other Services
Professional,
scientific and techical • The attractive tax system, the legal and regulatory
activities
Real estate & 11% framework and the educated workforce are the drivers of
construction Financial and the “service economy” in Cyprus
16% insurance
activities • With a contribution of 8% for financial and insurance
8% activities and 11% for professional scientific and technical
activities, the services sector comprises one of the
Source: Cystat, KPMG Analysis strongest pillars of the economy.

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 13
Tourist arrivals increase, total spending increases,revenue
per arrivalfalls

Economic overview
Arrivals 2022
(thousands) 1.213 52 277 170 198 119 2.728 3.201
[+2,1%] [-0,9%] [+2,37%] [+0,55%] [+1,12%] [+2,05%] [0,55%] [+0,65%]
(y-o-y change)

Total
Spending per
person (€) 583,84 396,82 358,69 690,2 655,26
[n/a]
523,42
[n/a]
December 2022 [+0,13%] [-0,08%] [+0,13%] [+0,06%] [+0,46%] [-0,05%]
(y-o-y change)

Spending per person in 2022

÷ =
€2,44 bln 3.201.080 €762

Total spending Tourist arrivals in 2022 Revenue per arrival

(+61% y-o-y) (+65% y-o-y) (-2,43% y-o-y)

Source: Cystat, KPMG Analysis

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 14
Real Estate in the real economy grows by6%
Economic contribution Jobs

Economic overview
Real estate contributed €3,5 billion to the Cyprus economy in The sector directly employs 44.720 people. This meansmore
2022, which is higher than the contribution of the Financial and jobs than any other sector.
Insurance activities and the Manufacturing sector.

Financial & Insurance activities

€2,4 billion

Financial & Insurance activities

Manufacturing
€1,5 billion
26.882

Manufacturing
2022 vs 2021
30.957
Growth in real estate Growth in workforce
and construction for real estate and
+6% activities’ contribution +1,4% construction
to the GVA activities
Source: CyStat, KPMG Analysis

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent Document Classification: KPMG Public
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
RealEstate
Sector
Building permits exhibit a drop in value and volume for2022
Number and value of building permits
10.000 4.000
Number of permits

8.000
1.036
3.000
6.000

€ million
2.177
2.000
4.000 1.209

Real Estate Sector

422 1.000
2.000
2.760
0 0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Nicosia Ammochostos Larnaca Limassol Paphos Total value

Building permits 2022- Volume Building permits 2022 - Value

• In 2022, a total of 7.604 permits were issued
compared to 8.164 in 2021, recording a
14% 6,85% decrease 13%
Nicosia
Nicosia
7.604 36% • Nicosia is the district with the highest number 35%
Ammochostos
€ 2,49 bln Ammochostos
(2021: 8.164) of building permits (36% of total), and 35% in
Larnaca (2021: .€2,5 bln)
29% terms of value Larnaca
-6,85%
Limassol 32% -0,04%
• Limassol accounts for 29% of the total Limassol
5% Paphos
number of permits and 32% of the total value 5%
16% Paphos
of permits. 15%

Source: Cystat, KPMG Analysis

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 17
Majority of building permits relate to residentialdevelopments
Number of building permits by type
• 6.810 permits refer to small
projects • 10% of the building permits issued
Residential
were for projects bigger than 900 m2
6%
• Total value of small projects – with a combined value of €1,23
1% 3% 3% Hotels
2% contributes 45% of total billion, representing 56% of the total
3% Office value of all permits. value of building permits
• The value of big projects permits

Real Estate Sector

Retail
Proportion of building permits for small and big
projects more than doubled from last year
Industrial (€1,27 billion).
Entertaiment,
education and 794
medical 10%
Other
82% Value of building permits by type
1.115.911
1%
45% 1% Residential
1.380.727 3% 3%
55%
6% Hotels
• 82% of total volume of permits
6.810
in 2022 are residential 90%
5% Office
developments
Retail
• Hotel developments account
Industrial
for 3% of the total permitsbut Big projects Small projects
5% of the total permits value.
• 794 permits refer to big Entertaiment,
education and medical
projects and correspond to Other
81%
10% of total volume of
permits and 55% of total
value of permits.
Source: Cystat, KPMG Analysis

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 18
6,9% decrease in volume of permits and marginal decreasein
value for 2022 when compare with2021
• Although there was a decrease overall of 6,9% in Volume of building permits 2022 vs 2021
volume of permits Ammochostos was the only
district exhibiting a notable increase of circa 19% 9.000

• Monitoring the overall volume of permits the trend 8.000

1.198
for the first two months of 2023 continues a decline 7.000 1.036

Number of permits
exhibiting -12,7% 6.000 2.321

Real Estate Sector

2.177
• Looking at value of permits for 2022 it is noted that 5.000
-6,9%
the decrease was marginal of 0,05% 4.000 1.282 1.209
354
• Signifying that although the number of permit has 3.000 422
decrease the overall remains overall the same 2.000
3.009 2.760
• With district like Limassol, exhibiting notable 1.000
increase in the overall value. 0
2021 2022
Nicosia Ammochostos Larnaca Limassol Paphos
Volume of building permits Jan- Feb 2022 vs 2023 Value of Permits 2022 vs 2021
2.750.000
1.400
2.500.000
1.200 2.250.000 374.884 328.245

1.000 2.000.000
774 1.750.000 731.649 803.523
800
-12,7% 553 -0,05%
€ millions
1.500.000
600 1.250.000
412.926 365.940
1.000.000 125.824
400 135.078
590 750.000
535
200 500.000
843.230 873.106
250.000
0
2022 2023 0
January February
2021 2022
Source: CyStat, KPMG Analysis
Nicosia Ammochostos Larnaca Limassol Paphos

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 19
Construction cost continue to risefast
Construction Price Index 2013 - 2022
135 20,00% Construction output
17%
130
15,00% • Between 2013 and 2020, the
125 131,3 construction sector has been recording
120 10,00% stable growth rates
115 • In 2021 and 2022, a significant surge in
5,00%

Real Estate Sector

110 112,0 prices was observed
105 0,00% • In 2022 the construction output
100 101,2 102,2
100,0 100,6 101,4 101,0 experienced an annual growth of 17%,
98,5 98,8
95 -5,00% which is the higher growth rate recorded
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
the last decade.
Construction Price Index % change from previous year
Source:CyStat, KPMG Analysis

Average construction cost per building permit issued - 2022

500
Construction cost per building permit
• Larnaca has the smallest average 400 369
value of construction cost per building 316 317 328
€'000 ' s

298 303
permit 300
• With Limassol having the greatest
average construction cost per building 200
permit, standing at €369.000
100

0
Nicosia Ammochostos Larnaca Limassol Paphos Cyprus weighted
average
Source:CyStat, KPMG Analysis

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 20
CoSincreaseby 30% in 2022, continue in 2023, while Limassol
leads theway Contracts of Sale submitted to the Department of Land and Surveys - annualy
CoS per district 2022
13.409
13.500 CAGR 15%
21% 21%

11.500 10.366 10.347

5% 9.242
8.754

Number of Contracts
9.500
7.968
18% 7.063
7.500

Real Estate Sector

35%
4.952
5.500 4.527
3.767
Nicosia Famagusta
3.500
Larnaca Limassol
Paphos 1.500

• The highest concentration -500

of transactions in 2022 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

has been recorded in Nicosia Ammochostos Larnaca Limassol Paphos

Limassol (35%), followed
Contracts of Sale submitted to the Department of Land and Surveys - monthly 2022 Q1 vs 2023 Q1
by Paphos and Nicosia
(21%) 1.400
1.200

+19%
314
• The largest y-o-y growth
Number of Contracts

1.000 219 220 289 266

in the number of contracts
800 214 507
was recorded in Paphos 377 366
346 398
600
(+58%), followed by 276
190
400 172 225 203 256
Limassol (+40%) 150 51 74 74 65
200 27 57
188 233 252 174 190 210
• CoS are 8,57% lower 0
January February March January February March
than the all time high of
2008. 2022 2023

Nicosia Ammochostos Larnaca Limassol Paphos

Source: DLS, KPMGAnalysis

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 21
Non-nationals account for 44% ofCoS
CoS per city and nationality - 2022 • In 2022 a total of 5.928 CoS was
5.000 submitted to the DLS by non-nationals,
4.500 accounting for 44% of total sales
4.000
contracts, exhibiting a 61% increase in
Contracts of sale

3.500
2.659 2022
3.000
2.500 832
• Domestic demand showed a strong

Real Estate Sector

2.000
1.224 growth in 2022, with the CoS submitted
1.500 2.409
1.000 2.006 2.044 by Cypriots increasing by 12%.
500 357 1.178
0 364 336
Nicosia Ammochostos Larnaca Limassol Paphos
Internationals Nationals

Contracts of sale submitted to the DLS

14.000
Number of contracts

12.000
10.000 7.481
8.000
4.875 5.885 6.656
6.000 6.328
4.000 5.250 3.325
3.334 3.603 5.928
2.000 2.750 4.367 4.481 3.691
1.813 2.406 2.985
0 1.017 1.193 1.349
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Number of properties for which sale contracts were registered by Cypriots

Number of properties for which sale contracts were registered by Foreigners

Source: DLS, KPMG Analysis

Note: As per the DLS, the Non-nationals counting methodology changed from 2018 onwards, with exception on 2020

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Document Classification: KPMG Public 22
Residential price evolution exhibits the largest increasein
2022
Cyprus Residential Price Indices (y-o-y % Change)
• The residential price evolution is monitored by
15,0%
9,7% the CBC, EuroStat and RICS
10,0% 6,8% 7,7%
• These indices have different methodologies
5,0% 4,8%
2,9% but all displayed similar negative trajectories
0,0% between 2011 and 2016. However, the trend

Real Estate Sector

(5,0%) has been reversed since early 2017
(10,0%) • EuroStat’s index displayed a decrease in
(15,0%) prices in the last quarter of 2021, while the
2011 2012 2013 2014 2016 2017 2018 2019 2020 2021 2022 2022 2023 other two indices showed increases
Q3 Q4 Q1
Eurostat RICS Index CBC Average • RICS’s index showed an increase of 9,7%
between 2022Q1 and 2023Q1.
Source: RICS, CBC, EuroStat, KPMG Analysis

RICS Cyprus Commercial Price Index

• Retail and Warehouses prices based on RICS
110
Index exhibit a similar trend over years with
100
latest quarter updates exhibiting small 87,92
90
increases 80,20
80 72,55
• Offices display a more notable increase in the 70
69,22
lastest quarter with more robust recovery in 60 55,10 55,63
recent years 50
• Overall despite small variations within 2022, 40
commercial properties exhibit increases in all 30
asset classes 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Q1
Retail Warehouse Office
Source: RICS, CBC, EuroStat, KPMG Analysis

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 23
Rental prices continue an upward trend for all assetclasses
Cyprus Average Monthly Rent
Rental prices (y-o-y % change) 2022 Q1 vs 2023 Q1
1.200
1.057
+21% 1.000 891
837
+10% 800
791
815
667
+3%

€
557
600 503 516
482
+5%

Real Estate Sector

400
+16% Kyrenia Ammochostos

200
Nicosia
Capital 0
+17% Paphos Larnaca +13%
Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023
Apartments Houses
+27%
Limassol
+19%
-1% +31%
0% • Rental prices in the residential sector exhibited significant
+38%
-3% 0%
increase across all districts in 2023Q1
• The most notable increases were recorded for apartments and
-4%
+12% +12% +5% houses in Larnaca (+38% and +31% respectively) and
+6% apartments in Paphos (+27%)
+6% • Rents for commercial properties also exhibit an upward trend in
-1%
+1% 2023 Q1, most notably offices in Nicosia (+16%) and offices in
Paphos (+12%)
+5% • Average Rental prices have been rising the last 5 years.

Houses Apartments Retail Warehouse Offices

Source: RICS

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 24
Overall yields continued their upward trend in 2022 and Q12023
2022
Retail
5,6%
Houses Apartments

5,1%
Warehouse
2,7% Offices

4,4%
5,2%

Real Estate Sector

Commercial
Residential
- Industrial
yields
yields
2022
2022

2023 Q1 Retail
Houses Apartments
5,8%
2,9% 5,4% 5,2% Warehouse

Residential
Offices
Commercial
4,3%
- Industrial
yields
yields
2023 Q1
2023 Q1

Source: RICS

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 25
Notable Real
Estate Sector
matters
804 licensed touristic establishments across Cyprus in2022
29 5 star hotels 5* 4* 3* 2* 1* Other Total
across Cyprus, where
38% are located in Nicosia 1 1 5 6 2 8 23
Paphos

71 4 star hotels Limassol 7 8 9 4 2 37 67

across Cyprus, where
32 are located in
Ammochostos Larnaca 1 6 4 19 2 68 100
74 3 star hotels
across Cyprus, where
50% are located in
Ammochostos 9 32 37 10 2 147
237

sector matters
Notable Real estate
Ammochostos

47 2 star hotels Paphos 11 23 13 4 6 217

274
across Cyprus, where
40% are located in 1 6
Larnaca Hill Resorts - 4 8 84
103
583 1 star hotels 2% increase in new licensed
and Other across
Cyprus, where 38% are 64% of only 30% establishments in Paphos or 2022 vs 2018
located in Paphos
establishments of touristic 3% increase in new licensed
are located in establishments establishments in Ammochostos for 2022 vs
30% Paphos & are STAR
3% 2018
Ammochostos establishments
34% 12% 15% decrease in licensed
8%
establishments in Nicosia for 2022 vs 2018
©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
DKoPcMumGeAnntaClylassissification:KPMG Public 27
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
+41% in volume, +16% in value of transactions for2022
2022 Volume of transactions per district
The Real Estate Sector continues to exhibit its
resilience for the Cypriot economy in 2022
demonstrating why it’s considered one of the key
€5,7 bln
pillars of the economy.
worth of transactions were 18%
Volume of transactions recorded in 2022. Limassol 27%
had the highest share with
24.637 circa €2,5bln, followed by
Paphos with circa €1,1bln.
21.215 6%
31%
15.743
19%
Value of Transactions 2022 (€bln)
21.901

sector matters
Notable Real estate
2,50 Nicosia Ammochostos
0 5.000 10.000 15.000 20.000 25.000 30.000
Larnaca Limassol
Papahos
Number of properties

Value of transactions
2022 5.773
1,07
0,72
1,10
+41%
0,30 In value of transactions
2021 4.090 compared to 2021 (y-o-y)

2020 3.252
+16%
2019 5.912
In volume of transactions
for 2022 compared to
- Value of properties (€ “millions) 2021 (y-o-y)
Source: Department of Land and Surveys, KPMG Analysis
Note: The above data concern raw data regarding Contract of Sales and Sales, from the Department of Land and Surveys (extracted at February 2023) in raw format and
have been cleared, consolidated and combined.

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 28
Limassol leads almost half of the value, but Paphosrecords
highestincrease
Nicosia Ammochostos Larnaca Limassol Paphos

€540m
Residential
€170m
Residential
€420m
Residential
€1,8bn
Residential
€750m
Residential

2.398
Apartments
442
Apartments
1.873
Apartments
2.757
Apartments
1.547
Apartments

sector matters
Notable Real estate
633
Houses
305
Houses
675
Houses
1.459
Houses
1.388
Houses

3%
y-o-y growth in value 2022
36%
y-o-y growth in value 2022
41%
y-o-y growth in value 2022
47%
y-o-y growth in value 2022
93%
y-o-y growth in value 2022

Source: Department of Land and Surveys, KPMG Analysis

Note: The above data concern raw data regarding Contract of Sales and Sales, from the Department of Land and Surveys (extracted at February 2023) in raw format and
have been cleared, consolidated and combined.

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 29
Significant increases in transactions recorded in allprice
categories
Apartment volume per price range
Transaction value of Apartments
2022
6.00
5.116
0
€2,1bn
Apartments sold

5.00 3.659
0 2.959 3.237

4.00 1.838
2.227 2.443 2.440 €1,3bn 2021
0
678 840 669
3.00 399 556
265 306 181 144 144 115 217
0 -
2.00 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 €1bn 2020
0 0-100k (€) 100k-300k (€) 300k-500k (€) 500k-1mln (€) >1mln (€)
1.00 €2,4bn
0
2019

sector matters
Notable Real estate
Transaction value ofHouses
Houses sold per price range 2022
2.500
1.897 1.972
2.110
€1,6bn
2.000
Houses sold

1.553
1.500
1.062
€1,1bn 2021

1.000 720 629 720 741 691

569
397 297 380
500 166 217 271 188
108 113
- €1bn 2020
2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021
2022 €1,5bn
0-100k (€) 100k-300k (€) 300k-500k (€) 500k-1mln (€) >1mln (€)
2019
Source: Department of Land and Surveys, KPMG Analysis
Note: The above data concern raw data regarding Contract of Sales and Sales, from the Department of Land and Surveys (extracted at February 2023) in raw format and
have been cleared, consolidated and combined
.

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 30
Limassol continues to dominating the way in transactions >€1
million
• The cancelation of the CIP, as from 1
November 2020, caused a decrease in Transactions over €1 million per district
the level of transactions over €1 million
600 100%
for residential properties 542
• Still, in 2022, there were 405 80%
transactions of residential properties 500
60%
worth over a million, which represent a
76% year-on-year increase, indicating 400 40%
a partial recovery and suggesting that
301 20%

Units
this market segment is still active 300
• Transactions has doubled in Paphos

sector matters
Notable Real estate
0%
and Limassol between 2021 – 2022
200 165 -20%
but still fall behind 2019. 144
167

-40%
100 66 62
35 42 43 27 30 23 10
-60%
14 18 9 9
1 4
- -80%
2019 2020 2021 2022

Nicosia Ammochostos Larnaca

Limassol Paphos y-o-y% change

Source: Department of Land and Surveys, KPMG Analysis

Note: The above data concern raw data regarding Contract of Sales and Sales, from the Department of Land and Surveys (extracted at February 2023) in raw
format and have been cleared, consolidated and combined
.

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 31
40% of land transactions in 2022 were in Nicosia,but
32% of commercial transactions in 2022 were inLimassol
Commercial property transactions

864 450

+13%
400
350
Commercial Transactions 300 279

Units
in 2022 250 277
y-o-y increase in
200
174 commercial
150
Limassol and Nicosia 100 115 transactions
experience the highest 50
transaction volume in 19
-
commercial properties 2019 2020 2021 2022
Nicosia Ammochostos Larnaca
Limassol Paphos

sector matters
Notable Real estate
8.647
Nicosia has the highest Land property transactions
land transaction volume 4.500
over the past 4 years 4.000
3.822
3.421
Land transactions 2022 Land transactions
3.500 3.092
2.843
3.000 2.603 2.784
in 2022 2.543

Units
6%
2.500
Nicosia 2.000 1.849 1.639 1.862
1.604
10% 1.500

+1%
1.192 890
Limassol 1.000 808 820
597 585 548
40% 394 350
500
22% Larnaca -
2019 2020 2021 2022
y-o-y increase in Paphos Nicosia Ammochostos Larnaca Limassol Paphos
land transactions 22%

Ammochostos
Source: Department of Land and Surveys, KPMG Analysis
Note: The above data concern raw data regarding Contract of Sales and Sales, from the Department of Land and Surveys (extracted at February 2023) in raw format and
have been cleared, consolidated and combined.
. ©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Document Classification: KPMG Public 32
27% increase in transaction volume for Q1 2023 vs Q1 2022,with
Limassol having the majority of thetransactions
€718mln Transaction’s value of
residential properties
199 Commercial Transactions
in 2023Q1 1.861
Land Transactions in 2023 Q1

Ammochostos has the lowest

Limassol exhibits the highest land

60% 40% commercial transaction volume for

2023 Q1
transaction volume for 2023 Q1

70 577 593
62
435

31 32
160

sector matters
Notable Real estate
Apartments transaction volume Houses transaction volume 96
4

103 33 Nicosia Ammochostos Nicosia Ammochostos

338
Larnaca Limassol Larnaca Limassol
534 261 Paphos
Paphos

128 Transaction volume per type 2022Q1 vs 2023Q1

555 68
2.704 +50% Residential

1.799 1.850 1.861

387
297
+76% Commercial
Nicosia Ammochostos 113 199
Larnaca Limassol
Paphos Residential Commercial
2022Q1 2023Q1
Land +1% Land

Source: Department of Land and Surveys, KPMG Analysis

Note: The above data concern raw data regarding Contract of Sales and Sales, from the Department of Land and Surveys (extracted at April 2023) in raw format and have
been cleared, consolidated and combined.
.

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 33
Lending
Market
Interest rates rise, mortgagesdecline
Interest rates
5,00
4,63 4,71 • Interest rates in Cyprus have gone through
4,50
4,00 3,84 a significant period of change
3,50
3,55 3,41
3,10 3,13
3,25 • Monetary easing policies were
3,00 implemented, such as reducing interest
%

2,50 rates on bank deposits and loans, to

2,00 stimulate the economy
1,50
• The COVID-19 pandemic and Russian-
1,00
0,50 Ukrainian war led to an increase in interest
0,00 rates to tackle inflation
Dec Dec Dec Dec Dec Dec Dec Dec
• In 2022, new net lending reached €3,23
2015 2016 2017 2018 2019 2020 2021 2022
billion, up 10% from 2021, according to the
New housings loans New Corporate Loans CBC.

New mortgages
1.400 • In 2022, new mortgages accounted for
1.200 1121,2
1177,9 36% of new net lending, totaling €1,18
billion, a 5% increase from 2021
1.000
868,5 876,4 783,4 • Renegotiated mortgages amounted to
800 721,0 €108 million
€ mln

600 546,5 • Total mortgages in 2022 amounted to

€1,28 billion, a small 4% decrease from the

Lending Market
400 375,8 322,8
220,6 previous year
136,7 156,8
200 89,7 95,6 107,5 • The increase in mortgages since 2020,
0 despite the pandemic, can be attributed to
2015 2016 2017 2018 2019 2020 2021 2022 the interest rate subsidy until the end of
New Mortgages Renegotiated Mortgage
2021 and overall market demand in 2022,
according to CBC data since 2015.
Source: CBC, KPMG Analysis
.

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 35
New corporate lending declines, renegotiated loanscontinue
New corporate loans of up to €1 mln • In 2022, new corporate loans up to €1
million amounted to €604 million, with
600
539 531 €531 million of net new lending and €74
500
504 million of renegotiated loans, representing
473
438 an overall 20% decrease from 2021
400 378 365
• Net lending decreased by 2% and
287 renegotiated loans decreased by 65%
300
213 • The drop in new lending and renegotiated
200
143 loans in 2022 can be attributed to the
112
100 74 68 74 tougher economic climate faced by
48
33 corporations, despite a rise in renegotiated
- loans in 2021 following the pandemic.
2015 2016 2017 2018 2019 2020 2021 2022

Pure new loans Renegotiated loans

New corporate loans over €1 mln
2.000
1.780
1.800 1.668 • Similar picture with new corporate loans up
1.600 1.424 1.546
to €1 million are the over €1 million, with
1.400 1.286
1.200 1.113 15% decrease in 2022 vs 2021 exhibiting
965 1.005

Lending Market
1.000 865 1.081 the tougher economic climate within the
800 746 year
583
600 468
400 309 372 • Increased amount of renegotiated loan is
200 151 observed from 2020 onwards versus the
- relative stable pure new lending observed
2015 2016 2017 2018 2019 2020 2021 2022 during the same time.
Pure new loans Renegotiated loans

Source: CBC, KPMG Analysis

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Document Classification: KPMG Public 36
Neutral attractiveness for touristicproperties
KPMG Cyprus in an effort to capture the banking sector expectations, carried out an interview based questionnaire during Q4 2022
with the participation of almost all local banks to identify the appetite of banks for lending on different asset categories, and the factors
that are expected to affect the bank’s loan portfolio.
How do you rate the attractiveness of different real estate subsectors for the bank?

Infrastracture assets (e.g Marinas, hubs etc) 67% 17% 17%

Alternative assets (e.g. student housing etc) 33% 33% 33% Not attractive

Touristic (Resorts, hotels etc) 67% 33% Less attractive

Residential 33% 50% 17% Neutral

Industrial/ Logistics 67% 33% Attractive

Retail 17% 17% 33% 33% Very attractive

Office 17% 33% 50%

Lending Market
0% 20% 40% 60% 80% 100%

Residential and office Response distribution

properties are the most
attractive subsectors for
banks

Source: Cyprus Property Lending Barometer survey

©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 37
Healthcare, Information technologies and Energy andutilities
are the most attractive industries forbanks
How do you rate the attractiveness of different industries for the bank, strategically?

Telecommunication 83% 17%

Manufacturing 17% 17% 67%

Information technologies 17% 33% 50% Not attractive

Healthcare 17% 17% 67%
Less attractive
Food and beverage 67% 17% 17%

Financial services 17% 50% 33% Neutral

Entertainment 17% 33% 50% Attractive

Energy and utilities 17% 33% 50%

Very attractive
Imports and Exports 67% 33%

Agriculture 33% 17% 33% 17%

Real estate 33% 67%

Lending Market
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Response distribution

Agriculture appears to be the least

attractive industry for banks, while the
majority of banks rank Real estate as
Source: Cyprus Property Lending Barometer survey neither attractive nor not attractive

Document Classification: KPMG Public 38

Macroeconomic conditions in the local market andEurope
affect real estate loanportfolio
Growth potential for the next three years in 17%
None (0%)

*green/sustainable link loans in your RE portfolio 33%

Low (<0% - 5% p.a.)

Average (5% - 10%

p.a.)
High (10% - 20%
p.a.)
33% Very high (>20%
p.a.)
17%

Other
New strategy

Most important factor expected to Activities of European Central Bank / National…

affect each bank’s real estate loan Macroeconomic conditions in Europe

Macroeconomic conditions in the local market
portfolio significantly

Lending Market
ESG considerations
Increased property values
Lack of equity
Lack of active investors
Lack of prime properties

0% 5% 10% 15% 20% 25% 30% 35%

Response distribution
Source: Cyprus Property Lending Barometer survey
Note: *green/ sustainable link loans refer to loans given with criteria directly relate to ESG metrics e.g
capturing the impact of externalities i.e. climate change, representation of social and governanceissues
©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 39
RealEstate
Services
Real Estate relatedservices

Business Plan Corporate Finance,

Preparation Transaction Services Feasibility Studies,
assistance, business (Buy side, Sell side) Business and Assets
modelling Valuation

Borrower and Lender Debt for Asset Swap

Assistance and Immigration Services Strategy, Advice &
Options Evaluation Execution

Funds & Fund

Asset Management &
Management: One- Audit & Tax Services
Strategy
stop Service Offering

Services
©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rightsreserved.
Document Classification: KPMG Public 41
Maincontacts
Christos Vasiliou
ManagingDirector,
T:+35722209113
E: Christos.Vasiliou@kpmg.com.cy

Christophoros Anayiotos
Board Member,
Deal Advisory
T:+35722209292
E: Christophoros.Anayiotos@kpmg.com.cy

Tassos Yiasemides
Board Member,
Global Compliance Management
T:+35722209 156, T:+357 26 955 285
E:Anastasis.Yiasemides@kpmg.com.cy

Rennos Ioannides
Board Member,
Deal Advisory
T:+35722209265
E: Renos.Ioannides@kpmg.com.cy

Marios Kapnisis
Senior Manager,
Deal Advisory
T:+35722207421
E:Marios.Kapnisis@kpmg.com.cy
Glossary
CoS Contracts of Sale

CIP Cyprus Investment Program

CBC Central Bank of Cyprus

CyStat Cyprus Statistical Authority

DLS Department of Land and Surveys

EU25 European Union of 25 member states

EU European Union

ESG Environmental social and governance

GDP Gross Domestic Product

GVA Gross Value Added

IP Intellectual Property

NPL Non Performing Loans

RE Real Estate

RICS Royal Institution of Chartered Surveyors

© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Document Classification: KPMG Public 43
kpmg.com.cy

The information contained herein is of a general nature and is not intended to address the circumstances of any
particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no
guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in
the future. No one should act on such information without appropriate professional advice after a thorough
examination of the particular situation.
©2023 KPMG Limited, a Cyprus limited liability partnership and a member firm of the KPMG global organisation
of independent member firms affiliated with KPMG International Limited, a private English company limited by
guarantee. All rights reserved.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG
global organization.