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No margin for further price reductions

The chairman of the Cyprus Land & Building Developers Association has said that there is no margin for making further cuts in property prices and that external demand may improve if Cyprus overcomes the problem with Title Deeds.

SPEAKING at a press conference at the annual general meeting of the Cyprus Land and Building Developers Association its chairman, Lakis Tofarides, said that property prices in 2010 will remain at the same levels as 2009.

The fall in property prices has hit a low. In Nicosia and Limassol they fell 5-10%, while in the seaside areas they fell by up to 30%. At the current stage the market has stabilized after 2007, when turnover climbed by up to 1,000%”, he said.

However, there is no margin for making further price reductions as the cost of land represents 40% of the sale price and the remaining 27% is taxes. Consequently, there will not be a significant increase in prices”, he stressed.

At the same time, Tofarides said that the benefit from the measure promoted by the government on the additional floors to city buildings will be negligent since “no one sells on the basis of the cost of the building but on the basis of the sale prices in the market”.

Invited to comment on the slight increase in sales in the past few months, Mr. Tofarides said that the level is marginal and insisted that rumours on further price decreases must stop because they create the wrong impressions.

Commenting on the external demand in 2010, the Chairman talked about huge uncertainty but stressed that if the economic condition in Europe improves and Cyprus overcomes the problem with Title Deeds, then the market might recover. “However, things are not that promising for the next six months”, he said.

The Association’s proposals also include the promotion of the summer residence via a series of measures such as the special tax investments”, Tofarides said.

Tofarides also urged Cypriots to be very careful and use trustworthy developers. “Of the 1,150 developers that are active in the sector, only 110 are members of the Association”, he noted.

As for the price of land, he said that there had been an increase of 5-10% per annum in the past ten years and this shows that there is no margin for impressive increases any more. “89% of the land belongs to individuals and not to developers”, he concluded.

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