"Explosion" in the real estate market in Cyprus and Greece

Rapid growth and the influx of foreign investment have inadvertently driven up property prices, making home ownership difficult for the average Greek or Cypriot

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The property market landscape in both Greece and Cyprus is undergoing significant transformation, with both countries showing promising growth and recovery. However, beneath the surface of the numbers, there are underlying challenges and inequalities that will need to be addressed.

Greece, in particular, is experiencing a building boom, with new high-rise buildings popping up in Athens and other major cities. This growth is a testament to the economic recovery of the country, which is now one of the fastest growing economies in Europe. Rating agencies are upgrading their ratings on Greece's debt, with the country attracting significant foreign investment. In addition, major global companies such as Microsoft and Pfizer are investing money in the country, signaling strong investor confidence.

Similarly, Cyprus, after the repeal of the Cyprus investment program saw a revival in the real estate sector, driven by foreign investment, especially in luxury real estate and tourism-related projects. With most of the investment concentrated in Limassol and to a lesser extent in Larnaca and Paphos, there is a noticeable increase in the number of residential and office spaces. Also, a significant number of tech companies have moved to or set up offices on the island, with many seeing it as a safe haven amid political turmoil in Israel and geopolitical uncertainty in Lebanon, Ukraine and Russia.

However, not everything is rosy. Both Greece and Cyprus continue to struggle with a high level of debt, while their businesses and households are burdened with a significant amount of non-performing loans. The shadow of the financial crisis still looms large, with the hard times brought about by austerity measures fresh in the minds of many. The war in Ukraine has also introduced inflation, further straining the economy, especially low-income workers.

In Cyprus, while foreign investment has boosted the luxury real estate market, there are concerns about sustainable growth and the potential for a real estate bubble, especially if it is driven primarily by external demand. In addition, the rapid increase in immigrants from abroad, legal and illegal, is causing social tensions, as the state has no mechanism to integrate these new arrivals into the fabric of local society. Thus, pockets of "parallel lives" have been created in all the cities of Cyprus, with immigrants congregating in specific geographical areas, visiting specific restaurants and places, etc.

While macroeconomic and property development indicators paint a positive picture, many locals feel left out. Rapid growth and the influx of foreign investment have inadvertently led to an increase in property prices, making home ownership difficult for the average Greek or Cypriot. This phenomenon is not unique to these nations - internationalized cities around the world have seen locals being displaced by soaring property prices.

In Greece, despite the economic recovery, many are still suffering from the effects of austerity measures. Rising inflation, especially in essential goods such as food and natural gas, has made everyday life difficult for many people. An improving economy does not necessarily translate into a better standard of living for everyone - nor does it mean laying the foundations for a better and more hopeful tomorrow for future generations, as the education system and local businesses have not adapted to the rapid changes around them.

While there are undeniable opportunities in these growing markets, it is important to approach them with a holistic view. Sustainable development requires balancing foreign investment with local needs and ensuring a fair distribution of the benefits of economic recovery. As we move forward, it is imperative that we remember that real estate is not only about buildings and land, but also about people. Ensuring sustainable growth will be key to long-term success in these dynamic markets and must ensure that growth benefits everyone.