Cyprus property price index published

Eighty people gathered for the launch of the RICS Cyprus Property Price Index in Nicosia earlier today. The Index will be published quarterly and aims to contribute to the transparency of the property market in Cyprus.

Attendees at the launch were addressed by the President of RICS Cyprus, Petros Stylianou MRICS, the vice-President of ΣEEOKK Anna Iacovou FCIArb MRICS, and by the ex-Minister of Finance, Dr Michalis Sarris.

Mr Stylianou highlighted the significance of the Index in bringing an identifiable measure of property prices and returns, whilst Mrs Iacovou noted the need for a similar Index on construction costs which identified market trends and the changing economic landscape.

Dr Sarris elaborated further on the importance of clarity in times of economic turbulence in order to instil confidence in investors and the public as a whole.

The Index has been designed to provide reliable indications of trends and broad changes in real estate pricing of apartments, houses, offices, high street retail premises, warehouses and offices and it tracks property prices and rents across 46 locations.

The methodology on which the RICS Cyprus Property Price Index is based was designed by Professor Dr Pat McAllister MRICS and Dr Franz Fuerst from the Reading University Department of Real Estate & Planning at Henley.

Professor McAllister spoke of the important role of the Index in identifying what is happening in the Island’s property market and its usefulness to buyers, sellers, mortgage lenders, real estate companies and associated businesses. He then went on to present the first issue of the RICS Cyprus Property Price Index :

Average Unit Price (Euro)
	Nicosia	Limassol	Larnaca	Paphos	Famagusta - Paralimni
Apartments	171,155	177,978	187,590	154,917	153,790
Houses	523,438	496,250	438,750	460,417	412,500
Retail	1,079,167	912,500	550,000	775,000	350,000
Warehouse	2,280,000	2,700,000	1,933,333	1,405,000	1,200,000
Office	758,000	600,000	480,000	523,333	337,500

Source: RICS Cyprus

Average Monthly Rent (Euro)
	Nicosia	Limassol	Larnaca	Paphos	Famagusta - Paralimni
Apartments	560	560	502	467	350
Houses	729	1,226	800	677	500
Retail	7,000	4,239	3,433	2,383	1,525
Warehouse	5,500	9,500	8,750	6,500	7,500
Office	2,700	3,050	1,655	1,800	1,300

Source: RICS Cyprus

Initial Yields (Annual Rent/Price)
	Nicosia	Limassol	Larnaca	Paphos	Famagusta - Paralimni
Apartments	3.9%	3.8%	3.2%	3.6%	2.7%
Houses	1.7%	3.0%	2.2%	1.8%	1.5%
Retail	7.8%	5.6%	7.5%	3.7%	5.2%
Warehouse	2.9%	4.2%	5.4%	5.6%	7.5%
Office	4.3%	6.1%	4.1%	4.1%	4.6%

Derived from: RICS Cyprus Property Price Index

Outline of the properties used in calculating the index:

Apartments – Two bedroom, 85m², Medium quality.
Houses – Three bedroom with garden, Semi-detached, 250m², Medium quality.
Retail – High-street retail, 100m² ground floor area with 50m² mezzanine.
Warehouse – Light industrial area, 2,000m², 200m² office space.
Office – Grade A, City centre location, 200m²

Commenting on the Index Professor McAllister said that “compared to other EU markets, initial yields appear low” and “the values will provide you of the best estimate of what you will be able to sell your property for”.

On the general subject of property price indexes, Professor McAllister said that indexes produced by banks tended to undervalue property because they used them for evaluating mortgage applications. Dr Sarris said that “banks (in Cyprus) have chosen not to chase developers for loans, but lend them more”.

Chairman of the Cyprus Land and Building Developers Association, Lakis Tofarides, said that property prices were high because the price of land has rocketed over the last ten years and that today, the cost of land represented some 40% – 50% of a property’s overall cost. He added that distortions in the market were due to the tax system in Cyprus and that property-related taxes were very high compared to other countries. He also expressed his concern over the government’s intention to reassess the property tax system as it might lead to even higher level of taxation.

by Cyprus Property News