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Information for Cyprus Expats on the price and trends of Cyprus property
Vouni Village House
This is the sixth publication of RICS Cyprus’ Property Price Index, a quarterly price and rental index which is based on methodology produced by the University of Reading, UK. The Index tracks property and rentalprices across all districts and main property types.
Introduction & Commentary
During the first quarter of 2011 Cyprus bore the brunt of the consequences of the increased uncertainty regarding the Greek economy and the, partly consequential, series of downgrades by rating agencies of Cyprus and of Cypriot banks.
Whilst the first quarter saw some signs of price stabilisation and muted economic growth, the lack of credit and the on-going events in Greece affected sentiment. In turn this led to a low transaction turnover and to reduced interest by local buyers (transaction volume, as recorded by the Land Registry, is circa 40% down from the ten year average).
The renewed investor interest experienced at the latter part of 2010 almost vanished, as companies, funds, and individuals took a “wait and see” approach. There seemed to be some limited investor interest for city centre, prime, properties, although evidence of this is anecdotal.
Market Capital Values
The Property Price Index has recorded a disappointing behaviour in property prices across Cyprus’ major urban areas, with prices and rents falling across all districts.
Residential prices for both houses and flats fell by 1.6% and 0.9% respectively, with the biggest drop for houses taking place in Limassol (-2.9%) and for flats in Paphos (-4.1%). Values of retail properties fell by an average of 0.8%, whilst those of offices and warehouses rose by 0.1% and remained stable respectively.
Compared to Q1 2010, prices dropped by 8.3% for apartments, 7.0% for houses, 6.5% for retail, 7.4% for office, and 2.0% for warehouses.
Market Rental Values
Across Cyprus, rental values for apartments fell by 0.9%, for houses 1.3%, retail units 1.0%, warehouses 0.7%, and offices 1.3%. Compared to Q1 2010, rents dropped by 6.1% for apartments, 10.7% for houses,
7.1% for retail, 6.3% for office, and 5.8% for warehouses.
The quarterly change in capital and rental values shows that all aspects and geographies of the property market are now affected, and that landlords are lowering their rents in order to attract tenants. In parallel, many tenants are renegotiating their leases or moving to smaller or lower cost accommodation.
Appraisal based initial yields
At the end of Q1 2011 yields stood at 3.6% for apartments, 1.9% for houses, 6.0% for retail, 4.8% for warehouses, and 4.8% for offices. The parallel reduction in capital values and in rents is keeping investment yields relatively stable and at very low levels (compared to yields overseas). These suggest that there is still room for rebalancing to take place.
Further information may be found here
Source RICS Cyprus
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