Tube,
Yes, we had a plot in Kolossi. Bought it for 40k and sold for 65k 2 yrs later. Had to cancel our building project after the builder tried to rip me off on the very first job he did. Hearing the architect say that he was the "man in the middle" and not working in my interests was the final nail in the coffin. Cyprus is so full of shysters and conmen in the building industry.
I do so agree with you that they must keep the trees in Fassouri, I always loved driving down that road.
Cheers,
John
Full Version: Defying The Laws Of Economics
Nice one, John !
Article from today. Interesting as I was just speaking to my cousin's husband who is a manager in the Co-Op bank. he told me that a dusty old villager turned up yesterday from a village in Paphos in a rusty old pickup truck. He had a cheque for ten million Cyprus pounds from a developer who bought his fields ! Will the madness here never end ... ?
=========
OPINION: Socio-economic polarization due to rising property prices
29/11/2007
Financial Mirror
Dr. Andreas Petrou, Cyprus International Institute of Management
The high growth of property prices we have been witnessing in the last few years is predominately due to the uncontrollable increase of land prices, which can be attributed to the fact that the market for land is not functioning properly. The reason for this malfunction is attributed to the supply of land, where decisions to sell are often not based on need, but rather are discretionary and consequently, speculative. In other words, the land owner, (given that he/she often has no reason to sell), will place any price tag on their property.
This malfunction of the land market is hard to regulate and, therefore, any attempts to control growth must be considered carefully. For example, the idea to extend building zones may not have the desired effect, as it does not eliminate the discretion to sell the land. Extending the building zones doesn’t necessarily imply that more land will be available for sale. Such a move will certainly make land owners richer faster. Similarly, increasing the floors of apartment buildings, (another idea that has been suggested), may have the same results, as the benefit will be cancelled out by land price increases.
Unsuccessful efforts to regulate the market will have a very negative socio-economic implication, which we have only just started to witness. Once upon a time, there was a large middle class in Cyprus. Today we witness a polarization trend, some citizens becoming richer fast and others becoming poorer equally fast. The parameter that drives this polarization is real estate ownership, predominately land ownership, which unfortunately is strongly correlated to whether a citizen is a refugee or not. Extension of this polarization may have far reaching implications.
So what is the answer to this problem? To find the answer we must first try to identify the sources of demand for land. Based on anecdotal evidence, the majority of demand is coming from contractors, who try to satisfy the demand for housing, and from speculative investors, who consider land as a safe bet, since they have never experienced a property downturn.
The obvious answer to control demand would have been higher interest rates, but this is not to the discretion of the Central bank of Cyprus anymore. Furthermore, Eurozone interest rates are unlikely, based on current trends, to reach levels which can significantly reduce demand. Another possibility would be a reduction of exogenous demand. This could happen in case there is a property crash in the UK or an emerging market crisis such as the Russian crisis in 1998. Again such events are hard to predict and policy makers can not rely on them to regulate a market which is so important for Cyprus.
Consequently, other effective approaches need to be considered. An effective remedy could be higher taxation of certain land transactions and allocation of the receipts to a fund that would aim to reduce polarization. One may argue that higher taxation will increase the cost of housing, but this will apply to people who can afford it, who in turn will directly contribute funds to the housing for the less privileged. Another alternative, which could be considered along with demand reduction, would be the de-incentivization to hold certain types of land for the long term. This again must be achieved through taxation and again it is imperative that funds must go to the ‘anti-polarization’ fund.
Article from today. Interesting as I was just speaking to my cousin's husband who is a manager in the Co-Op bank. he told me that a dusty old villager turned up yesterday from a village in Paphos in a rusty old pickup truck. He had a cheque for ten million Cyprus pounds from a developer who bought his fields ! Will the madness here never end ... ?
=========
OPINION: Socio-economic polarization due to rising property prices
29/11/2007
Financial Mirror
Dr. Andreas Petrou, Cyprus International Institute of Management
The high growth of property prices we have been witnessing in the last few years is predominately due to the uncontrollable increase of land prices, which can be attributed to the fact that the market for land is not functioning properly. The reason for this malfunction is attributed to the supply of land, where decisions to sell are often not based on need, but rather are discretionary and consequently, speculative. In other words, the land owner, (given that he/she often has no reason to sell), will place any price tag on their property.
This malfunction of the land market is hard to regulate and, therefore, any attempts to control growth must be considered carefully. For example, the idea to extend building zones may not have the desired effect, as it does not eliminate the discretion to sell the land. Extending the building zones doesn’t necessarily imply that more land will be available for sale. Such a move will certainly make land owners richer faster. Similarly, increasing the floors of apartment buildings, (another idea that has been suggested), may have the same results, as the benefit will be cancelled out by land price increases.
Unsuccessful efforts to regulate the market will have a very negative socio-economic implication, which we have only just started to witness. Once upon a time, there was a large middle class in Cyprus. Today we witness a polarization trend, some citizens becoming richer fast and others becoming poorer equally fast. The parameter that drives this polarization is real estate ownership, predominately land ownership, which unfortunately is strongly correlated to whether a citizen is a refugee or not. Extension of this polarization may have far reaching implications.
So what is the answer to this problem? To find the answer we must first try to identify the sources of demand for land. Based on anecdotal evidence, the majority of demand is coming from contractors, who try to satisfy the demand for housing, and from speculative investors, who consider land as a safe bet, since they have never experienced a property downturn.
The obvious answer to control demand would have been higher interest rates, but this is not to the discretion of the Central bank of Cyprus anymore. Furthermore, Eurozone interest rates are unlikely, based on current trends, to reach levels which can significantly reduce demand. Another possibility would be a reduction of exogenous demand. This could happen in case there is a property crash in the UK or an emerging market crisis such as the Russian crisis in 1998. Again such events are hard to predict and policy makers can not rely on them to regulate a market which is so important for Cyprus.
Consequently, other effective approaches need to be considered. An effective remedy could be higher taxation of certain land transactions and allocation of the receipts to a fund that would aim to reduce polarization. One may argue that higher taxation will increase the cost of housing, but this will apply to people who can afford it, who in turn will directly contribute funds to the housing for the less privileged. Another alternative, which could be considered along with demand reduction, would be the de-incentivization to hold certain types of land for the long term. This again must be achieved through taxation and again it is imperative that funds must go to the ‘anti-polarization’ fund.
Land Registry: House prices to drop by up to 20%
First Published: 30/11/2007 13:04:48
After the Central Bank’s decision to cut the lending ceiling for the purchase of the first home from 70% to 60%, the house and flat prices dropped sharply in the past four months. “The price cut are estimated at 10% - 20% and affect all seaside towns, especially Paphos”, Land Registry Manager, Andreas Christodoulou and Chairman of Real Estate Agents’ Association, Solomon Kourouklides told StockWatch.
According to Mr. Christodoulou, the CB decision affected significantly demand by non-Cypriots, who turned to the Portuguese and Maltese markets, where the limit of their contribution stands at 0% – 10%. “We have good climate and favourable tax conditions in Cyprus but if the CB does not change its measures, the foreigners might turn to the occupied north. So long as Mr. Orphanides said recently that the banks have healthy portfolios, he has to reinstate the old regime and maintain the contribution of 40% for the developers only”, he said.
Domestic demand
Similarly, Mr. Kourouklides said that according to his Association’s studies, the non-Cypriots’ demand for all seaside towns has dropped to 40%. “Paphos, where prces stood higher, has been affected the most. As for domestic demand, Nicosia has been largely affected due to speculators”, he noted.
Mr. Kourouklides could not submit the relevant studies.
Chairman of the Land Developers’ Association, Lakis Tofarides, is more pessimistic. “The sales to non-Cypriots dropped by more than 50% in certain cases. Mr. Orphanides had promised that he would be abreast with the developments in the property market on a daily basis and he would make changes if this was deemed necessary. We are certain that this day will come soon”, he stressed.
As regards to Central Bank’s increased measures of precautionary supervision, Mr. Orphanides expressed his confidence that they will contribute to the restraining of the huge price hikes on properties and will facilitate the purchase of the first home.
According to the latest CB Monetary Review for October 2007, loans grew by 33.3%, which is the highest in the past decades. The personal and professional loans grew by 40.1% to £7.87 billion against £5.61 billion in the corresponding period of 2006. The loans for construction purposes recorded an increase of 40.7% to £2.87 billion.
Growth rate slowdown
What are the estimates on the property market if the CB measures do not change? According to Mr. Christodoulou, there will be a slowdown of 15% in the purchase of plots, while Mr. Kourouklides agreed, stressing that house prices will drop further in Paphos.
First Published: 30/11/2007 13:04:48
After the Central Bank’s decision to cut the lending ceiling for the purchase of the first home from 70% to 60%, the house and flat prices dropped sharply in the past four months. “The price cut are estimated at 10% - 20% and affect all seaside towns, especially Paphos”, Land Registry Manager, Andreas Christodoulou and Chairman of Real Estate Agents’ Association, Solomon Kourouklides told StockWatch.
According to Mr. Christodoulou, the CB decision affected significantly demand by non-Cypriots, who turned to the Portuguese and Maltese markets, where the limit of their contribution stands at 0% – 10%. “We have good climate and favourable tax conditions in Cyprus but if the CB does not change its measures, the foreigners might turn to the occupied north. So long as Mr. Orphanides said recently that the banks have healthy portfolios, he has to reinstate the old regime and maintain the contribution of 40% for the developers only”, he said.
Domestic demand
Similarly, Mr. Kourouklides said that according to his Association’s studies, the non-Cypriots’ demand for all seaside towns has dropped to 40%. “Paphos, where prces stood higher, has been affected the most. As for domestic demand, Nicosia has been largely affected due to speculators”, he noted.
Mr. Kourouklides could not submit the relevant studies.
Chairman of the Land Developers’ Association, Lakis Tofarides, is more pessimistic. “The sales to non-Cypriots dropped by more than 50% in certain cases. Mr. Orphanides had promised that he would be abreast with the developments in the property market on a daily basis and he would make changes if this was deemed necessary. We are certain that this day will come soon”, he stressed.
As regards to Central Bank’s increased measures of precautionary supervision, Mr. Orphanides expressed his confidence that they will contribute to the restraining of the huge price hikes on properties and will facilitate the purchase of the first home.
According to the latest CB Monetary Review for October 2007, loans grew by 33.3%, which is the highest in the past decades. The personal and professional loans grew by 40.1% to £7.87 billion against £5.61 billion in the corresponding period of 2006. The loans for construction purposes recorded an increase of 40.7% to £2.87 billion.
Growth rate slowdown
What are the estimates on the property market if the CB measures do not change? According to Mr. Christodoulou, there will be a slowdown of 15% in the purchase of plots, while Mr. Kourouklides agreed, stressing that house prices will drop further in Paphos.
Chickens coming home to roost ?
------
North economy faces dark year ahead
By Simon Bahceli
ROW UPON row of empty villas – some complete, others partially built – stand testament to the fact that north Cyprus’ once-booming property business is now well and truly over.
Meanwhile, closer to the centre of town, numerous hotels, built to house thousands, cater for just a handful of forlorn elderly British tourists and Turkish gamblers – a clear sign that the dream of turning Kyrenia into a tourism hotspot remains nothing but a dream.
“Most hoteliers close their doors between October and April because it costs too much to keep them running,” Amber Onar of the small, family-run Onar Village says.
“Tourism here is worse now than it has ever been,” she adds.
Indeed, a planned mega tourist site planned for 15,000 beds at Vokolida (Bafra) beach near Famagusta remains only a fraction of what was intended, with just one of the nine hotels that were to have been built operating. The other eight investors are yet to lay even the foundations.
The situation is perhaps even worse for the construction industry.
“The market has been flat for two years now. That’s why I got out of it,” says Hasip Izzet, a building contractor who, by his own admission, did very well out of the boom.
“Any estate agent will tell you, the build-to-sell business is dead.”
A third sector of the economy, which many hoped would provide stability in the north, is higher education. But with that also in the relative doldrums, it seems there is nothing left to lift the Turkish Cypriot off the floor at present. With around 25,000 foreign students studying at the six universities, it is not hard to appreciate the importance of the sector.
As Chamber of Commerce head Hasan Ince says, with student intake down by 50 per cent, a decline means a knock-on effect though other economic sectors.
In November, the breakaway state’s ‘prime minister’ Ferdi Sabit Soyer gave official credence to what everyone in the north already suspected by announcing that economic growth for 2007 was expected to be zero per cent.
Such statements stand in stark contrast to the abundant optimism of 2004 and 2005. Back then, the authorities in the north boasted double figure growth and a doubling of per capita income from a paltry $5,000 to $10,000 annually.
So what has caused the end of the boom? Financial consultant and former ‘economy minister’ Ayse Donmzer says the current decline stems from investors’ and the authorities’ mismanagement of the good times.
“The [Greek Cypriot rejection of the] Annan plan led to a boom in construction, and the construction boom led to a boom in related sectors. However, those who made money out of the boom kept reinvesting in more property, and kept very little cash in reserve,” she says. This led to the supply of property outstripping demand.
The problem, she says, was compounded by the fact that many property investors were new to the business.
“Suddenly everyone was a contractor,” she says.
With so many in the business, bad business practices and poor standards led to a further fall in demand as horror stories of people losing vast sums of money to unscrupulous opportunists spread through the local and international media.
Bad business, Donmezer says, was also coupled with a failure on the authorities’ part to rein in the informal economy and earn tax from the boom.
“This was a real missed opportunity for the government to collect finances for investment in the infrastructure,” she says, adding that it could also have been a golden opportunity to tackle the growing budget deficit – something she believes Turkish Cypriots will be called to foot the bill for during these current bad times.
Investment expert Necdet Ergun does not see a good year ahead for the Turkish Cypriot economy either.
“There could be further stagnancy or even negative growth. Globally, there is a downturn.
“A few years ago there was an appetite for risk, but the looming mortgage crisis in the UK will do little to help,” he says.
With Kyrenia, and to a lesser extent Famagusta, full of empty properties, one would expect the north to be full of bargains. However, according to Ergun, constructors are not in the mood to sell off their investments cheaply.
“They [building contractors] are waiting. They think the [presidential] elections in the south could bring new life to the industry, if Christofias wins and starts a new peace process of course,” he says.
Hope, it seems, springs eternal.
Copyright © Cyprus Mail 2007
------
North economy faces dark year ahead
By Simon Bahceli
ROW UPON row of empty villas – some complete, others partially built – stand testament to the fact that north Cyprus’ once-booming property business is now well and truly over.
Meanwhile, closer to the centre of town, numerous hotels, built to house thousands, cater for just a handful of forlorn elderly British tourists and Turkish gamblers – a clear sign that the dream of turning Kyrenia into a tourism hotspot remains nothing but a dream.
“Most hoteliers close their doors between October and April because it costs too much to keep them running,” Amber Onar of the small, family-run Onar Village says.
“Tourism here is worse now than it has ever been,” she adds.
Indeed, a planned mega tourist site planned for 15,000 beds at Vokolida (Bafra) beach near Famagusta remains only a fraction of what was intended, with just one of the nine hotels that were to have been built operating. The other eight investors are yet to lay even the foundations.
The situation is perhaps even worse for the construction industry.
“The market has been flat for two years now. That’s why I got out of it,” says Hasip Izzet, a building contractor who, by his own admission, did very well out of the boom.
“Any estate agent will tell you, the build-to-sell business is dead.”
A third sector of the economy, which many hoped would provide stability in the north, is higher education. But with that also in the relative doldrums, it seems there is nothing left to lift the Turkish Cypriot off the floor at present. With around 25,000 foreign students studying at the six universities, it is not hard to appreciate the importance of the sector.
As Chamber of Commerce head Hasan Ince says, with student intake down by 50 per cent, a decline means a knock-on effect though other economic sectors.
In November, the breakaway state’s ‘prime minister’ Ferdi Sabit Soyer gave official credence to what everyone in the north already suspected by announcing that economic growth for 2007 was expected to be zero per cent.
Such statements stand in stark contrast to the abundant optimism of 2004 and 2005. Back then, the authorities in the north boasted double figure growth and a doubling of per capita income from a paltry $5,000 to $10,000 annually.
So what has caused the end of the boom? Financial consultant and former ‘economy minister’ Ayse Donmzer says the current decline stems from investors’ and the authorities’ mismanagement of the good times.
“The [Greek Cypriot rejection of the] Annan plan led to a boom in construction, and the construction boom led to a boom in related sectors. However, those who made money out of the boom kept reinvesting in more property, and kept very little cash in reserve,” she says. This led to the supply of property outstripping demand.
The problem, she says, was compounded by the fact that many property investors were new to the business.
“Suddenly everyone was a contractor,” she says.
With so many in the business, bad business practices and poor standards led to a further fall in demand as horror stories of people losing vast sums of money to unscrupulous opportunists spread through the local and international media.
Bad business, Donmezer says, was also coupled with a failure on the authorities’ part to rein in the informal economy and earn tax from the boom.
“This was a real missed opportunity for the government to collect finances for investment in the infrastructure,” she says, adding that it could also have been a golden opportunity to tackle the growing budget deficit – something she believes Turkish Cypriots will be called to foot the bill for during these current bad times.
Investment expert Necdet Ergun does not see a good year ahead for the Turkish Cypriot economy either.
“There could be further stagnancy or even negative growth. Globally, there is a downturn.
“A few years ago there was an appetite for risk, but the looming mortgage crisis in the UK will do little to help,” he says.
With Kyrenia, and to a lesser extent Famagusta, full of empty properties, one would expect the north to be full of bargains. However, according to Ergun, constructors are not in the mood to sell off their investments cheaply.
“They [building contractors] are waiting. They think the [presidential] elections in the south could bring new life to the industry, if Christofias wins and starts a new peace process of course,” he says.
Hope, it seems, springs eternal.
Copyright © Cyprus Mail 2007
A salutory lesson in the importance of investing only in the very best developments that have clear goals, and robust state lead protections (for example in Morocco developers have immense battles trying to obtain planning permission).
Property sector to slow down in 2008
First Published: 19/02/2008 08:00:43
Stockwatch
Properties that equal to ¼ of the Cyprus GDP changed hands in 2007, reflecting the positive course of the property sector. Sources say that 2007 signaled the peak of the rapid growth of the sector and expect a “significant slowdown” but not a price cut. They connect the course of the sector with the imposition of VAT on properties, anticipating the achievement of an exception for two more years.
The latest Land Registry figures indicate the strong activity in the property market in 2007. Specifically, the total value of property sales was shot to €4.5 billion against €2.9 billion in 2006 (+57.1%), while the number of property sales reached 23,723 compared to 20,259 in 2006. According to historic figures, the sales in 2007 are the highest since the release of the first available data.
The positive course of the sector is reflected in the state’s revenues from the capital gains tax, which climbed 135% to €467.1 million against €199 million in 2006 and €98,9 million in 2005.
Slowdown in 2008
Property sources insist that they expect a significant slowdown in property sales this year, while the course of the sector will depend on the finalization of the period that the 15% VAT on plots will be imposed.
“The property sales in January and February show that the sector has slowed down slightly, despite that the demand is always weaker this time of the year. This year, the sales were affected by the presidential election as well. The course of the property market will be determined after March”, Vice Chairman of Cyprus Property Valuators, Charalambos Petrides told StockWatch.
The real estate agents believe the same. “We expect a serious slowdown in property sales in the first half of 2008. The factors that affect sales are the psychological confusion after the adoption of the euro, as well as the increase in the price of oil, which pushed prices up at the same time that the Cypriots’ salaries remain the same”, Chairman of the Pancuprian Real Estate Agents Association, Solomon Kourouklides said.
“Given the Central Bank’s decision to cut the lending ceiling for the purchase of the second home, which affected Paphos mostly due to its external demand, sales will slow down”, Mr. Kourouklides added.
As for the property prices, there are no expectations that prices will drop. “Prices will not drop but marketability will be reduced. The growth rate will slow down compared to 2007. This slowdown will be stronger for the flats and houses”, Mr. Kourouklides noted.
VAT
The impressive increase in the purchase and sale of properties in 2007 is related to the expectations for an imposition of 15% VAT on plots. “We have been informed by the government that the imposition of VAT has been postponed until 1/7/2008. They say that they will try to extend it for 1-2 years more”, Mr. Kourouklides said.
Mr. Petrides reiterated, however, that the terms of the VAT imposition are still ambiguous. “It has not been clarified yet whether the term ‘building land” will include the new plots or the fields and the existing plots. We believe that the VAT must be imposed on new plots only”, he concluded.
First Published: 19/02/2008 08:00:43
Stockwatch
Properties that equal to ¼ of the Cyprus GDP changed hands in 2007, reflecting the positive course of the property sector. Sources say that 2007 signaled the peak of the rapid growth of the sector and expect a “significant slowdown” but not a price cut. They connect the course of the sector with the imposition of VAT on properties, anticipating the achievement of an exception for two more years.
The latest Land Registry figures indicate the strong activity in the property market in 2007. Specifically, the total value of property sales was shot to €4.5 billion against €2.9 billion in 2006 (+57.1%), while the number of property sales reached 23,723 compared to 20,259 in 2006. According to historic figures, the sales in 2007 are the highest since the release of the first available data.
The positive course of the sector is reflected in the state’s revenues from the capital gains tax, which climbed 135% to €467.1 million against €199 million in 2006 and €98,9 million in 2005.
Slowdown in 2008
Property sources insist that they expect a significant slowdown in property sales this year, while the course of the sector will depend on the finalization of the period that the 15% VAT on plots will be imposed.
“The property sales in January and February show that the sector has slowed down slightly, despite that the demand is always weaker this time of the year. This year, the sales were affected by the presidential election as well. The course of the property market will be determined after March”, Vice Chairman of Cyprus Property Valuators, Charalambos Petrides told StockWatch.
The real estate agents believe the same. “We expect a serious slowdown in property sales in the first half of 2008. The factors that affect sales are the psychological confusion after the adoption of the euro, as well as the increase in the price of oil, which pushed prices up at the same time that the Cypriots’ salaries remain the same”, Chairman of the Pancuprian Real Estate Agents Association, Solomon Kourouklides said.
“Given the Central Bank’s decision to cut the lending ceiling for the purchase of the second home, which affected Paphos mostly due to its external demand, sales will slow down”, Mr. Kourouklides added.
As for the property prices, there are no expectations that prices will drop. “Prices will not drop but marketability will be reduced. The growth rate will slow down compared to 2007. This slowdown will be stronger for the flats and houses”, Mr. Kourouklides noted.
VAT
The impressive increase in the purchase and sale of properties in 2007 is related to the expectations for an imposition of 15% VAT on plots. “We have been informed by the government that the imposition of VAT has been postponed until 1/7/2008. They say that they will try to extend it for 1-2 years more”, Mr. Kourouklides said.
Mr. Petrides reiterated, however, that the terms of the VAT imposition are still ambiguous. “It has not been clarified yet whether the term ‘building land” will include the new plots or the fields and the existing plots. We believe that the VAT must be imposed on new plots only”, he concluded.
Construction boom slows down
Stockwatch
First Published: 19/03/2008 13:32:24
According to Eurostat data released on Wednesday, construction output in Cyprus slowed down, boosting estimates that the island’s economy will grow slower in 2008. Specifically, construction output in the fourth quarter of 2007 grew by 3% compared to 9% in the third quarter of 2007, 7.5% in the second quarter of 2007 and 4.2% in the first quarter. The growth rate of the construction sector, which is 8.5% of the Cypriot GDP, is smaller than that of economy, which stood at 4.3% in the fourth quarter of 2007.
Eurostat’s figures confirm forecasts that the sector of constructions, which contributed heavily to the fast GDP growth in the past five years, will slow down. Besides, the Finance Ministry expects that GDP growth will decline to 4.6% in 2008, 4.2% in 2009 and 3.3% in 2010. However, the current figures show that slowdown might be larger and steeper than the Ministry’s forecasts.
The construction slowdown is connected with the deterioration of the conditions in the property market, market experts support. “The Central Bank’s move to cut the lending ceiling for the purchase of a home has contributed to the negative climate”, they said.
The anticipated slowdown in constructions – especially in Paphos – is more than obvious in the latest CYSTAT data on building permits. The area of the licensed projects in Paphos recorded a drop of 10.1% in 2007.
The sudden slowdown in constructions will spark fresh talks for the state’s development expenditure, which will be revaluated according to Finance Minister, Charilaos Stavrakis.
Stockwatch
First Published: 19/03/2008 13:32:24
According to Eurostat data released on Wednesday, construction output in Cyprus slowed down, boosting estimates that the island’s economy will grow slower in 2008. Specifically, construction output in the fourth quarter of 2007 grew by 3% compared to 9% in the third quarter of 2007, 7.5% in the second quarter of 2007 and 4.2% in the first quarter. The growth rate of the construction sector, which is 8.5% of the Cypriot GDP, is smaller than that of economy, which stood at 4.3% in the fourth quarter of 2007.
Eurostat’s figures confirm forecasts that the sector of constructions, which contributed heavily to the fast GDP growth in the past five years, will slow down. Besides, the Finance Ministry expects that GDP growth will decline to 4.6% in 2008, 4.2% in 2009 and 3.3% in 2010. However, the current figures show that slowdown might be larger and steeper than the Ministry’s forecasts.
The construction slowdown is connected with the deterioration of the conditions in the property market, market experts support. “The Central Bank’s move to cut the lending ceiling for the purchase of a home has contributed to the negative climate”, they said.
The anticipated slowdown in constructions – especially in Paphos – is more than obvious in the latest CYSTAT data on building permits. The area of the licensed projects in Paphos recorded a drop of 10.1% in 2007.
The sudden slowdown in constructions will spark fresh talks for the state’s development expenditure, which will be revaluated according to Finance Minister, Charilaos Stavrakis.
Cyprus property sales dive 17% in 1Q08
Financial Mirror
14/05/2008
Cyprus property sales registered a 17% Year-on-Year reduction in the first quarter of 2008 according to data from the Cyprus Land Registry. The value of property deals transacted in the first quarter of 2008 reached EUR 794 mln compared to EUR 956 mln in the same period in 2007 for a 17% decline. A similar decline was registered in the number of successful deals, which in 1Q08 tumbled 21% YoY to 4143 from 5202 in 1Q07.
The data confirm the widely held belief that the booming property sector, which had become the driving force supporting the Cyprus economy has entered a period of slowdown. The Chairman of the Cyprus Property Developers Association, Lakis Tofarides during a briefing at the House had warned that property sales had in fact declined by 30% with Larnaca and Ayia Napa areas the worst affected, while Nicosia was faring better, as its mostly supported by locals. The influx of Russian buyers had in part cushioned the impact in Limassol, while results in Paphos were mixed.
A slowdown in the property sector is certain to have a dire impact on state finances, which in recent years on the back of a booming property sector have shown an incredible improvement, moving from constant deficits into a surplus.
The fiscal surplus of Cyprus in 2007 stood at EUR 250.6 mln (CYP 146.7m) vs. a fiscal deficit of EUR 212.7 mln (CYP 124.5m) in 2006, according to data compiled by the Financial Mirror.
The reversal in deficit was the result of higher direct (EUR 2.23bln: +42% YoY) and indirect taxes (EUR 2.92bln: +19.5% YoY). Total revenues in 2007 reached EUR 6.88 bln (CYP 4.03bn) recording an increase of 10% YoY, whilst total expenditures were up by just 3% YoY to EUR 6.62bn (CYP 3.88bn).
In the first quarter of 2008, the capital gains revenue declined by 5% to EUR 90.9 mln from EUR 96 mln in 1Q07.
Financial Mirror
14/05/2008
Cyprus property sales registered a 17% Year-on-Year reduction in the first quarter of 2008 according to data from the Cyprus Land Registry. The value of property deals transacted in the first quarter of 2008 reached EUR 794 mln compared to EUR 956 mln in the same period in 2007 for a 17% decline. A similar decline was registered in the number of successful deals, which in 1Q08 tumbled 21% YoY to 4143 from 5202 in 1Q07.
The data confirm the widely held belief that the booming property sector, which had become the driving force supporting the Cyprus economy has entered a period of slowdown. The Chairman of the Cyprus Property Developers Association, Lakis Tofarides during a briefing at the House had warned that property sales had in fact declined by 30% with Larnaca and Ayia Napa areas the worst affected, while Nicosia was faring better, as its mostly supported by locals. The influx of Russian buyers had in part cushioned the impact in Limassol, while results in Paphos were mixed.
A slowdown in the property sector is certain to have a dire impact on state finances, which in recent years on the back of a booming property sector have shown an incredible improvement, moving from constant deficits into a surplus.
The fiscal surplus of Cyprus in 2007 stood at EUR 250.6 mln (CYP 146.7m) vs. a fiscal deficit of EUR 212.7 mln (CYP 124.5m) in 2006, according to data compiled by the Financial Mirror.
The reversal in deficit was the result of higher direct (EUR 2.23bln: +42% YoY) and indirect taxes (EUR 2.92bln: +19.5% YoY). Total revenues in 2007 reached EUR 6.88 bln (CYP 4.03bn) recording an increase of 10% YoY, whilst total expenditures were up by just 3% YoY to EUR 6.62bn (CYP 3.88bn).
In the first quarter of 2008, the capital gains revenue declined by 5% to EUR 90.9 mln from EUR 96 mln in 1Q07.
Real estate agents’ concerns on property prices
First Published: 26/08/2008 08:00:11
Stockwatch
The boom in the property market has been affected badly lately, since the sharp decline in Paphos has spread to other regions too. The increase in interest rates and inflation has pushed domestic demand down and together with the drop in external demand, the problems are acute in many Cyprus’s regions.
In his statements to StockWatch, Chairman of the Pancyprian Association of Real Estate Agents, Solon Kourouklides said that the drop in the construction activity in Paphos is more than real. “Sales have dropped significantly and the number of indisposed properties increases drastically. In the past three months, the drop is of 30-40% for the external market and 5% for the domestic, while forecasts say that it will continue until the end of the year – early 2009”, he said.
The decline, however, does not concern sales only, but prices too. “Comparatively, Paphos had the highest prices. Today, property prices show a drastic decrease of up to 30% or even 50% for flats”, Mr. Kourouklides noted.
The problems in the property market do not concern Paphos only. “The future of the property market is gloomy due to the slowdown in the number of sales across Cyprus. The commercial plots and land are exempted since the demand by foreign investors – Russians mostly – who want to expand their business activities to the island, is big”, he added.
Reasons
Mr. Kourouklides said that the positive course has been overturned due to:
- The interest rate increase by 125 base points in few months.
- The impacts from the CB Circular, which provided for the increase in the advance payment for the purchase of a home from 30% to 40%. Although it has been withdrawn, it still causes problems because it is too hard to regain the external demand.
- The global economic crisis that hit the British market, which is 80% of external demand.
- The devaluation of the sterling against the euro.
“The interest rate increase, which pushes monthly installments up, is the main reason for the drop in domestic demand, which will continue in the next few months”, Mr. Kourouklides stressed.
Other reasons are the drop in the purchasing power of the consumers due to the sharp increase in the price of fuel and the confusion from the upcoming imposition of 15% VAT on properties.
-----------------------------
Banks to impose stricter criteria
First Published: 25/08/2008 07:45:06
Last Updated: 26/08/2008 07:53:51
Stockwatch
The commercial banks decided to introduce stricter criteria for the loans granted to property investors and developers, increasing their charges. The international credit crunch and the drop in the price of properties in countries such as Spain, Estonia and the UK have shaken the banks, which decided to make borrowing more difficult. The first signs of the defensive policy were apparent since early 2008, but become clearer as time goes by.
Banks mostly focus on the foreign property investors since the crisis in their countries makes their ability to pay off the loans more uncertain. Certain banks think of introducing stricter criteria for them, especially with regard to the period given until they start to pay the loans.
Measures will also be taken for those developers with small volume of activities. Due to the sharp drop in external demand, many developers face financial problems. In order to deal with the issue, banks started to observe the development of the economic activities on a more systematic basis.
“If the crisis goes on, lending will become more difficult for other professional groups too, such as hoteliers and traders”, bank officials say.
At the current stage, many businessmen and householders go through hard times due to the installments that they are called to pay after the interest rate increase. The increase in ECB rates to ease inflation together with the consecutive increases in the price of the bank interest rates have pushed interest rates up to 125 base points. The banks have also increased their charges for relevant services.
Inevitably, the interest rate increase and the acceleration of inflation have affected the loan market. Bank officials say that demand for loans has dropped in the past few months, although part of this decline is seasonal. However, credit growth, which neared 32% according to latest figures – remains at 20-25%.
First Published: 26/08/2008 08:00:11
Stockwatch
The boom in the property market has been affected badly lately, since the sharp decline in Paphos has spread to other regions too. The increase in interest rates and inflation has pushed domestic demand down and together with the drop in external demand, the problems are acute in many Cyprus’s regions.
In his statements to StockWatch, Chairman of the Pancyprian Association of Real Estate Agents, Solon Kourouklides said that the drop in the construction activity in Paphos is more than real. “Sales have dropped significantly and the number of indisposed properties increases drastically. In the past three months, the drop is of 30-40% for the external market and 5% for the domestic, while forecasts say that it will continue until the end of the year – early 2009”, he said.
The decline, however, does not concern sales only, but prices too. “Comparatively, Paphos had the highest prices. Today, property prices show a drastic decrease of up to 30% or even 50% for flats”, Mr. Kourouklides noted.
The problems in the property market do not concern Paphos only. “The future of the property market is gloomy due to the slowdown in the number of sales across Cyprus. The commercial plots and land are exempted since the demand by foreign investors – Russians mostly – who want to expand their business activities to the island, is big”, he added.
Reasons
Mr. Kourouklides said that the positive course has been overturned due to:
- The interest rate increase by 125 base points in few months.
- The impacts from the CB Circular, which provided for the increase in the advance payment for the purchase of a home from 30% to 40%. Although it has been withdrawn, it still causes problems because it is too hard to regain the external demand.
- The global economic crisis that hit the British market, which is 80% of external demand.
- The devaluation of the sterling against the euro.
“The interest rate increase, which pushes monthly installments up, is the main reason for the drop in domestic demand, which will continue in the next few months”, Mr. Kourouklides stressed.
Other reasons are the drop in the purchasing power of the consumers due to the sharp increase in the price of fuel and the confusion from the upcoming imposition of 15% VAT on properties.
-----------------------------
Banks to impose stricter criteria
First Published: 25/08/2008 07:45:06
Last Updated: 26/08/2008 07:53:51
Stockwatch
The commercial banks decided to introduce stricter criteria for the loans granted to property investors and developers, increasing their charges. The international credit crunch and the drop in the price of properties in countries such as Spain, Estonia and the UK have shaken the banks, which decided to make borrowing more difficult. The first signs of the defensive policy were apparent since early 2008, but become clearer as time goes by.
Banks mostly focus on the foreign property investors since the crisis in their countries makes their ability to pay off the loans more uncertain. Certain banks think of introducing stricter criteria for them, especially with regard to the period given until they start to pay the loans.
Measures will also be taken for those developers with small volume of activities. Due to the sharp drop in external demand, many developers face financial problems. In order to deal with the issue, banks started to observe the development of the economic activities on a more systematic basis.
“If the crisis goes on, lending will become more difficult for other professional groups too, such as hoteliers and traders”, bank officials say.
At the current stage, many businessmen and householders go through hard times due to the installments that they are called to pay after the interest rate increase. The increase in ECB rates to ease inflation together with the consecutive increases in the price of the bank interest rates have pushed interest rates up to 125 base points. The banks have also increased their charges for relevant services.
Inevitably, the interest rate increase and the acceleration of inflation have affected the loan market. Bank officials say that demand for loans has dropped in the past few months, although part of this decline is seasonal. However, credit growth, which neared 32% according to latest figures – remains at 20-25%.
One of the biggest problems facing Cyprus at the moment is the lack of water and the lack of planning for water usage.
Cyprus is facing its biggest draught after 5 years of very low rainfall. Resevoirs are only 7% full. The two desalination plants can't handle the demand. A third one is being built (2 years away from being operational).
8 golf courses are already finished with 6 more to come. Total use of water for the 14 courses is the equivalent of water useage of a town of 160.000 people.
Water is being imported via ships from Greece (very expensive). This has been unsuccesful as the pipes to unload the water have been too short.
What will happen soon when tourist will not have enough water to fill pools and the golf courses turns brown. (at the moment tourist have been given more water than locals) Add to that increasing cost of agriculture due to poor harvests and expensive water. I was talking to a couple from Cyprus that had to pay €3500 to install a rainwater tank.
I think Cyprus has reached its limits for sustainable tourism.
Cyprus is facing its biggest draught after 5 years of very low rainfall. Resevoirs are only 7% full. The two desalination plants can't handle the demand. A third one is being built (2 years away from being operational).
8 golf courses are already finished with 6 more to come. Total use of water for the 14 courses is the equivalent of water useage of a town of 160.000 people.
Water is being imported via ships from Greece (very expensive). This has been unsuccesful as the pipes to unload the water have been too short.
What will happen soon when tourist will not have enough water to fill pools and the golf courses turns brown. (at the moment tourist have been given more water than locals) Add to that increasing cost of agriculture due to poor harvests and expensive water. I was talking to a couple from Cyprus that had to pay €3500 to install a rainwater tank.
I think Cyprus has reached its limits for sustainable tourism.
soldintime,
Where do you get that figure of 8 completed golf courses ?. Currently in the south there are: Tsada, Secret Valley, Aphrodite Hills and a nearly completed one close to Paphos airport. Outline pp has been granted for one near Polis - subject to the club sourcing its' own water supply.
Where do you get that figure of 8 completed golf courses ?. Currently in the south there are: Tsada, Secret Valley, Aphrodite Hills and a nearly completed one close to Paphos airport. Outline pp has been granted for one near Polis - subject to the club sourcing its' own water supply.
QUOTE (soldintime @ Aug 28 2008, 01:17 AM) 
One of the biggest problems facing Cyprus at the moment is the lack of water and the lack of planning for water usage.
Cyprus is facing its biggest draught after 5 years of very low rainfall. Resevoirs are only 7% full. The two desalination plants can't handle the demand. A third one is being built (2 years away from being operational).
8 golf courses are already finished with 6 more to come. Total use of water for the 14 courses is the equivalent of water useage of a town of 160.000 people.
Water is being imported via ships from Greece (very expensive). This has been unsuccesful as the pipes to unload the water have been too short.
What will happen soon when tourist will not have enough water to fill pools and the golf courses turns brown. (at the moment tourist have been given more water than locals) Add to that increasing cost of agriculture due to poor harvests and expensive water. I was talking to a couple from Cyprus that had to pay €3500 to install a rainwater tank.
I think Cyprus has reached its limits for sustainable tourism.
Cyprus is facing its biggest draught after 5 years of very low rainfall. Resevoirs are only 7% full. The two desalination plants can't handle the demand. A third one is being built (2 years away from being operational).
8 golf courses are already finished with 6 more to come. Total use of water for the 14 courses is the equivalent of water useage of a town of 160.000 people.
Water is being imported via ships from Greece (very expensive). This has been unsuccesful as the pipes to unload the water have been too short.
What will happen soon when tourist will not have enough water to fill pools and the golf courses turns brown. (at the moment tourist have been given more water than locals) Add to that increasing cost of agriculture due to poor harvests and expensive water. I was talking to a couple from Cyprus that had to pay €3500 to install a rainwater tank.
I think Cyprus has reached its limits for sustainable tourism.
I definetly agree with you that we have reached our limits for sustainable tourism.
however the water crisis is nothing new and it will pass. we have cyclical droughts here on the island and we are used to water cuts, although the last ones were 8 years ago. this particular water shortage has been exacerbated by bad management but it looks like the new desalination plants will be up and running by april so the problem should be solved. we have also had some rain over august which lends hope to a wet winter. we will see. we have been here before, the sky will not fall down. we just need to change our wasteful habits and that is all. there is more than enough water for everyone if managed correctly.
3500 euros for a what ? i guess you mean a second water tank ??? sounds like your friends were ripped off. i just bought a tank from Brakkas for 300 euros and fit it myself for 100 more in parts. took me three hours. rainwater butts are even cheaper to buy and fit.
p.s the minister of tourism made a statement a few weeks ago that all golf courses would be put on hold until the water problem has been solved.
Housing properties in the red
First Published: 01/09/2008 08:05:59
Last Updated: 02/09/2008 08:01:18
Stockwatch
According to a survey carried out and presented by StockWatch, the house and flat prices have dropped while property prices have stabilized. The survey, which includes real estate agents from all municipalities, shows that the crisis that started in Paphos has spread to the other seaside cities too except for Limassol, where the Russian purchases interest keep prices at last year’s level. The real estate agents talk about a significant decline in prices in non-seaside cities too.
The real estate agents noted that slump in sales to non-Cypriots expanded top domestic market too, exercising huge pressure on the property prices, which must be restrained so as not to decline further.
According to their statements to StockWatch, the house and flat prices have dropped, especially those destined to non-Cypriots. However, domestic demand faces problems too, since prices in non-tourist areas fall as well. On the other hand, it is quite impressing that the price of plots, fields, offices and shops has stabilized.
“Under the table” sales
StockWatch’s survey reflects the size of the crisis and the concerns for the prospects of the property market since the sellers have already admitted that they dropped their profits from 20% to 30% “under the table”.
For the time being, however, the advertising spots have not changed.
“If someone advertises in lower prices, the system will collapse”, one of the real estate agents said.
Sharp increase in the previous years
On the question whether there has been a drop or an increase in property prices, 11 of the 12 real estate agents replied that prices will drop or stabilize, while 1 said that prices will increase as a result of the increased construction cost.
The vast majority admitted that the price hikes in the past few years were unrealistic.
“We expect a depression just like in the CSE, where only the big funds survived”, an agent stated.
Another agent referred to a “tsunami that hits property market”, especially in external demand. “The sharp increase in property prices as a result of the huge demand by non-Cypriots and the uncertain future of economy make the investments in properties unfeasible for the Cypriots”, he noted.
According to latest Central Bank figures, the price of housing properties grew by 15% in 2007 against 10% in 2006, 12% in 2005, 20% in 2004 and 8% in 2003.
Reasons
Almost all real estate agents said that the drop in the domestic market is attributable to the bank interest rates, the inflationary pressures, and the increase in the deposits’ interest rate.
Part of them believes that the sales by the non-Cypriots, especially the British who cover 85% of the market, hit the stability of the property market.
“In order to take advantage of the difference between the sterling and the euro, the British sell their flats and houses either to buy in their country or in some other country such as Spain, where unsold houses and flats reach one million”.
Sharp drop of activity
The problem with the prices starts with the slump in demand. All 12 agents support that the in the seaside areas of Paphos, Larnaca and Ayia Napa the real estate agents are inactive.
“They beg us to sell them even a flat so as to give us 8% additional commission”, an agent from Nicosia said, while another from Larnaca stated that if the sales index stood at 100 in 2007, today fell to 5.
Limassol is the exception to the rule due to the Russians. “The Russians push sales up in Limassol and the city does not have to deal with the same problem”, the real estate agents concluded.
First Published: 01/09/2008 08:05:59
Last Updated: 02/09/2008 08:01:18
Stockwatch
According to a survey carried out and presented by StockWatch, the house and flat prices have dropped while property prices have stabilized. The survey, which includes real estate agents from all municipalities, shows that the crisis that started in Paphos has spread to the other seaside cities too except for Limassol, where the Russian purchases interest keep prices at last year’s level. The real estate agents talk about a significant decline in prices in non-seaside cities too.
The real estate agents noted that slump in sales to non-Cypriots expanded top domestic market too, exercising huge pressure on the property prices, which must be restrained so as not to decline further.
According to their statements to StockWatch, the house and flat prices have dropped, especially those destined to non-Cypriots. However, domestic demand faces problems too, since prices in non-tourist areas fall as well. On the other hand, it is quite impressing that the price of plots, fields, offices and shops has stabilized.
“Under the table” sales
StockWatch’s survey reflects the size of the crisis and the concerns for the prospects of the property market since the sellers have already admitted that they dropped their profits from 20% to 30% “under the table”.
For the time being, however, the advertising spots have not changed.
“If someone advertises in lower prices, the system will collapse”, one of the real estate agents said.
Sharp increase in the previous years
On the question whether there has been a drop or an increase in property prices, 11 of the 12 real estate agents replied that prices will drop or stabilize, while 1 said that prices will increase as a result of the increased construction cost.
The vast majority admitted that the price hikes in the past few years were unrealistic.
“We expect a depression just like in the CSE, where only the big funds survived”, an agent stated.
Another agent referred to a “tsunami that hits property market”, especially in external demand. “The sharp increase in property prices as a result of the huge demand by non-Cypriots and the uncertain future of economy make the investments in properties unfeasible for the Cypriots”, he noted.
According to latest Central Bank figures, the price of housing properties grew by 15% in 2007 against 10% in 2006, 12% in 2005, 20% in 2004 and 8% in 2003.
Reasons
Almost all real estate agents said that the drop in the domestic market is attributable to the bank interest rates, the inflationary pressures, and the increase in the deposits’ interest rate.
Part of them believes that the sales by the non-Cypriots, especially the British who cover 85% of the market, hit the stability of the property market.
“In order to take advantage of the difference between the sterling and the euro, the British sell their flats and houses either to buy in their country or in some other country such as Spain, where unsold houses and flats reach one million”.
Sharp drop of activity
The problem with the prices starts with the slump in demand. All 12 agents support that the in the seaside areas of Paphos, Larnaca and Ayia Napa the real estate agents are inactive.
“They beg us to sell them even a flat so as to give us 8% additional commission”, an agent from Nicosia said, while another from Larnaca stated that if the sales index stood at 100 in 2007, today fell to 5.
Limassol is the exception to the rule due to the Russians. “The Russians push sales up in Limassol and the city does not have to deal with the same problem”, the real estate agents concluded.
QUOTE (Radio @ Aug 29 2008, 10:06 AM)
soldintime,
Where do you get that figure of 8 completed golf courses ?. Currently in the south there are: Tsada, Secret Valley, Aphrodite Hills and a nearly completed one close to Paphos airport. Outline pp has been granted for one near Polis - subject to the club sourcing its' own water supply.
Where do you get that figure of 8 completed golf courses ?. Currently in the south there are: Tsada, Secret Valley, Aphrodite Hills and a nearly completed one close to Paphos airport. Outline pp has been granted for one near Polis - subject to the club sourcing its' own water supply.
Ok this article talks about 6 finished ones but still the overall of 14 as target.
http://www.cyprus-mail.com/news/main.php?i...09&cat_id=9
Still own supply means bore hole or desalination. If bore hole it will only lead to more water depletion.
QUOTE (Tuberider @ Sep 2 2008, 07:05 AM)
I definetly agree with you that we have reached our limits for sustainable tourism.
however the water crisis is nothing new and it will pass. we have cyclical droughts here on the island and we are used to water cuts, although the last ones were 8 years ago. this particular water shortage has been exacerbated by bad management but it looks like the new desalination plants will be up and running by april so the problem should be solved. we have also had some rain over august which lends hope to a wet winter. we will see. we have been here before, the sky will not fall down. we just need to change our wasteful habits and that is all. there is more than enough water for everyone if managed correctly.
3500 euros for a what ? i guess you mean a second water tank ??? sounds like your friends were ripped off. i just bought a tank from Brakkas for 300 euros and fit it myself for 100 more in parts. took me three hours. rainwater butts are even cheaper to buy and fit.
p.s the minister of tourism made a statement a few weeks ago that all golf courses would be put on hold until the water problem has been solved.
however the water crisis is nothing new and it will pass. we have cyclical droughts here on the island and we are used to water cuts, although the last ones were 8 years ago. this particular water shortage has been exacerbated by bad management but it looks like the new desalination plants will be up and running by april so the problem should be solved. we have also had some rain over august which lends hope to a wet winter. we will see. we have been here before, the sky will not fall down. we just need to change our wasteful habits and that is all. there is more than enough water for everyone if managed correctly.
3500 euros for a what ? i guess you mean a second water tank ??? sounds like your friends were ripped off. i just bought a tank from Brakkas for 300 euros and fit it myself for 100 more in parts. took me three hours. rainwater butts are even cheaper to buy and fit.
p.s the minister of tourism made a statement a few weeks ago that all golf courses would be put on hold until the water problem has been solved.
I read an article that over the last 20 years cyprus has had a decrease of 20% rainfall. However increased temperatures also created 20% more evaporation. That is a 40% drop. Desalination is an expensive way of getting water. It will increase the overall energy consumption and CO2 output.
Here in Malta 20% of all energy use goes towards desalination. Also no more permits for pools are being issued.
Crisis in property market expands
First Published: 29/09/2008 07:38:32
Stockwatch.com.cy
A new StockWatch survey among twenty developers and real estate agents carried out last week shows that crisis in the property market has expanded. It started to affect not only the plot prices but also the value of shops and offices.
The crisis is exceptionally intense on housing properties, where prices have declined up to 25%. Although in the previous survey crisis focused on tourist areas only, the new survey shows that it affects all housing properties in the market.
Sixteen of the total twenty developers support that prices fall. Only one sees that prices will go up and three expect that they will stabilize. Two developers stressed that conditions in Limassol differ due to the interest on behalf of the Russian businessmen.
All twenty developers and estate agents are actively involved in all cities of free Cyprus. The list includes businesses of all sizes, including the big.
Most of the respondents said that shop and office prices fall too, while others see a decline in plots and farms. At the previous StockWatch survey, none of the respondents expected a drop in this type of properties. Almost all anticipated that plot prices would stabilize.
According to a developer, he undertook the construction of a 23-flat complex in Larnaca in early 2008, but none of them has been sold yet. Two more developers said that they have not sold any property in 2008.
One of the developers that participated in the survey said: “The Company has a new flat of 90m2 in Protaras of £100 thousand. We tried to sell it for £90 thousand but it was not sold. We pushed the price down to £85 thousand, but still nothing. We will be forced to push price further down to sell it”.
A real estate agent from Larnaca said that the crisis does not concern housing properties only, but plots too. “About 5 months ago we were selling a plot in Alethriko for £120 thousand. Now we are forced to sell it for £90 thousand”, he noted.
“We are in the middle of a crisis and there’s no room for sentiment. Each one of us will have to push prices down to save his business”, another developer said.
“The market is moving in such a way so as to correct the fictitious property prices, which jumped 40-80% in 2005-2007”, a developer said.
According to latest central Bank data, housing property prices grew 15% in 2007 against 10% in 2006, 12% in 2005, 20% in 2004 and 8% in 2003. There are no official data for 2008 yet. These figures, however, concern all properties, while the developers referred to properties for sale.
“Two years ago we sold a property against £50 thousand. Now we ask for £200 – 250 thousand. With such prices, how we can avoid a crisis?”, he wondered.
Some of the respondents talked about a depression in the property market with a disproportionate increase in offer, unemployment and loss. Due to the prevailing conditions, certain developers became more restrained. “We are more restrained now. We build fewer flats and houses to avoid stock and bank pressures”, they said.
“We expect things will get worse in 2009. That’s why many businessmen have already reduced their staff. Also, a number of businessmen are not professionals and their activities are not based on strong foundations. Therefore, they are now forced to sell cheaper so at to pay their debts”, they said.
The cooperation between the developers and the real estate agents has been affected too. Some developers say that sell without the agents’ intervention. On the other hand, the real estate agents support that developers offer a 10-15% additional commission to them if they manage to sell.
First Published: 29/09/2008 07:38:32
Stockwatch.com.cy
A new StockWatch survey among twenty developers and real estate agents carried out last week shows that crisis in the property market has expanded. It started to affect not only the plot prices but also the value of shops and offices.
The crisis is exceptionally intense on housing properties, where prices have declined up to 25%. Although in the previous survey crisis focused on tourist areas only, the new survey shows that it affects all housing properties in the market.
Sixteen of the total twenty developers support that prices fall. Only one sees that prices will go up and three expect that they will stabilize. Two developers stressed that conditions in Limassol differ due to the interest on behalf of the Russian businessmen.
All twenty developers and estate agents are actively involved in all cities of free Cyprus. The list includes businesses of all sizes, including the big.
Most of the respondents said that shop and office prices fall too, while others see a decline in plots and farms. At the previous StockWatch survey, none of the respondents expected a drop in this type of properties. Almost all anticipated that plot prices would stabilize.
According to a developer, he undertook the construction of a 23-flat complex in Larnaca in early 2008, but none of them has been sold yet. Two more developers said that they have not sold any property in 2008.
One of the developers that participated in the survey said: “The Company has a new flat of 90m2 in Protaras of £100 thousand. We tried to sell it for £90 thousand but it was not sold. We pushed the price down to £85 thousand, but still nothing. We will be forced to push price further down to sell it”.
A real estate agent from Larnaca said that the crisis does not concern housing properties only, but plots too. “About 5 months ago we were selling a plot in Alethriko for £120 thousand. Now we are forced to sell it for £90 thousand”, he noted.
“We are in the middle of a crisis and there’s no room for sentiment. Each one of us will have to push prices down to save his business”, another developer said.
“The market is moving in such a way so as to correct the fictitious property prices, which jumped 40-80% in 2005-2007”, a developer said.
According to latest central Bank data, housing property prices grew 15% in 2007 against 10% in 2006, 12% in 2005, 20% in 2004 and 8% in 2003. There are no official data for 2008 yet. These figures, however, concern all properties, while the developers referred to properties for sale.
“Two years ago we sold a property against £50 thousand. Now we ask for £200 – 250 thousand. With such prices, how we can avoid a crisis?”, he wondered.
Some of the respondents talked about a depression in the property market with a disproportionate increase in offer, unemployment and loss. Due to the prevailing conditions, certain developers became more restrained. “We are more restrained now. We build fewer flats and houses to avoid stock and bank pressures”, they said.
“We expect things will get worse in 2009. That’s why many businessmen have already reduced their staff. Also, a number of businessmen are not professionals and their activities are not based on strong foundations. Therefore, they are now forced to sell cheaper so at to pay their debts”, they said.
The cooperation between the developers and the real estate agents has been affected too. Some developers say that sell without the agents’ intervention. On the other hand, the real estate agents support that developers offer a 10-15% additional commission to them if they manage to sell.
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