The Cyprus property market has now turned the corner and started to become more active, thanks to improving local conditions and renewed interest from overseas property investors.
A 2016 review of the Cyprus property market and economy recently published by Resolute Asset Management has shown more activity due to improving local and international economic conditions.
This was represented by Cyprus property sales involving the exchange of Title Deeds which were up by 41 per cent, and contracts of sale deposited at Land Registry offices, up by 43 per cent.
Interest from overseas property investors has also increased, though this is mainly targeted at residential properties in coastal regions where the tourist trade is strongest, offering the most potential for rental income.
Property Prices
Property prices had been on a downward trend for six years until 2016, but prices, rents and yields rose across all asset classes last year, on a year-on-year basis.
Houses – Prices: +1.1 per cent. Rents: +4.9 per cent. Yields: 2 per cent.
Apartments – Prices: +0.5 per cent. Rents: +4.9 per cent. Yields: 4 per cent.
Retail – Prices: +0.8 per cent. Rents: +0.5 per cent. Yields: 5.3 per cent.
Warehouse – Prices: Stable. Rents: -1.2 per cent. Yields: 4.3 per cent.
Offices – Prices: +2.8 per cent. Rents: +5.2 per cent. Yields: 4.5 per cent.
Restructuring
Cyprus banks have also intensified restructuring efforts to meet deleveraging objectives imposed by the European Central Bank. This includes consensual debt-for-asset swaps by which the bank acquires the real estate collateral in exchange for partial or full debt forgiveness.
During the first nine months of 2016 there were 492 restructuring transactions, which represented 5.4% of the total number of transactions over the period.
2017 Outlook
The report also identifies a number of favourable and unfavourable factors, which are anticipated to affect the real estate market in the year ahead and concludes with a forecast for real estate capital values in 2017
Housing plots – Stable
Commercial plots – +5 per cent
Apartments – Centre: +5 per cent. Secondary locations: Stable. Touristic locations: +5 per cent
Retail – Centre: +10 per cent. Secondary locations: Stable. Touristic locations: +5 per cent
Offices – Class A: +10 per cent. Class B: +5 per cent
With the Cyprus property market stabilised and beginning to rise, more and more overseas property investors are expected to return their attention to this popular island destination.
For further details read the Cyprus Economy & Real Estate Market – Annual Report 2016
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