RICS/KPMG property price & rental index Q1 2024

Nigel Howarth
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RICS/KPMG property price & rental index Q1 2024

The latest quarterly publication of the RICS Cyprus Property Index with KPMG in Cyprus records the property price and rental index, tracking property and rental prices across all Cyprus districts and main property types.

Speaking on behalf of KPMG in Cyprus, Christophoros Anayiotos, Head of Real Estate Industry Group, said:

“According to the first quarter of 2024 data, the market has shown stabilisation for most of the property categories, apart from Apartments which continue their upward movement, with notable increases in Nicosia and Paphos.

“Houses recorded increases in Nicosia but remained stable in other districts.

“Warehouses and Offices recorded marginal increases, with the best performers being Nicosia for Warehouses and Larnaca for Offices.

“Retail recorded zero increases, with a marginal drop in Larnaca, continuing the trend from the fourth quarter of 2023.

Declines were recorded in Warehouse values in Limassol and Paphos, while Paphos recorded a decline in Retail, also.

“Rental values showed increases, with residential sector properties (apartments, houses) taking the lead.

“All in all, the Index shows signs of stabilisation in most categories with some positive performances also noted”.

Speaking on behalf of RICS, Simon Rubinsohn, RICS Chief Economist, commented:

“The Cypriot economy continues to be underpinned by the firm trend in domestic demand even if concerns persist about the scale of the current account deficit.

“This generally positive picture continues to underpin the real estate market as highlighted both in this report and the improvement in sentiment captured by respondents from Cyprus in the recently released Q1 RICS Global Commercial Property Monitor.”

Extracts from the price and rental index

Market values year-on-year

During 2024 Q1, solid increases were recorded in Apartment prices, with Houses posting more modest gains. Offices and Warehouses also saw small rises over the period, whilst, in contrast, Retail prices were slightly lower, continuing the trend from 2023 Q4.

  • Apartments +9.30%
  • Houses +5.49%
  • Retail premises +0.08%
  • Warehouses +3.75%
  • Offices +2.54%

Holiday home prices

Holiday assets (Apartments & Houses) recorded almost no increases in Q1 in contrast to the generally positive trend in recent years.

  • Holiday apartments +6.72%
  • Holiday houses +5.47%

Rental values year-on-year

Year-on-year, rental values showed increases in all asset categories, the highest being in Apartments, followed closely by Houses. Retail and Warehouse asset classes are at the lower end of the scale, recording small, if not marginal, increases.

  • Apartments +10.57%
  • Houses +9.55%
  • Retail premises +0.98%
  • Warehouses +1.82%
  • Offices +5.53%
  • Holiday apartments +7.44%
  • Holiday houses +6.45%

Rental yields

Largest increases in rental yields were in Offices followed by Houses.

Retail and Apartment and holiday properties recorded marginal increases.

  • Apartments 5.44%
  • Houses 2.97%
  • Retail 5.83%
  • Warehouse 4.22%
  • Office 5.51%
  • Holiday Apartments 5.75%
  • Holiday Houses 2.74%

Notional buildings

The RICS Cyprus Property Price Index with KPMG in Cyprus monitors hypothetical or notional buildings, each having specific characteristics. The methodology underpinning Index was developed by the University of Reading.

The price per sqm is based on the Gross External Area of the property (as defined in the RICS’ Code of Measurement Practice 8th Edition), which includes the living area and covered verandas but excludes common areas.

The estimation of price levels is carried out by accredited RICS property professionals who are active in the relevant markets.

Further reading

The full publication can be found on the RICS website at The RICS Cyprus Property Index with KPMG in Cyprus.

Holiday home prices hit eight-year high

Kyriacos Kiliaris
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Holiday home prices hit eight-year high

If you’re in the market for a vacation home on the island, you might be in for a sticker shock, as sale price and rental rates for these properties have soared to eight-year highs, showing that the sector has rebounded fully from the Covid-19 pandemic.

Rental rates for apartments and vacation homes have reached their highest levels since 2016, with prices more than doubling in Limassol, according to property experts.

According to data from Danos International Property Consultants and Valuers’ reports, rental rates across Cyprus have surged, with vacation apartment rates up by 80 per cent and vacation home rates by 60 per cent compared to 2016.

When it comes to purchasing a holiday home, prices have climbed by about 40 per cent for apartments and 20 per cent for homes.

The rental rates (monthly) and sale prices for holiday apartments and homes had been climbing steadily from 2016 to 2019, to take a nosedive in 2020 due to the Covid-19 pandemic, which saw the island follow the rest of the world into lockdown.

Rental and purchase prices started climbing again from 2022, hitting record highs this year.

Larnaca leads the pack in rental rate increases for holiday homes, with rates up by 74 per cent since 2016 and by 41 per cent since 2019.

One must note that many of these holiday homes are also used as permanent residences, due to the limited supply.

Current rental rates for holiday apartments and homes range from €25 to €30 per square metre, compared to €18 to €22 in 2019. These rates depend on factors like age, location, and view.

Paphos follows Larnaca in terms of rental rate increases for holiday apartments and homes.

The average rent has increased by 24.5 per cent since 2019, with rates ranging from €25 to €30 per square metre. Lower rates are available for second-tier properties.

Surprisingly, Limassol is in third place for rental rate increases in seaside holiday homes, despite holiday homes in the coastal city remaining the priciest.

Rental rates in Limassol have climbed by 16.2 per cent since 2019, with the gap between vacation homes and other districts widening.

Current rental rates range from €23 to €70 per square metre, compared to €20 to €60 in 2019.

Holiday homes in Limassol are popular as permanent residences if they’re near amenities and business hubs, due to the shortage of housing properties.

In Famagusta, rental rates are climbing at a similar pace to Limassol, with holiday apartment and home rents up by 16 per cent, ranging from €21 to €25 per square metre for high-standard properties.

As for sale prices, Limassol’s holiday homes remain the priciest, with rates exceeding €4,000 per square meter. That’s a 20 per cent increase since 2019, suggesting more interest in buying rather than renting. The average increase since 2016 is estimated at 30 per cent. In Famagusta, sale prices have risen by about 20 per cent since 2019, averaging between €2,760 and €3,000 per square metre.

Larnaca ranks next in sale prices for holiday homes and apartments, with a 7 per cent increase since 2019. Prices range from €2,300 to €2,900 per square metre.

In Paphos, sale prices for holiday apartments and homes have shown a slight increase, creating some investment opportunities due to the lower rent increase. The cost of buying a holiday home in Paphos has risen by about 15 per cent since 2019, with prices averaging around €3,000 per square metre.

About the author

Kyriacos Kiliaris is Chief Marketing Officer at Danos International Property Consultants & Valuers.
CM

Building permits on the rise in February

Editorial
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Building permits on the rise in February

The number of building permits in Cyprus issued by municipal and district authorities rose to 706 in February, up from just below 600 each in January and December, according to the Statistical Service Cystat.

This helped increase the total number of permits issued in the first two months of the year to 1,293, up 13% from 1,143 in January-February last year.

According to Cystat, the issue of building permits constitutes a leading indicator of future activity in the construction sector.

The total value of the permits reached €248.9 million in February and the total area 202,600 square metres.

These building permits are for the construction of 919 residential buildings, of which 309 were for single or double housing units, 482 residential apartment blocks and 118 mixed-use buildings (residential and commercial blocks).

During the January-February period, the total value of permits increased by 16.9% year-on-year from €402.05 million to €470.2 million, and the total area by 14.3% from 350,662 sq.m. to 400,750 sq.m.

The number of dwelling units increased by 13.4% in the first two months of the year compared to January-February last year, from 1,546 to 1,703.

The data is based on residential and non-residential buildings as well as other construction activities such as civil engineering projects, division of plots and road construction, by district (both urban and rural areas).

Cyprus Building Permits

Overseas buyers interest in Paphos & Limassol waning

Nigel Howarth
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Overseas buyers interest in Paphos & Limassol waning

The latest analysis of sales contracts issued by the Department of Lands and Surveys reveals that overseas buyers appear to be turning away from Paphos and Limassol and choosing to buy in the less expensive districts of Larnaca and Famagusta.

Overseas sales in Larnaca have increasing due to heightened interest from Israeli investors according to media reports. It seems that others overseas investors who are looking for a holiday home in the sun are turning to Famagusta.

But now the future of the Larnaca marina & port development appears to be in jeopardy according to reports in the Greek media. It seems likely that Alexis Vafeades, the Minister of Transport, Communications and Works, may terminate the contract with Kition Ocean Holdings and Around Town.

Speaking to Stockwatch the Minister said that “ “the contract agreed with the contractor company is very complicated.

“However, in case of its termination, there is a provision according to which the management of the port, which is one of the main operational infrastructures of the state, must be transferred to the Port Authority within 30 days.”

The Minister went on to stress that “We have now lost all hope that the contractor company intends to renew the €10 million guarantee and proceed with the construction of the project, so we are acting based on our own obligations to protect the public interest.”

Only time will tell how this will affect future property sales in Larnaca district.

Why waning interest from overseas buyers?

One possible reason for the decline in overseas buyers in Paphos & Limassol is the revised rules for obtaining permanent residency in Cyprus, which currently requires an applicant to invest a minimum of €300,000 and have a secure annual income from abroad of €50,000 plus an additional €15,000 for their spouse and €10,000 for each child.

Parliament is currently discussing legislation to replace the Category F application process, which has seen no approvals in the last few years, despite still being theoretically active. The proposed regulations would lower the investment threshold to €250,000 and reduce the income requirement to €40,000 for the applicant, with an additional €10,000 for each dependent.

AKEL have also submitted a proposal to relax the law. They want the Minister of the Interior to allow foreigners to obtain citizenship even if they have insufficient knowledge of the Greek language. Applicants would need to have a good grasp of the basic elements of the contemporary political and social reality of the Republic of Cyprus.

Property sales – market segment analysis

Sales to the domestic (Cypriot) market

The total number of sales to the domestic market in April 2024 rose 34% compared to the same period last year and accounted for 63% of the total number of sales in the month.

With the exception of Paphos (where sales fell by 26%) sales in Limassol, Nicosia, Larnaca, and Famagusta rose by 55%, 48%, 36% and 7% respectively.

Domestic Sale Transactions – 2023/2024 Comparison
Domestic Sale Transactions – 2023/2024 Comparison

Sales to the domestic market in the first four months of 2024 reached 3,001; an increase of 20% on the 2,504 achieved in the same period of last year. With the exception of Famagusta, all districts recorded gains.

Domestic Property Sale Transactions – 2023/2024 Comparison (Jan-April)

Sales to the overseas market

The total number of property sales to the overseas market (both EU and non-EU citizens) in April 2024 fell 8% compared to to the same month last year.

Increased sales in Larnaca, Famagusta, and Nicosia were wiped out by falls of 46% in Paphos and 6% in Paphos. (However, it’s worth nothing that in terms of the number of properties sold to overseas buyers, Paphos was still the most popular.)

Property sales to the overseas market – 2023/2024 Comparison

On an annual basis, overseas sales rose by 16%, with increased sales in all districts with the exception of Famagusta. Despite the recent fall in sales, 2023 saw the highest number of sales to the overseas market since the market peaked in 2007.

Sales to the overseas market in the first four months of 2024 reached 1,962; a fall of 13% on the 2,262 achieved in the same period of last year. With the exception of Limassol & Paphos, all districts recorded gains.

Overseas Property Sale Transactions – 2023/2024 Comparison (Jan-April)

Property sales to EU citizens

Sales to EU citizens rose 4% in April compared to the same month last year accounting for 11% of the total number of sales (1,366) achieved during the month.

While sales rose by 133% in Nicosia, 60% in Larnaca and remained steady in Famagusta, they fell 36% and 13% in Limassol and Paphos respectively.

Overseas (EU) Sale Transactions – 2023/2024 Comparison

Sales to EU citizens in the first four months of 2024 reached 563; a fall of 4% compared to the same period last year, with only Nicosia and Famagusta gaining ground.

Property Sale Transactions EU Nationals – 2023/2024 Comparison (Jan-April)

Sales to non-EU citizens

Sales to non-EU citizens fell 12% in April compared to the same month last year accounting for 27% of the total number of sales (1,366) achieved during the month.

While sales rose in Famagusta and Larnaca, they sell in remaining three districts

Overseas (Non-EU) Sale Transactions – 2024/2024 Comparison

Sales to Non-EU citizens in the first four months of 2024 reached 1,399; a fall of 17% compared to the same period last year, with Limassol and Paphos being worst affected..

Property Sale Transactions Non-EU Nationals – 2023/2024 Comparison (Jan-April)

Property Sales Market Segment Analysis Jan-April 2024

Total Number of Sale Contracts Deposited 2008 to 2024 in the First Four Months of Each Year

Housing prices maintain upward trend

Jonathan Shkurko
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Housing prices maintain upward trend

The upward trend in housing prices, primarily driven by increases in apartment prices, persisted during the fourth quarter of 2023, according to a report published by the Central Bank of Cyprus on Tuesday.

Based on the findings of the report, housing prices continued to rise despite a slight decrease in demand, as reflected in comparative sales data from the department of lands and surveys.

The increase in mortgage interest rates significantly affected the demand for new housing loans. Also, demand from foreign buyers and construction material prices stabilised, leading to more moderate short-term increases in the Housing Price Index (HPI).

According to the department of lands and surveys, the total number of sale deeds submitted to district offices, covering all types of properties, recorded a slowing increase on an annual basis during the fourth quarter of 2023.

The increase in overall property demand came from domestic buyers, while a decrease was observed in the number of sale deeds submitted by foreign buyers.

On the demand side, the total value and number of transactions of residential properties – including houses and apartments – in 2023 experienced a slight decrease compared to 2022. This was influenced by the continuous increase in mortgage interest rates, which was recorded during the fourth quarter of 2023, as well as the decrease in the approval of new housing loans in 2023 compared to 2022.

Furthermore, there was relatively greater demand for apartments compared to houses, stemming from buyers’ preference for smaller properties, as reflected in the reduced square metres per residential unit for which building permits were issued.

On the supply side, according to market factors, it remained limited compared to the high levels of demand, a significant factor contributing to the increase in the HPI.

However, the increase in the number of residential units for which building permits were issued in 2023, combined with the fact that there was already a significant number of construction projects underway, is expected to increase the supply of residential properties in the medium term for the upcoming period, which, in turn, is expected to alleviate the pressures for price increases.

Meanwhile, the HPI during the fourth quarter of 2023 recorded a 2.3 per cent increase, similar to the 2.2 per cent rent recorded in the previous quarter.

The slight rise in the HPI, nevertheless, resulted from a 1.8 per cent increase in house prices and a 3.2 per cent increase in apartment prices.

On an annual basis, there was an 8.3 per cent increase in housing prices during the fourth quarter of 2023, compared to 7.6 per cent in the previous quarter. Apartment prices increased by 12.7 per cent and house prices by 5.7 per cent.

Quarterly housing prices across all provinces saw an increase for the fourth consecutive quarter during the last quarter of 2023. Specifically, the Nicosia district witnessed a 1.5 per cent increase, Limassol 3 per cent, Larnaca 2.5 per cent, Paphos 2.7 per cent, and Famagusta 2.1 per cent.

Regarding annual changes in Property Price Indices (PPI) by province, increases were recorded across the board. Nicosia saw a rise of 5.1 per cent, Limassol 10.7 per cent, Larnaca 11 per cent, Paphos 8.3 per cent, and Famagusta 9.5 per cent.

Quarterly house prices exhibited increases in all provinces, with Nicosia rising by 1.5 per cent, Limassol by 2.5 per cent, Larnaca by 1.2 per cent, Paphos by 1.7 per cent, and Famagusta by 1.4 per cent.

CM

Decline in Swiss franc loans

Nigel Howarth
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Decline in Swiss franc loans

Recent data from the Central Bank of Cyprus reveals a marked decline in Swiss franc loans, indicating a significant shift in the borrowing landscape of the island’s banking system.

As of the end of March 2024, existing Swiss franc loans are being actively serviced, with some being converted to euros or sold by banks. The euro now dominates the borrowing market, with a total borrowing volume of €25.11 billion, including €22.59 billion in euro-denominated loans.

In contrast, Swiss franc loans have dwindled to €99 million, a stark drop from the €2 billion recorded in 2005, which had previously posed significant challenges for borrowers and sparked discussions in the Parliamentary Committee on Economic Affairs.

The surge in Swiss franc loans in Cyprus began in 2006, heavily promoted by banks in 2007 and 2008 due to the attractive low interest rates and favourable exchange rate against the euro, sometimes differing by up to 1%. However, problems emerged in 2015 when the Swiss franc appreciated against the euro, increasing repayment burdens for borrowers.

This trend was not unique to Cyprus, affecting Eastern European countries such as Hungary, Serbia, Poland, Romania, and Croatia.

In 2022, a judge at the Paphos district court ruled in favour of borrowers whose Swiss franc loans were granted by the National Bank of Greece (Cyprus) Ltd; the borrowers were represented by the Zambartas law firm.

The judge hearing the case ordered the bank to convert their Swiss franc loans into Euros at the exchange rate that applied at the time the loan was granted.

The judge also ruled that bank was not entitled to charge interest on the late payments and rejected the bank’s claim to impose interest at 14% on the loan closure amount.

The judgement followed similar court rulings in favour of Swiss currency borrowers in Poland, Hungary and Croatia.

The banking system also includes deposits in various currencies. At the end of March 2024, total deposits amounted to €52.23 billion, with €45.85 billion in euros. Other deposits included €5.33 billion in US dollars, €32.2 million in Swiss francs, €9.4 million in Japanese yen, and €730.6 million in Sterling.

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