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Market Research - Cyprus

Cyprus: Nicosia office market - March 2019

Foreign occupiers remain an important source of tenants for the office market

Grade A office premises still in demand

The Cypriot real estate market historically is divided into the major urban centers of Nicosia, Limassol and Larnaca mainly on the basis of local demand. Nicosia, being the capital and financial centre of Cyprus, is the primary target of the large multina-tional businesses operating on the island and it is the growth of foreign occupiers that is shaping the city’s occupational market. The office space in Cyprus is found in the old common type multi-storey buildings which are mainly located in the heart of the cities. These are not always suitable for businesses so some decentralization began to occur over recent years and many of the Grade A offices are now found in decentralised areas. The city continues to see foreign direct investment (FDI) led space demand that is helping to drive development. Rents continue to grow in the city over 2018 and likely to follow this path in 2019 if FDI continues into Cyprus.

 

Stable yields in the city office market

 

The Nicosia commercial real estate investment market is a small and contained one compared to other European cities. Its activity is driven by domestic buyers with foreign professional asset management companies seeking to buy the Grade A units occupied by other foreign multinationals. But the majority of real estate acquisition (both domestic and foreign) is concentrated on the residential sector where most supply exists. Grade A offices continue to appeal to foreign investors but with no significant market pressure the prime yield was stable at 5.5% in 2018.

 

EOM Nicosia March 2019
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