Property prices & sales in Cyprus still falling
Property prices and sales in Cyprus still falling but generally at a slower pace, latest reports show
The number of foreigners buying property in Cyprus is still falling despite hope from real estate agents that they could attract new investors from Russia and the Middle East.
The British have traditionally been among the top buyers but they have largely deserted the market thanks to the global recession and publicity over the island’s title deeds fiasco.
The latest figures from the Department of Lands and Surveys, shows that there were 127 contracts of sale by overseas buyers during August compared to 167 in July.
According to the Estate Agents Association of Cyprus foreign demand for property over the first eight months of the year has been ‘disappointing’ with 1,222 properties being sold compared to the 1,190 sold during the first eight months of last year. This increase of 2.7% is very small considering last year’s exceptionally low sales figures.
The largest increase in sales to non Cypriot buyers has been in Nicosia, where sales have risen by almost 55%. But Nicosia has been an exception with the once popular seaside towns showing smaller increases and falls in property sales
‘The negative economic condition in the United Kingdom, Cyprus’ main market, does not allow the purchase of properties by the British, while the drop in the property prices in the UK contributes negatively too,’ said chairman of the Estate Agents Association of Cyprus, Solomon Kourouklides.
Figures also show that prices are continuing to fall on the Mediterranean island but at a slower pace. The Cyprus Property Price Index from the Royal Institution of Chartered Surveyors that tracks property and rental prices across all districts and main property types also shows that during the first half of 2010 there was a significant reduction in property transactions, particularly from overseas buyers.
Towards the end of the second quarter, there were some early signs of stabilisation, with local buyers returning to the market taking advantage of lower prices for holiday homes. Also, some landmark projects received planning permission, most notably the Tersefanou Golf Course and work started on Limassol Marina.
Residential prices for both houses and flats fell by an average of 2.5%, with the biggest drop for houses taking place in Paphos, down 4%, and for flats in Paralimni, down 3.3%. Values of commercial properties generally fell across all cities by an average of 0.5% for retail and 2.1% for offices. The exceptions were warehouses which rose by an average of 0.4%, greatly influenced by warehouses in Limassol which rose by 4.5%.
Across Cyprus, rental values for apartments rose marginally by 0.3%, whilst rents on houses, retail units, warehouses and offices fell by a respective average of 2.1%, 0.8%, 0.2%, and 2.1%.
The report also identifies a dichotomy between Nicosia, which continues to be stable, and the coastal cities. Rents for all property types fell in Paphos probably indicating the continuing woes of the city. Similarly rents in Limassol, except for warehouses, also decreased; a sign that the crisis in now beginning to affect the Limassol market.
Initial yields on commercial property increased slightly, and now stand at 6% for retail, 4.7% for offices, and 4.9% for warehouses. Yields on residential property are at a very low of 3.6% for apartments and 2% for houses, showing that prices relative to rents remain at multiples which are considerably above that of other European countries and that there is still room for rebalancing to take place.