The property market in Cyprus has seen strong price appreciation in recent years, with high end prices in Nicosia, Limassol and Larnaca doubling in the past four years and tripling in Paphos.
The property market has been supported by the recovery in the Cypriot economy in recent years, international growth (offshore services and tourism) and leading banks’ focus on mortgage lending.
The recent rapid housing market growth has led to concern at the Central Bank of Cyprus. This concern is understandable given that the rate of increase has been substantial.
However, Citigroup analysts on a recent fact finding mission to Cyprus note that high-end prices in the major Cypriot towns such as Nicosia and Limassol of CYP 1,500-1,700 per square metre, or € 2,550 – 2,900/square metre, are not high by European standards.
Similarly, top-end Paphos, where much of the British tourism and home buyers are concentrated, priced at about € 4,500/square metre is below the top end for luxury properties in Europe. Even at Aphrodite Hills, considered the very top end of Cypriot residential tourism, prices are about € 5,000 (for apartments) to € 8,500 (for high-end villas), according to Citigroup analysts.
An analysis of new housing starts in Cyprus indicates that (a) the numbers are relatively small, and (b) the buyers are foreign dominated. The market is still relatively limited and focused on foreign buyers. New housing starts were about six thousand last year and should be about eight thousand this year, according to Citigroup projections.
Copyright © Financial Mirror 2007
