According to the seventh issue of the RICS (Cyprus) Property Price Index, average residential prices for houses and apartments fell by 1.0% and 2.7% respectively. Average rental values for apartments fell by 3.1%, retail units by 4.1%, warehouses by 5.4%, and offices by 2.0%. In contrast, rents for houses rose by 1.3%. Figures from the Land Registries across Cyprus reveal that the number of properties sold fell for the 16th consecutive month in October; the rate of the fall appears to be slowing. The area hit hardest by the decline is Larnaca, where sales slumped 27%. In Paphos they are down 22% and in Famagusta they have fallen 15%. Limassol seems to be weathering the crisis well with sales falling by just 0.2% over the year which has been attributed to an influx of Russian buyers.

Property experts believe the country’s favorable lifestyle and climate will continue to prove tempting to emigrating Brits. A large number of potential homeowners in the country are hoping to take advantage of the low prices which are currently on offer, as a result of the market crash.

Property valuer Polys Kourousides believes that the things will change in the next few months. He said that Limassol recorded an increase in August due to the purchase of properties by non-Cypriots, Russians mostly. Parliament’s approval of the draft law on the suspension/reduction in Property Transfer Fees will make a positive contribution to the market and it was actually one of the proposals made by the Valuers’ Association three years ago.

Meanwhile, The Vice Chairman and spokesman for the Real Estate Agents’ Association, Solomon Kourouklides, said that the biggest problem is the lack of liquidity and that the measures cannot change the market by themselves; further incentives are needed.

The third RICS Cyprus property Index is a quarterly price and rental index which is based on methodology of the University of Reading, UK. The RICS index is produced by the Cyprus department on the Royal Institution of Chartered Surveyors and Cypriot chartered quantity surveyors. There was a significant reduction in property transactions, particularly from overseas buyers during the first half of 2010 with the economy slowing down and the government’s income decreasing.

Towards the end of the second quarter, there were some early signs of stabilization, with buyers returning to the market taking advantage of lower prices for holiday homes. Also, some landmark projects received planning permission (Tersefanou Golf Course) or started construction (Limassol Marina).

The Property Price Index has recorded a speckled behavior in property prices across Cyprus major urban areas, with residential prices dropping across all districts and commercial prices fluctuating. Prices for both houses and flats fell by an average of 2.5%, with the biggest drop for houses taking place in Paphos (-4.0%) and for flats in Paralimni (-3.3%). Values of commercial properties generally fell across all cities by an average of 0.5% for retail and 2.1% for offices.

Meanwhile, Professor Patrick McAllister of University of reading (UK) said that yields on commercial property are quite low by European standards, but also hugely variable, even within Cyprus. The high prices of property in Cyprus especially houses compared to apartments are caused by a range of distortions in the local market.

According to the Cyprus Central Bank in its six-monthly bulletin reports, prices had decreased by 8% during 2009, although they predicted that they will remain stable throughout 2010. A spokesman for the Central Bank said that the “drop in housing property prices coincides with the weakening of construction activity in 2009.” The most recent Land Registry figures stated that the total sales for 2009 amounted to just over 8,000, compared with around 14,500 in 2008. Property experts agree that the market has been severely affected by a sharp drop in demand from foreign buyers.

However, the good news is although in 2009 saw an unprecedented drop in first-time enquiries, those who had delayed visits to look at property were starting to visit again this year, although in far smaller numbers than before the downturn. It seems that those who are keen to buy in Cyprus are sticking with it during the tough times.

Prospective buyers may be interested to know that, despite the economic recession, the Cypriot government is still investing in infrastructure. Property investment in Cyprus is of course depends on buyers circumstances, their lifestyle and what they want from their property in Cyprus. Buyers are naturally benefiting from the downturn as sellers offer significant reductions, particularly to cash buyers.

Panayiotis Michaelides, the firm’s marketing manager said that Aristo has seen growing interest from the Scandinavian market over the last four months, He said that Norway’s economy has been particularly resilient during the financial crisis with a relatively shallow recession and moderate increase in unemployment. Aristo has been selling to Scandinavian buyers for the last eight years, and has had an affiliate office in Stocholm for four years.

He commented: “Our exclusive partner, Agnar D. Carlsen, managing director of Norsk Megling, strongly believes the same as we do – Aristo and Norsk Megling joining forces can achieve quite good results under the given circumstances. We are now about to launch some new signature projects and we need to empower our position on these markets, Norway and Sweden being the two countries we believe have great potential for further growth.”
Aristo developers have begun a new marketing strategy separating its existing stock from its new luxury projects. Panorama Residences in Pissouri was launched in an attempt to attract buyers from the high-end of the market . Aristo is also awaiting government approval on ‘Venus rock’ project as it will be the biggest the island has ever seen. it is intended to be a €1 billion project covering around 10 million sq.m. of land.

The two developments are to be marketed separately from the company’s other products, which are aimed at mid to low-end buyers and now referred to as ‘Aristo Classic’.

According to the latest data from the Statistical Service Cystat, The revised data show that GDP in the first three months of the year rose in real terms by 0.1% over the previous quarter, having declined by 0.3% in the fourth quarter of 2009. However, the early flash estimate published in May estimated the GDP to have declined by 0.2% over the previous quarter in the Q1 and by 0.8% in the Q4.

According to the revised figures real GDP decline compared with the previous year was milder as a result of these revisions. Cystat reported that there was positive growth in banking activities and certain other services sectors, as well as improved relative performance in tourism, distributive trade and industry.

In good news for property investors in Cyprus, the island’s Central Bank said that Cypriot economy is expected to contract by 0.5 percent in 2010 but rebound in 2011 with growth of 1.3 percent. The Central Bank in its semi-annual report said its latest forecasts were in line with an expected drop-off in domestic demand and a slowdown in construction and tourism this year. Its previous forecast, issued in Dec. 2009, had Cyprus registering growth of 0.3 percent this year and 1.8 percent in 2011.

According to the latest Wealth Report compiled by Knight Frank and Citi Private Bank, many wealthy individuals regard property to be one of the best assets to have. A total of 71 per cent of those questioned claimed that 2010 would be a good time to make a property purchase, with its “tangible and straightforward” nature making it a good investment during tough economic times.

After a turbulent 2009 for the Cypriot housing market, news that property sales are beginning to pick up is likely to be welcomed by investors. Many overseas investors are looking for long-term returns and they are buying cheap and distressed properties in the country and waiting for improvements to materialize.

Many overseas investors are buying up distressed property from individuals who are struggling with loan payments. Solomon Kourouklides, president of the Cypriot real estate agents association said that the growth was probably a result of more opportunities opening up for buyers in the marketplace.

According to the figures released by the Department of Land and Surveys organisation, real estate sales were up 11 per cent during April, compared to 2009, and up 25 per cent in the first quarter of this year in comparison to last. Besides, the figures reveal that demand for foreign property was also beginning to re-appear, after a number of investors fled the market during the country’s economic troubles.

In the fourth quarter of 2009, Cyprus GDP shrunk on a seasonally adjusted by just 0.3% compared to the previous quarter and by 2.7% compared to the corresponding quarter of 2008. Only 1,800 Cyprus properties were sold to non-Cypriots in 2009. This compares to over 11,000 in 2007. According to the latest figures from the Cyprus Land Registry, 158 contracts of sale were deposited by non-Cypriots at the Land Registries throughout Cyprus in November, compared to 117 in October. Cyprus is one of very few countries to produce official data on the number of homes sold to foreigners, so a comparison with other similar markets is difficult.

While Cyprus may well have seen the fewest foreign sales in 2009, it could well see the same level of rebound as seen elsewhere as 2010 progresses. At this time of year when sales traditionally slide off, the increase in sales in November signifies that the Cyprus property market will recover quickly as the international economic recovery gathers pace. At the first signs of recovery, and demand growing for overseas property, demand has begun to increase for Cyprus property. The title deeds crisis has also been a massive barrier to sales, but there is hope that this is now resolved by new government legislation.

Les Calvert director of overseas property portal Property Abroad.com said that Cyprus’ new golf courses and proposed 2nd Eurodisney as reasons to believe that Cyprus property has a bright future.

According to financialmirror.com reports, the purchase from Hayasa Properties also generated EUR 3.2 mln in capital gains tax, in addition to a transfer fee of EUR 1.45 mln, which left the Inland Revenue Service very pleased. The buyer, Hayasa Properties Ltd, said that the new purchase will be developed into a multi-storey venture that will include a modern boutique hotel, commercial and residential space and the capability to rise up to 18 floors with five underground levels. However, plans are still at an early stage and a development project has not yet been finalized.

Martin Pearce, UK sales manager for Aristo Developers, has told the Liverpool Echo that Nicosia presents the perfect opportunity for property investors and the upward pressure for property due to the city’s developing significance as a financial and business hub is raising prices and in turn leading to “increased monthly rental rates”.

The expert stated that tenants are “able to pay well” for the right home, with a good year-round demand in Nicosia as the city is developing and advancing its international reputation.

Overseas Property Professional (OPP) has reported that Purple International saw a sharp rise in sales in the second half of last year in response to huge discounts designed to tempt buyers back to the market. OPP also drew attention to a shift into the type of lifestyle purchasers and people relocating to warmer climates increasingly replaced the typical investors. Some buyers were able to pick up property with discounts of as much as 30 per cent.

Angelos Koutsoudes, managing director and partner at Purple International, told OPP “The first half of 2009 was dire but the second half was brilliant. Because of the volume we sell and … connections with developers, we are able to negotiate big discounts.”

In related news, Graham Norwood draws attention to the cheap prices developers and estate agents are offering to tempt UK buyers back to its market. Property prices have wintered a negative pricing adjustment as the country was hit by the global effects of the credit crunch meaning it is now cheaper to buy property on the island, according to Dailymail reports.

Justin Stayles of PropCyprus told the paper said: “Prices are just about stabilizing after a long period of freefall. If you’re going to buy at the bottom of the market, get in quickly.”

Speaking after a meeting with political party representatives and social partners, as well as government officers, to discuss the European Commission document on the future of the Lisbon Strategy, Minister of Finance Charilaos Stavrakis said that the challenge now is to maintain this “‘potential advantage” and the Ministry of Finance would be doing everything it deemed right to solve structural problems that have been to the detriment of society for many years.

He recalled that the potential rate of growth in Cyprus was historically around 4% and, due to the global crisis and the recession, it has dropped to 3-3.5%. He pointed out that ”the respective rate of the European economy is 2% and has now dropped to 1-1.5%.”

The Minister noted that the government has already presented a comprehensive package of proposals, which could solve the structural problems of the Cypriot economy, increase the growth rate and reduce unemployment, adding that some of the measures need more processing and approval by the House of Representatives.

Meanwhile, a recent study conducted by investment website Homes Overseas indicated that Cyprus is still a popular destination for those considering overseas property investments. The island offers bargain getaways that will help travelers escape the bad news of the current economic climate.

According to the Times, The country offers Mediterranean food and weather, advantageous tax laws, English language radio stations and the combination of being under five hours away by plane and a minimum temperature of 15 degrees Celsius, even in winter, makes the destination ideal for a holiday home for Brits.