RICS Cyprus Property Index Q1 2016
This is the twenty-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 rental prices across all districts and main property types.
Introduction & Commentary
During the first quarter of 2016 the Cyprus economy showed some signs of stability, with the economy’s performance being better than expected and tourism mildly outperforming forecasts. Unemployment remained at high levels, on a downtrend to ca 13% (from the high levels of 17%), and discussions were on going on the implementation of the foreclosure bill.
Given prevailing economic conditions and the turbulence in Cyprus’ banking system, there were relatively few transactions during the quarter although volume was higher on a year on year basis. Local buyers in particular were the most discerning as unemployment and high debt for locals maintained lack of interest. Furthermore, those interested are trying to access bank-finance.
Market Capital Values
The Property Price Index has recorded increases in almost all cities and asset classes, with significant increases being recorded in Paphos and Famagusta area, whilst other cities are progressively bottoming out.
Market Rental Values
Across Cyprus, on a quarterly basis rental values increased by 3.6% for apartments, 1.8% for houses, 0.2% for retail, 0.4% for warehouses and office rents increased by 0.6%.
Compared to Q1 2015, rents increased by 4.2% for flats, 2.4% for houses and 2.4% for offices. Retail and warehouses dropped by 3.2% and 2.1% respectively.
The majority of asset classes and geographies are bottoming out, with areas that had dropped the most early on in the property cycle e.g Paphos, Famagusta and Larnaca are showing some signs of price stability.
Appraisal based initial yields
At the Q1 of 2016 average gross yields stood at 4% for apartments, 2.0% for houses, 5.2% for retail, 4.3% for warehouses, and 4.4% for offices. The parallel reduction and/ or stabilisation 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 re-pricing of capital values to take place, especially for properties in secondary locations.
Download the full PDF Cyprus Property Price Index Q1 2016 publication