After a very cold January, which we Cypriots are not used to, we have entered February, the last month of the winter of 2022.

As I mentioned in my analysis last month, the economic environment of our country, Northern Cyprus, continues to experience a process under the influence of internal and external factors that we cannot control. If we remember, these factors were 1- high exchange rate, 2- high inflation and 3- negative real interest rate and 4- general elections, in addition to the Kovid-19 Pandemic, which we have been under the influence of for more than two years.

In February 2022 we are experiencing a divergence in two of these factors, specifically Covid-19 and Elections. As the dominant variant, Omikron, is very contagious, I observe that the precautions are being reduced all over the world due to the understanding that its harm to our health is limited. It seems that if a different and harmful variant does not emerge, more steps will be taken towards normalization and we will come towards the end of the pandemic. For an island economy like ours, which is based on Tourism and Higher Education, the most important of these steps will undoubtedly be the reduction and complete removal of travel restrictions. With the steps to be taken towards normalization in Turkey and Southern Cyprus, which are our most important travel destinations, with the easing of quarantine, PCR, Antigen etc. conditions, it is very unlikely to expect a serious entry from abroad to Northern Cyprus, especially next summer, and an increasing interest from foreign real estate investors. it won't be...General Elections were also held in our country last month. We went through an election process that took place in an environment of democratic tolerance and tolerance, which befits Cypriots. While we wish the elections to be beneficial to all our people and our country, we urgently await the establishment of a strong and stable government that will make the structural (especially the economy, public, infrastructure and digitalization) reforms we need and take responsibility!

Despite the potential improvement in the factors I mentioned in the two paragraphs above, there are still: 1- the purchasing power of domestic buyers has seriously weakened due to high exchange rates and high loan rates, especially for first (young) buyers, it has become very difficult for them to purchase housing if there is no family support, 2- again high exchange rate Due to the fact that the rents have returned to TL (i.e., they have fallen) to a large extent due to this reason, the real decrease in rental incomes and the decrease in the demand and prices of flats in rental flats continue. However, it should be noted here that the rents in commercial real estates are still determined in foreign currency, and a high rate of return is provided.

The only buyers who provided a small upward divergence to the market this month are the local and Turkish land buyers who do not want to keep their foreign currency deposits at negative interest rates. The fact that Cyprus is an island and the land prices do not decrease statistically to a great extent keeps this buyer market alive. In addition, buyers looking for commercial real estate also make their impact on the market.In addition, I observe that the demand from foreign investors other than the Turkish Republic is starting to increase slowly.

In the light of all these analyzes, the most important investment to be earned in foreign currency in Northern Cyprus, which I foresee for the near future, is still Land investments. In other words, the motto 'Land Does Not Lose Value' is also valid for the current period. However, this month, I made an innovation and added Commercial Properties with foreign currency rental income to my portfolio in line with my analysis and incoming demand.

With my love and respect,

Dengiz KÜRŞAT

Avertiss International Real Estate & Consultancy

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