Highest property prices and rents in Limassol

Editorial
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Highest property prices and rents in Limassol

THE INCREASE in tourism and home-sharing practices on platforms like Airbnb has led to a spike in property price and rental increases especially in Limassol, according to recently-released findings by DANOS International Property Consultants (DANOS / BNPPRE).

The report underlines the importance of tourism as a driving force of the Cyprus economy, attracting large investments that lead to upgraded properties and contribute to the steady improvement of the island’s real estate market.

At the same time, the country’s highly sought-after passport (through investment) is beginning to pay off with dozens of foreign investors purchasing new properties in Cyprus and gaining residency rights.

More specifically, according to DANOS data for the January-March 2019 period, average apartment prices rose by 1.6%, compared with a 1.5% increase in the corresponding period of 2018, driven by a significant 2.5% increase in the selling prices of flats in the Nicosia area.

The going rates in Limassol meanwhile, increased to 1.8%, and to 0.7% in the other cities and areas across Cyprus.

Meanwhile, increased demand in properties with the purpose of leasing these out short term for tourism accommodation purposes (Airbnb-style) has also played a decisive role in the increase of prices.

Demand for commercial properties with a particular focus on office spaces and retail buildings also rose in the first quarter of 2019 with prices for high-end office space and stores up by 3.5% and by 2.1%, respectively, compared to the first quarter of 2018 with growth rates even higher in Limassol at 4.6% and 4%, respectively.

Furthermore, investor interest in hotels in the first three months of 2019 saw a 5% rise in the number of new building permits.

In 2019 DANOS is expecting further positive growth due to the higher demand and this is expected to stabilise over the next couple of years.

The most significant issues related to the real estate are the high volume of NPLs, the large number of properties that now are under bank ownership, the political pressures, the government policy in regard to housing and lastly the Brexit uncertainty, said DANOS.

Indicative sale and rental prices for Limassol

Asking prices for apartments on the seafront fetch €4,000 /sqm to €10,000 /sqm in central areas from €2,000 /sqm to €4,000 /sqm, central seafront plots range from €800, houses on the seafront are around €4,000/sqm (including central areas) and for commercial property its around €4,000 /sqm.

Rental values for apartments at seafront start from €12 /sqm (including central areas). For commercial properties on the seafront, the range is from €20 /sqm to €30 /sqm and up to €25 / sqm in central areas of the town.

The types of properties that are mostly in demand are apartment units in town centres and houses in sought-after suburbs.

No more mockery it’s a landslide

Bejay Browne
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No more mockery it’s a landslide

RESIDENTS of Pissouri whose homes are crumbling due to a landslide, and their supporters, are continuing to press for action and are calling on the state to stop wasting time and to assume responsibility.

A news release from the residents said: ‘No more mockery, it’s a landslide.’ The announcement was from the Pissouri Housing Initiative Group (PHIG) and was also signed and supported by Pissouri community council, and political parties Akel, Greens, Citizens’ Alliance, Animal Party, and Elam, said lawyer for the homeowners, Elina Zoi.

“It is made in response to Auditor-general, Odysseas Michaelides’ comments at the beginning of the month that the state has no obligation to compensate the homeowners of damaged properties,” she said.

This move came after it seemed as though the residents’ long battle for compensation was coming to a close.

“The Interior Ministry said that the Auditor-General  pointed out that a decision to compensate the affected owners by the government will create a precedent for similar cases and is basically a gift to the developers who sold the residences to unsuspecting buyers,” said the announcement. “The victims of the landslide are victims of a natural disaster. Their lives are at risk every day.”

The group call on the Auditor-General to visit the area and see the landslide for himself, and to investigate state officials who have “wasted €870.000 over seven years to cover up the problem with the intention of forcing the residents to leave on their own.”

They also question who has been advising the Ministry of Interior that it’s not a landslide, but “settlement” and “subsidence”, and question where the water came from.

“There is no sewage system, or rainwater drainage network and the landslide in today’s affected area was activated the year following the completion of the project in the neighbouring area on Anexartisias Street,” the residents said.

In 2015, property owners formed PHIG and paid thousands of euros to obtain studies and papers from various renowned international experts, as well as satellite imaging, at a cost of €25,000. Then the land movement was up to 40 cm per year, it is now almost that figure every month.

The group also call on the Attorney-General to advise on the responsibilities of the state for the protection of the right to property under Article 23 of the Constitution and the right to a decent existence under Article 9.

“We will provide the AG with all the information that we have given to the authorities and the House of Representatives. We are sure that he will not receive it from the ministry of the interior which will try to concoct an opinion that will absolve its employees and condemn the victims of the landslide.”

Last weekend, the community of Pissouri blocked the Limassol to Paphos highway to demonstrate against the lack of compensation from the state and support the victims of the continuous and accelerating land slippage, which has caused homes to crumble.

Homeowners took the streets because human rights are being violated and people’s lives and property are at risk, said the group.

“The government has been mocking residents for seven years and keeps repeating allegations that have proven to be false.”

The announcement also highlights what it refers to as ‘untruths’ from the Ministry of the Interior, who, “force people in European Cyprus to live in conditions that resemble a war zone but in a time of peace.”

They also note that the houses with structural problems are only because they had the misfortune to be on the fissures created by the active landslide.

“Untruthfully, the Ministry refers to lakes that were filled in; it seeks to create misconceptions. The aerial photographs of the land office show that the area hasn’t changed since 1963.”

They add that after drilling boreholes in 2013, the geological surveys department informed the ministry that there is a landslide and that multiple letters have been sent confirming this opinion.

“If the state had assumed responsibility and constructed the necessary infrastructure recommended by the geological surveys department as early as 2012, then it would not have wasted €870,000 in filling fissures and repairing roads and pavements. Fewer houses would have been destroyed and residents wouldn’t live in a constant nightmare that sends them to the hospital with heart attacks and strokes. The problem would not have spread so much so that now even the village is in danger.”

The announcement also requests that the technical chamber ETEK clarify the responsibilities of a civil engineer and what they should check.

“How is it possible for any professional to be responsible for not predicting risks for which they had no information?”

Solution for trapped buyers edging closer?

George Psyllides
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Solution for trapped buyers edging closer?

Solution for trapped buyers edging closerTHE LAND REGISTRY has processed 6,000 applications concerning trapped real estate buyers while an additional 1,140 were at an advanced stage, MPs heard on Wednesday, as the House legal affairs committee discussed amendments to current legislation to make it more effective.

“Today too there was an exhaustive discussion based on the amended text we have presented, some suggestions were made by the land registry and the finance ministry and the law proposal will be discussed on May 2 so that the matter goes to plenum on May 10, the last before the European elections,” committee chairman, Disy MP, Giorgos Georgiou said.

In 2015, parliament passed a law aimed at helping thousands of buyers who had paid for their properties in full but had not been issued with their Title Deeds because the developers had their own mortgages on the properties.

Since developers’ land and buildings are counted as assets that need to be offset against their debt to banks, this gave banks a claim on properties that had been mortgaged by developers.

The head of the Land Registry had been granted the authority to exempt, eliminate, transfer and cancel mortgages and or other encumbrances, depending on the case and under certain conditions, as the state sought to sort out the Title Deed mess.

However, banks contested the law and won rulings that it was unconstitutional.

Courts said it violated Article 26 of the constitution, which affords individuals the right to enter freely into any contract.

But in September 2017, a Larnaca court upheld the law, allowing trapped property buyers to obtain their Title Deeds irrespective of the developers’ own commitments to banks.

The final say now lies with the Supreme Court.

Georgiou said they believed some amendments they planned to add would remove the reasons for which certain court decisions ruled the law unconstitutional.

The committee’s intention was to tackle any problems in the event the Supreme Court ruled in favour of the banks.

The problem affects thousands of Cypriot and foreign buyers who have also sought recourse in European courts.

Angry Pissouri residents block highway

Katy Turner
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Angry Pissouri residents block highway

Pissouri residents block highwayTHE COMMUNITY of Pissouri blocked the Limassol to Paphos highway on Sunday morning to demonstrate against the lack of compensation from the state for homes that are slipping down the hillside.

Demonstrators held banners over a bridge on the highway near Pissouri, while others stood in the road blocking traffic.

“The protest is taking place as we consider that the state is delaying to solve a problem that should have been resolved some time ago,” said community leader of Pissouri Lazaros Lazarou.

The person who is losing his house has no time to wait, he added, and the community expects the immediate support of these people, and support of the area so that the problem does not get worse.

“We demand what has happened in similar cases in other villages in Cyprus, where the state, in worse times than we are now facing, has moved entire villages. For us it is just one neighbourhood,” he continued.

He said he hoped the demonstration showed those who need to take the action to do it immediately as the demonstrators are prepared to step up measures.

One of the affected homes in Pissouri

Lawyer for the home owners Elina Zoi said according to the district office six homes have been branded too dangerous to live in while another 40 face problems, among which 15 are considered dangerous even though the owners continue to live in them as they have nowhere else to go.

“With the heavy rains this winter the situation has got much worse. The number of residents affected increases day by day,” she added, saying that every month the land moves by 30cm and problems are exacerbated by issues with electricity and water supply.

There is also an issue with the condition of the roads worsening, which means even those whose homes have no problems face difficulties.

In February the government agreed to compensate home owners in the Limnes area and to carry out a geological survey on the area.

After this announcement Greens’ MP Giorgos Perdikis said that the government moves at a snail’s pace. By the time measures are taken, he said, most of the buildings will have collapsed leaving scores of residents without a home.

In 2015, some of the property owners formed the Pissouri Housing Initiative Group (PHIG) and paid out thousands of euros to obtain studies and papers from various renowned international experts and also satellite imaging, at a cost of €25,000, which measures the movement of the land. According to the study, the movement is up to 40cm per year, which is a lot when it’s pressing against a house.

Damage includes cracks in interior and exterior walls, swimming pools, roads, pavements, footpaths, retaining walls, drains, water pipes and other infrastructure works.

The land slippage is due to failure to provide adequate infrastructure to manage groundwater, and allowing development to go ahead in the area. Residents blame authorities that have permitted large scale development but failed to carry out infrastructure works either to manage the groundwater, or to stabilise the sliding hillside.

Cyprus real estate investment: prospects & risks

Panos Danos
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Cyprus real estate investment: prospects & risks

WHEN it comes to investing in real estate, the Cypriot market is considered to be an increasingly attractive investment destination, which has been gaining more and more importance over the past 15 years.

We should now concentrate to establish Cyprus as a transparent, easy, safe and straightforward country to invest in.

The real estate market is moving in cycles and consists of several stages, expansion, stagnation and contraction. Cyprus is now in an up-market phase of the cycle in all market segments.

For several years, the housing sector has been continuously recording the demand that is two times higher than the new offer.

Large Complexes with 40 or more units, which are also the primary choice of local but mainly foreigner buyers, imply a phased construction that carries a price increase of an average of 5 percent with each new phase, which motivates buyers to opt for purchases at the earliest phases of the complex, because it takes 2 to 3 years on average for the completion of the construction of the entire complex, and the value of the property purchased at the beginning means there is an increase in the value of this property by as much as 20 percent.

On the other hand, the activity in the part of the retail market where we have about 180,000 square meters of malls currently under design or construction is also impressive, and it will increase the total offer of such space by almost 50 percent within the following two years.

A similar situation exists in the office space market, where record levels of demand are also being recorded, creating the needs for new business buildings, keeping rent levels very high – so the investment risk needs to be reduced.

The relatively inelastic offer and the fact that, in relation to the demand growth at this moment, the offer takes a few years to respond to it with a specific product, are precisely the reasons why real estate investment is riskier than investing in other forms of assets.

In order to reduce the potential risk, investors must try to anticipate trends in parts of the market in which they want to invest and to assess how and in which way the fundamental economic indicators will flow on one hand, and, on the other hand, how will the supply and demand flow on the part of the real estate market which is interesting to them.

In other words, the excess supply of a real estate type may result in a fall in prices, especially if it coincides with a negative economic environment.

It is desirable to consult experts who are engaged in this business, so that they can assess from a professional point of view whether the real estate has the potential for improvement and, as such, be adapted for a wider circle of buyers or tenants – it should be noted that, in all likelihood, Cyprus is competing with other EU countries such as Malta, Greece or Portugal with its offer and quality of construction.

EU reports Cyprus house prices up 3.5 per cent

Nigel Howarth
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EU reports Cyprus house prices up 3.5 per cent

HOUSE prices, as measured by the House Price Index, rose by 4.2% in both the euro area and the EU in the fourth quarter of 2018 compared with the same quarter of the previous year. The figures come from Eurostat, the statistical office of the European Union.

Compared with the third quarter of 2018, house prices rose by 0.7% in the euro area and by 0.6% in the EU in the fourth quarter of 2018.

Among EU Member States for which data are available, the highest annual increases in house prices in the fourth quarter of 2018 were recorded in Slovenia (+18.2%), Latvia (+11.8%) and Czechia (+9.9%), while prices fell in Italy (-0.6%).

Compared with the previous quarter, the highest increases were recorded in Slovenia (+6.5%), Latvia (+4.3%) and Malta (+3.8%), while decreases were observed in Denmark (-1.7%), Belgium (-0.5%), United Kingdom (-0.4%), Sweden (-0.2%), Italy (-0.2%) and France (-0.2%).

Eurostat reports the annual increase in house prices recorded in Cyprus in the fourth quarter of 2018 was 1.6 per cent, and a 3.5 percent increase over the previous quarter.

Further reading

Eurostat newsrelease 61/2019 – 11 April 2019

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