RICS Cyprus Property Price Index Q4 2016

RICS Cyprus Property Price Index Q4 2016

Introduction & Commentary
During the fourth quarter of 2016 the Cyprus economy showed further signs of stability, with a seasonally adjusted quarterly GDP growth of 0.7% and an annual seasonally adjusted GDP growth of 2.9%. Unemployment remained at relatively high levels, on a downtrend to ca 13% (from the high levels of 17%). Given prevailing economic conditions and the marginally improved confidence in the Cyprus’ banking system, there ere relatively higher transactions during the quarter. Financial institutions, despite of their NPLs, have been more willing to provide access to finance and there is a sluggish interest from locals.

Market Capital Values
The Property Price Index has recorded increases in almost all cities and asset classes, with significant increases being recorded in Larnaca, Limassol and Nicosia, whilst other cities are progressively bottoming out.
 
Market Rental Values
Across Cyprus, on a quarterly basis rental values increased by 1.8% for apartments, 2.9% for houses, 0.8% for retail, 4.3% for offices while for warehouses they remained stable. Compared to Q4 2015, rents increased by 6.6% for flats, 8.7% for houses, 4.9% for retail, 7.9% for offices and for warehouses 3.5%. All asset classes have shown a consecutive quarterly growth.

Appraisal based initial yields
At the Q4 of 2016 average gross yields stood at 4% for apartments, 2.1% for houses, 5.3% for retail, 4.4% for warehouses, and 4.6% 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. 

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