Cyprus Property Price Index Q2 2017This is the thirty-first 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 second quarter of 2017 the Cyprus economy showed further signs of stability, with a seasonally adjusted quarterly GDP growth of 0.9% and an annual seasonally adjusted GDP growth of 3.5%. Unemployment remained at relatively high levels, on a continued downwards trend to ca 10.8% (from the high levels of 17%). Given prevailing economic conditions and the marginally improved confidence in the Cyprus’ banking system, there are relatively higher transactions during the quarter and improved market sentiment. Financial institutions, despite of their NPLs, have been more willing to provide access to finance and there is an increasing interest from locals.
Market Capital Values
The Property Price Index has recorded increases on an annual basis in all cities and asset classes, with significant increases being recorded in Limassol, Nicosia and Larnaca, whilst Paphos and Paralimni have shown smaller annual increases.
Market Rental Values
Across Cyprus, on a quarterly basis rental values increased by 3.0% for apartments, 1.0% for houses, 2.0% for retail, 3.7% for offices and 0.7% for warehouses. Compared to Q2 2016, rents increased by 8.3% for flats, 10.2% for houses, 6.8% for retail, 14.4% for offices and for warehouses 4.2%. All asset classes have shown a consecutive quarterly growth.
Appraisal based initial yields
At the Q2 of 2017 average gross yields stood at 4.1% for apartments, 2.1% for houses, 5.4% for retail, 4.3% for warehouses, and 4.9% 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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