New built properties suit buy-to-flip investors
The existing stock of new properties in the markets of Paphos, Larnaca and the Famagusta/Paralimni area will remain unsold in the near future as the market is oversupplied, it has been claimed.
Pavlos Loizou, the lead consultant of Leaf research said that the new properties were built for “buy-to-flip” investors and is unsuitable for permanent living. The period of frenzied investment speculation has come to an end; these properties are unlikely to be sold in the near future. As the banks have tightened their borrowing criteria and are withholding finance for almost all projects, very little construction activity is taking place. On a positive note, he said that there is a demand for city centre apartments, some holiday homes, student housing and projects related to renewable energy.
There is little demand for long term investment and Prices in secondary areas as well as the price of land are likely to reduce further. However, Prices and rents across Cyprus’ major urban areas continued to fall during the second quarter of 2011.
According to the seventh issue of the RICS (Cyprus) Property Price Index, the first quarter saw some signs of price stabilization and muted economic growth, the second quarter saw foreign investors took a “wait and see” approach which led to a low transaction turnover and to reduced interest by local buyers. The average residential prices for houses and apartments fell by 1.0% and 2.7% respectively during the second quarter of the year.
Larnaca experience the biggest drop where house prices fell by 3.2% and apartment prices by 7.2%. Average values of retail properties fell by 4.4%, whilst those of offices and warehouses fell by 2.2% and 1.7% respectively. Over the quarter, average rental values for houses rose by 1.3%, apartments fell by 3.1%, retail units by 4.1%, warehouses by 5.4%, and offices by 2.0%.
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