Is this the last year for buyers’ bargains?
I don’t share this view, without first questioning the statistics issued by the Lands Surveys Dept. By reducing VAT to 5% and transfer fees by 50% or even zero, it is true that there was an increased interest. This interest is expected to increase further with the approval of the bill for transfers prior to 31.12.2016, the release of the mortgaged properties, as well as markets that will be exempt of the capital gains tax.
These measures, together with the legislation on passports and visas, permanent residence for foreigners (whose applications are seeing a growth rate) suggest a positive direction for the future, especially in view of the limited number of new construction projects available.
Real estate prices indicate, even to a small extent, a descending path. It should be stressed that the demand for land and agricultural land is not expected to recover any time soon because of the large supply and the large stock of land planned to be divided into plots (which are now on hold). There is increased demand, which is encouraging, for apartments in selective locations and high cost homes in the EUR 800,000 - 1.1 mln range for coastal units.
In the category of holiday homes, Protaras remains as the primary target for Nicosians while Limassol is in great demand for high net worth foreign buyers, followed by Paphos primarily for British buyers (the strengthening of the sterling against the euro helps) and the interest from the Arab world is focused in Larnaca, where two specialist offices recently opened. Staying in Larnaca, with the new state of affairs in Iran, as well as the increase in direct flights from other Arab countries, the interest for the city of Kition is bound to increase.
Certainly, the lack of funding is the main reason that still holds back or restricts the demand in the market and most buyers either have trouble finding funding (even in the case of loans for 30% of the value, while the 100% payment in cash may even cause certain tax issues, as regards declaration an transparency.
That which we expect to receive the biggest increase is the sector of holiday homes with secured title deeds. A remarkable effort is being undertaken by the Land Registry to increase the pace of issuing titles, but for the process to reach their office a great deal of bureaucracy still needs to be overcome that has not changed as regards the issuing of planning permission or building permit, securing final approval certificate, etc.
It is also assumed that the “opportunities” diminish as time passes. True, the best bargains were in 2012 due mainly to jittery Britons who were selling their holiday or retirement their homes almost in a panic, but now the quality in the demand for such these holiday homes has declined, perhaps pushing prices lower.
I believe, therefore, that maybe 2015 is the last year for a certain type of quality opportunities. The market is expecting the course from the foreclosures by banks but I do not think that this will create particular opportunities, particularly in units with title deeds. The new buyer will have to pay the transfer fees, to secure the title, to undertake repairs, etc. and finally add his profit. Perhaps foreclosures will create opportunities for commercial or industrial properties - and to a lesser degree for vacant plots or good quality residential estates, while in v e s tm en t opportunities (eg modern offices for rent especially in Limassol) are still not producing a high yield, despite the fact that rents are at about EUR 20 / sq.m. I must add that I have yet to see commercial offices for sale that fall in the category of distress sales or forced sales.
Certainly, the situation as it is today is gradually improving, but our market remains so fragile and continuous changes that it is difficult to draw final conclusions even for the medium term, while the various announcements by developers or real estate agents and others referring to a rapid recovery are rather driven by their own interests.
Recently, we have seen a widening in the gap between the asking price and the final agreed price.
There is so specific percentage to suggest this because the seller determines the final price and it still depends on the pressure and the need for the seller. But generally a variation of 5% - 10% depending on the quality of the sale is a good indication.
On a final note, we are all waiting to see what the future holds, including any prospects of a Cyprus settlement.