Cyprus Real Estate Continues Its Downward Spiral
News Posted On: 02 April 2014
The Cyprus real estate market has continued on its downward trend, although its economy has made minor improvements and is expected to gradually stabilize in the future according to a recent Leaf Research forecast.
Prices and demand for properties dive
Prices of real estate assets have come down in different cities and different properties alike throughout Cyprus. Retail has shown the largest drop, with prices reducing by 42 percent when compared to their values in the last quarter of 2009. Housing followed them with a comparative drop of 26 percent in their prices.
The district of Paphos was the most active real estate hub during 2013, with a movement of 31 percent. The number of transaction agreements in the district involving foreigners recorded a 27 percent increase, while foreign purchases amounted to 38 percent of the net volume.
The lowest number of transaction agreements were recorded to be six percent in the Famagusta district, and the lowest foreign transaction percentage in Nicosia with 13 percent. Nicosia showed the highest price decline as it was one of the last cities to be torn down by the crises, as its main economy depends on banking and public sectors.
The decreased property prices and transaction volumes do not reflect on the property market as a whole. But the demand shortages in secondary location constructions and real estate land purchases reflect on its current state. Even prime properties are attracting buyers in limited numbers, despite selling them at distressed prices with the option of blocked deposit payments.
Other properties, especially those that come under mass production, the demand remains at a stagnant low even though the quoted prices are well under the construction costs.
Predictions for the Cyprus property market
While the demand for properties in Cyprus is not expected to see the summit anytime soon, the holiday home resales and class B office property numbers are expected to climb up in the near future. These factors when combined, may stamp out any price recovery that surfaces, says the report. The sales rates and land prices are expected to plummet further, while the debt financing front looks bleak as well, according to the latest analysis.
One of the toughest challenges to conquer in the immediate short term would be, working on developments inside British Bases. This could increase the availability of land in Limassol and Larnaca. While the short term property prices are expected to remain in a subdued state due to high unemployment rates that are expected to further shoot up during 2014, the worst is behind us, says the report. The tentative stabilization that has taken over Cyprus, will reflect positive changes on the property market and the economy in years to come.
The following medium term may see the economy battle the challenges from real-estate property foreclosures. Long term concerns could sprout from policy-related issues, especially those intending to boost the construction by providing reckless incentives such as giving authority for increased building density. This could create a bottled up oversupply in developments around the island.
Written by Les Calvert
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