RICS: Prop­erty deals sub­dued in 4Q

Financial Mirror (Cyprus) - - FRONT PAGE -

Given pre­vail­ing eco­nomic con­di­tions and the tur­bu­lence in the Cyprus bank­ing sys­tem, there were few prop­erty trans­ac­tions in the fourth quar­ter of 2015, al­though vol­ume was higher on a year on year ba­sis, ac­cord­ing to the RICS Cyprus Prop­erty Price In­dex. Lo­cal buy­ers in par­tic­u­lar were the most dis­cern­ing as un­em­ploy­ment re­mains at high lev­els and the prospects of the lo­cal econ­omy main­tained the lack of in­ter­est.

Fur­ther­more, those in­ter­ested are try­ing to ac­cess bank-fi­nance, the re­port said.

How­ever, as re­gards the econ­omy in gen­eral, the fourth quar­ter showed some signs of sta­bil­ity, with the econ­omy’s per­for­mance be­ing bet­ter than ex­pected and tourism mildly out­per­form­ing fore­casts. Un­em­ploy­ment re­mained at a his­tor­i­cal high level, but sta­bilised at about 14%, and dis­cus­sions were on­go­ing re­gard­ing pri­vati­sa­tions of state-owned en­ter­prises.

The Prop­erty Price In­dex has recorded falls in most cities and as­set classes, while the rate of de­crease is less than pre­vi­ous quar­ters. In ad­di­tion, some Dis­tricts and as­set classes in­di­cate signs of sta­bil­ity as Paphos, Lar­naca and Fa­m­a­gusta are pro­gres­sively bot­tom­ing out.

Across Cyprus, move­ments in prop­erty prices ap­pear mixed as res­i­den­tial prices for flats fell by 0.5% and 0.1% for houses. The big­gest drop be­ing in Li­mas­sol (1.4% for flats) and in Nicosia, with a 0.8% de­crease for houses. An in­crease of 2.9% for of­fices was noted in Nicosia.

Val­ues of ware­houses fell by an av­er­age 2.3%, retail prop­er­ties were sta­ble at the same level, and of­fices in­creased by 0.7%.

Com­pared to Q4 2014, prices dropped by 1.8% for flats, 0.3% for houses, 2.4% for retail, 0.9% for of­fice, and 2.2% for ware­houses.

Across Cyprus, on a quar­terly ba­sis, rental val­ues in­creased by 0.5% for apart­ments, 1.1% for houses and 0.2% for of­fices. A de­crease of 0.2% for retail units was noted and 1% for ware­houses.

Com­pared to Q4 2014, rents dropped by 3.8% for retail, 2.6% for ware­houses and 0.2% for of­fices. On an an­nual ba­sis, an in­crease of 0.3% and 0.8% was noted for apart­ments and houses, re­spec­tively.

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

At the end of Q4 2015, av­er­age gross yields stood at 3.9% for apart­ments, 2% for houses, 5.2% for retail, 4.3% for ware­houses and 4.5% 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 of cap­i­tal val­ues to take place, es­pe­cially for prop­er­ties in sec­ondary lo­ca­tions.

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