The Effect of China’s Limit on Capital Outflows in Cyprus Real Estate Market

Abstract

This dissertation mainly investigates the effects and risks that theoretically can arise in Cyprus’ real estate market due to China’s Capital Control Policy. To achieve this we have compared construction and real estate activity in Cyprus by Foreign Buyers and investors based on a 10 year period. Initially, we have collected RE transaction data based on foreign people. These data were collected from the Statistical Service of Cyprus to see if there is any possible change in Chinese capital inflow before and after the Chinese capital restrictions. Also, we have contacted real estate professionals along with China’s and Russia’s Embassy in Cyprus in order to collect information about foreign buyers and how many of them have Cyprus Citizenship, a major “KEY” in real estate development. More, a questionnaire was sent to Real estate professionals for further information. Some of our findings show that Real estate sector is a pillar of Cyprus economy and a big percentage of cash-flow comes from abroad. Even though, Chinese Capital Controls have not affected Cyprus real estate (RE) industry that much. Chinese people can outflow their money with different ways out of China. Even more, China is not our biggest RE foreign investor so Cyprus is not facing a high level risk in this industry. Unfortunately, the exact number of Chinese Buyers was not accessible but we strongly believe that our assumptions along with our indisputable questionnaire data have resulted to the most accurate conclusions for this topic.