Land values also recovering

THE STABILISATION of home prices appears to be accompanied by a similar trend in land values, reflecting a recovering economy and real estate market, two property valuators said.

When private buyers by land “we clearly see selection criteria play a role such as the accessibility of an area, its characteristics, infrastructure, whether other family members live in the area, and then comes the budget,” said Kyriacos Talatinis, chairman of the Property Valuers Association.

As a result, the two main urban areas, the capital Nicosia, and the port town of Limassol, display a mixed trend, with prices rising in certain locations and falling in others where demand is limited, he said. “The plot market runs on various speeds in terms of value,” Talatinis added.

On Monday, the Central Bank of Cyprus said home prices rose 0.3 per cent in the fourth quarter of 2016, compared to the previous quarter when they rose 0.1 per cent on a quarterly basis, following a prolonged drop. Still, in October to December, home prices dropped an annual 0.9 per cent.

The Cyprus branch of the Royal Institute of Charter Surveyors (RICS) said last month that apartment prices had increased 1.7 per cent island-wide in Q4, and an annual 3.7 per cent. As regards houses, there was a 0.7 per cent and 3.4 per cent increase respectively.

Neither the Central Bank nor RICS offered information about the land price development.

Limassol-based property valuer Pericles Markaris, said that “in the last six months of 2016, there had been an increase in demand for land” in Cyprus, mostly felt in his home town.

The increase in demand in Cyprus’ second largest urban area already attracted developers from other coastal areas suffering from seasonality, such as Paphos and the Famagusta area, Markaris said.

Last year, more than one-third of property transactions involved assets in the Limassol district, according to the land registry. In Limassol, a shipping, business, and financial services hub, property transactions rose 59 per cent last year, the highest of all districts, against a 43 per cent island-wide average.

The commercialisation of the Limassol port, completed earlier this year, the construction of a casino, conference centre, and hotel complex in the Fasouri area, and other investments in the town, have already increased demand in Limassol, Markaris said.

“It looks like conditions with respect to private property and investment in land has improved,” he said, adding that even Cypriots, gradually recovering from the 2013 fiscal and banking crisis, are considering investing in land.

Cystat data on building permits showed a 19 per cent increase in terms of construction area in 2016, and a 29 per cent annual increase in the first quarter of 2017, which signal a rise in future construction activity.

“Some consider doing so ahead of the introduction of value added tax (VAT) on plots while others believe that it is a good time to take advantage of the decline in the price of land in recent years,” Markaris said. “After all, buying land hedge against inflation”.

Talatinis said that while discussion at the House finance committee of the harmonisation bill to introduce a 19 per cent VAT rate on plots by the end of 2018 is still ongoing, this has not yet triggered a grand scale acquisition of land.

Markaris added that another factor pushing prices upwards is the large-scale acquisition of land by banks as part of debt restructuring agreements. “Banks have been successful in re-selling properties” to both foreign and local buyers, he said, adding that Cypriots are more likely to buy commercial-zoned land.