Rics Immovable property Price Index quarter 4 2010
The Royal Institute of Chartered Surveyors (RICS) Cyprus have published fifth 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 rental prices across all districts and main real estate types.
During the 2nd half of 2010 Cyprus felt the aftershock of the global economic crisis, with the economy slowing down and the government's income decreasing. The fourth quarter saw the Cypriot economy showing some signs of stabilisation and muted growth, although the increased uncertainty about Greece and the local economy affected sentiment. Towards the end of the year there were some early signs of price stabilisation, with local buyers returning to the market taking advantage of lower prices for holiday homes and for permanent residence. Also, there seemed to be some renewed investor interest, particularly for city centre, prime, properties.Evidence of this however is anecdotal, as there have been no significant transactions to support it. These signs need to be viewed within the wider context of a continuing curtailing of loans by the banks, reduced income as a result of inflation and salary reductions, and to a change in people’s expectations of future changes in capital values.
Market Capital Values
The Property Price Index has recorded a disappointing attitude in real estate values across Cyprus’ major urban areas, with prices and rents falling across all districts.
Residential prices for both houses and flats fell by 2.6% and 2.4% respectively, with the biggest drop for houses taking place in Limassol(-4.8%) and for flats in Famagusta (-4.2%). Values of commercial properties fell across all cities by an average of 2.5% for retail, 3.4% for offices, and 2.4% for warehouses.
Year-on-year, prices dropped by 10.8% for apartments, 7.4% for houses, 7.0% for retail, 6.3% for office, and 4.8% for warehouses.
Market Rental Values
Across Cyprus, rental values for apartments fell by 5.5%, for houses 5.9%, retail units 3.8%, warehouses 4.4%, and offices 2.7%. Year-on-year rents dropped by 7.2% for apartments, 11.8% for houses, 8.5% for retail units, 3.0% for offices, and 3.9% for warehouses.
The quarterly change in capital and rental values shows that all aspects and geographies of the real estate 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.
The reduction in rents will have a profound effect on the incomes of many locals and overseas owners, and is likely to increase the downward pressure on prices as the contrast between rent and capital values is accentuated.
Appraisal based initial yields
At the year-end initial yields stood at 3.6% for apartments, 1.9% for houses, 6.0% for retail, 4.8% for warehouses, and 4.8% for offices. These suggest that there is still room for rebalancing to take place. You can check Developers Paphos.