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Cyprus property market seeing steep decline

The latest figures available from the Cyprus Land Registry show that the number of property sale contracts transacted between January and November 2008 showed a 27.9% year-on-year reduction, while contracts transacted in November showed a 60.5% year-on-year decline.

Analysts say that the decline is unlikely to change during 2009 as local economic growth continues to slow.

And Central Bank governor Athanasios Orphanides is warning that investors must be prepared for a worst-case scenario when it comes to the economy for 2009.

He said that adoption of the single currency had so far protected Cyprus against major effects from the international crisis. But the bank estimates that the economic growth rate will fall to 2% in 2009, the lowest since 2003.

'We cannot overlook the fact that an open economy like ours cannot remain completely unaffected by the negative global developments,' he said.

'Because the length and depth of the international crisis is difficult to predict, the government should be ready to take action if the worst scenarios materialise for the economy,' he added.

According to analyst Antonis Loizou the Cyprus property sector will experience a long period of recession. He pointed out the price of tourist properties have already fallen by as much as 20%.

He said that property developers are halting new projects. 'You must be lunatic to build at right now since the banks are not lending and a significant number of properties remain unsold,' he said.

According to Stelios Platis, managing director of financial services group MAP S. Platis, investors are being more careful but those with funds are continuing to buy.

There is no doubt that people are very, very careful, and very, very skeptical about the future of the real estate sector, which means they don't invest in it,' he said.

But wealthy Cypriot buyers looking to purchase property on the cheap could help sustain the country's construction and property sectors. He expects interest will be generated in four new marinas that the state is building to boost tourism several of which will require the construction of an artificial island between Limassol's new and old port.