Property In Cyprus Continues To Fall In Demand
News Posted On: 03 September 2013
Prices of property in Cyprus have recorded one of the steepest declines in recent years, especially in the country’s second financial quarter. This was announced in a survey, which was shown recently. The reason for the decline in prices is because of the austerity-driven recessions in the country’s property market, which was once thriving successfully.
Lack of Cash Worsens Market Outlook
The market sentiment on the beautiful island of the Mediterranean was further dampened. Lack of availability of cash, accompanied by a worsening market outlook was the reason why the market sentiment seemed so dampened. According to the Chartered Surveyors Royal Institution survey, there was very little cash available in Cyprus to invest in the market related to real estate and property.
It was also found that the country ended up making a deal with few international lenders, which was for about ten billion euros during March in the year 2012. This was done to gain some financial benefits. In return the country had to impose big deposit losses and wind down on insolvent bank deposits as well. The capital ensures that the bank run is in place and exercises a certain control on it.
Pavlos Loizou, who is the Cyprus-compiler for this survey stated that there is definite proof that the market will deteriorate further than it already has. Also, this deterioration is going to take place faster than it did before. Since there is no more lending available, the money of the people stored in banks will also be blocked.
Price Valuations after RICS Survey
The annual decline during the second quarter, which was from 12.6 percent to about 23.3 percent price drop for all office space, seemed to be the sharpest declining rates recorded ever since the survey began in the year 2009, according to Loizou. Evidently, the rate of fall in the prices has been found to be the sharpest since many years in any market, which isn’t accustomed to sudden declines in evaluations.
At least ten years before 2009, property prices in Cyprus had been steadily growing on the backs of demands from overseas buyers and also through liquidity-flush banks, who decided to extend credit. Over 2 growth cycles after and before the country joined the EU in the year 2004, property prices were seen to rise between 150 percent and 200 percent, according to the survey.
In central parts of Nicosia, the capital of Cyprus, there are many boarded up shops. Once a commercial hub, which used to be filled with people and various shops, now stands empty since businesses have been driven out by the high prices in rent.
Real estate insiders expect further market deterioration
Loizou, however, said that there was some interest shown by investors from overseas, who were looking at retail properties. Even though they have shown interest, it doesn’t necessarily mean they will invest.
Written by Les Calvert
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