RICS: Prop­erty prices down in 2Q, mainly Nicosia-Lar­naca

Financial Mirror (Cyprus) - - FRONT PAGE -

Prop­erty prices were down 0.4% for apart­ments and 0.3% for homes in the sec­ond quar­ter, ac­cord­ing to the latest in­dex pro­duced by RICS Cyprus. The ar­eas that saw the big­gest quar­terly drops were Nicosia and Lar­naca.

The 23rd edi­tion of the RICS Cyprus quar­terly Prop­erty Price In­dex said that the big­gest drop was in Lar­naca (-1.2% for flats and -3% for houses). An in­crease of 0.6% for house prices was recorded in Nicosia, while the val­ues of re­tail prop­er­ties fell by an av­er­age 0.1%, of­fices by 1.4%, and ware­houses by 2.4%, the sur­vey said.

De­spite the Cyprus econ­omy show­ing some signs of sta­bil­ity, com­pared to 2Q 2014 prices dropped by 2.6% for apart­ments, 2.3% for houses, 5.5% for re­tail, 1.4% for of­fice, and 2.4% for ware­houses.

Across Cyprus, quar­terly rental val­ues de­creased by 0.3% for apart­ments, 2% for houses, 1.1% for of­fices, 2.1% for re­tail units and 1.4% for ware­houses. Year-on-year, rents dropped by 3.0% for flats, 2.9% for houses, 6% for re­tail, 2.8% for ware­houses, and 3.6% for of­fices.

The ma­jor­ity of as­set classes and geogra­phies con­tinue to be af­fected, with ar­eas that had dropped the most early on in the prop­erty cy­cle now near­ing or at the bot­tom, with Paphos and Fa­m­a­gusta show­ing some signs of price sta­bil­ity, the RICS re­port said.

At the end of the sec­ond quar­ter, av­er­age gross yields stood at 3.8% for apart­ments, 1.9% for houses, 5.2% for re­tail, 4.3% for ware­houses, and 4.4% for of­fices. The par­al­lel re­duc­tion in cap­i­tal val­ues and rents is keep­ing in­vest­ment yields rel­a­tively sta­ble and at low lev­els (com­pared to yields over­seas). This sug­gests that there is still room for some repric­ing, with the econ­omy per­form­ing bet­ter than ex­pected and tourism mildly out­per­form­ing fore­casts.

Un­em­ploy­ment re­mained at a his­tor­i­cal high level, sta­bilised at 16%, and dis­cus­sions were on­go­ing re­gard­ing pri­vati­sa­tions of state-owned en­ter­prises, fore­clo­sures and the tur­bu­lence in bank­ing sys­tem.

There were few trans­ac­tions dur­ing the quar­ter although vol­ume was higher on a year-on-year ba­sis. Lo­cal buy­ers in par­tic­u­lar were the most dis­cern­ing as the in­crease in un­em­ploy­ment and the prospects of the lo­cal econ­omy main­tained the lack of in­ter­est. Fur­ther­more, those in­ter­ested are still hav­ing trou­ble to ac­cess bank-fi­nance.

The Prop­erty Price In­dex has recorded falls in most towns and as­set classes, with sig­nif­i­cant falls recorded in Nicosia and Lar­naca. Nicosia is clearly feel­ing the im­pact on the gov­ern­ment and bank­ing sec­tor (the two sec­tors that dom­i­nate the lo­cal em­ploy­ment mar­ket), whilst Paphos and Fa­m­a­gusta are pro­gres­sively bot­tom­ing out.

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