Real Estate Outlook 2021: Focus shifting to new opportunities
The New Year has entered with a sense of optimism as vaccines are getting more widely available to the public by the day.
According to real estate professionals in Europe, 2021 is going to be a positive year for the real estate market with new opportunities for investments forecasting an explosion of pent-up demand for travel and leisure producing a period of “growth” which will accelerate in 2022.
It will take a little while for the vaccines to roll out and then somewhere around May, we are going to get a confluence of the vaccines getting to a certain critical mass and infection rates will begin to drop.
For 2020 as a whole, real estate prices, as well as the number of sales contracts, decreased in Cyprus, mainly because of the consequences of the pandemic that caused national lockdowns and movement restrictions worldwide.
In addition, the decision of the government to terminate the Cyprus Investment Program as from the 1 November 2020, has added to the level of uncertainty that conquered the real estate market, causing extreme pressure to high-end properties that were designed for and allocated to the investment program.
Despite fears that a number of units may remain unsold and that developments that have acquired permits will not materialize, there are projects that add significance to the depth and calibre of the Cyprus market.
Some of the biggest projects include the ‘City of Dreams Mediterranean Casino Resort’, CYCLOPS, Del Mar, Hadassah Hospital Centre, Invel projects, the Ayia Napa Marina, Larnaca Port and Marina, large golf resorts, the ‘TRILOGY’, ‘BLUE MARINE’ etc.
Looking ahead into 2021, it’s clear that affordability will be less than 2019 and this trend is expected to continue for some time.
There’s not going to be a widely available coronavirus vaccine for at least another four months, if not longer, according to health experts.
And given the recent surge of cases, there is a good chance non-essential retailer will be hit with added restrictions in the coming weeks that will impact their bottom lines.
Plus, many consumers are just plain afraid to shop in stores, and given the economic crisis, many also cannot afford to do so.
A sluggish holiday season could therefore pave the way to additional retail closings in the coming year.
All of this is particularly bad news for mall operators, who can’t afford to keep losing tenants – especially department store anchors.
It will be interesting to see if malls take a proactive approach to the ongoing crisis by expanding their tenant base in 2021 in an effort to get ahead of retail closures.
One area they might look to is healthcare — walk-in clinics and diagnostic centres.
It may be a little unconventional to sandwich a doctor’s office between a clothing store and an accessory shop, but if it brings in the revenue malls need, so be it.
Some real estate investors are going into 2021 with an optimistic approach about a speedy snap-back from the economic challenges related to the coronavirus pandemic.
Investment funds, which use leverage and employ more aggressive, often riskier strategies than other investors, predict that many undesirable sectors of 2020, ranging from energy to medical, assisted living, warehouses, logistics centres, composite real estate projects that include retail spaces, health centres and recreational areas, as well as old and obsolete buildings in town centres, will be the new areas of focus in the coming years.
However, the state and the banks must help small and medium enterprises by supporting wages for their employees and a new postponement of payment of taxes, contributions, and loans for extended periods.
Businesses have weathered many storms over the past years, displaying impressive levels of creativity and adaptability as they shifted to new operating models, distribution channels and technologies.
The challenges are not over, but their tenacity has helped sustain economic momentum and offers optimism for a recovery in 2021.
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