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Disappointing drop in Cyprus real estate prices

The fifth issue of the RICS Cyprus Property Price Index show that real estate prices across the Island fell during the fourth quarter of 2010, with house and apartment prices falling by an average of 2.6% and 2.4% respectively.

THERE was a ‘disappointing’ fall in property prices across the Island during the fourth quarter of 2010. Houses and apartment prices dropped by an average of 2.6% and 2.4% respectively according to the fifth issue of the RICS Cyprus Property Price Index, which tracks property prices and rents across 46 locations.

Residential prices for both houses and flats fell by 2.6% and 2.4% respectively, with the biggest drop for houses taking place in Limassol (-4.8%) and for flats in Famagusta (-4.2%).

Values of commercial properties fell across all cities by an average of 2.5% for retail, 3.4% for offices, and 2.4% for warehouses. Year-on-year, prices dropped by 10.8% for apartments, 7.4% for houses, 7.0% for retail, 6.3% for office, and 4.8% for warehouses.

Across Cyprus, rental values for apartments fell by 5.5%, for houses 5.9%, retail units 3.8%, warehouses 4.4%, and offices 2.7%. Year-on-year, rents dropped by 7.2% for apartments, 11.8% for houses, 8.5% for retail, 3.0% for office, and 3.9% for warehouses.

The quarterly change in capital and rental values shows that all aspects and geographies of the property market are now affected, and that landlords are lowering their rents in order to attract tenants. In parallel, many tenants are renegotiating their leases or moving to smaller or lower cost accommodation.

The reduction in rents will have a profound effect on the incomes of many local and overseas owners, and is likely to increase the downward pressure on prices as the mismatch between rent and capital values is accentuated.

Investment Yields

Yields are a useful tool showing the relationship between rent and property prices. At year-end, yields for commercial property stood at 6.0% for retail, 4.8% for offices, and 4.8% for warehouses, while yields for residential property stood at 3.6% for apartments and 1.9% for houses. These suggest that there is still room for rebalancing to take place.

Initial (or gross) yields, as shown in the chart below, is the total yearly gross rent divided by the price, expressed as a percentage.

Derived from the RICS Cyprus Property Price Index for Q4 2010

According to Pavlos Loizou MRICS, Board member of RICS Cyprus During the second half of 2010 Cyprus bore the aftershock of the global economic crisis, with the economy slowing down and the government’s income decreasing. The fourth quarter saw the Cypriot economy showing some signs of stabilisation and muted growth, although the increased uncertainty about Greece and the local economy affected sentiment.

Towards the end of the year there were some early signs of price stabilisation, with local buyers returning to the market taking advantage of lower prices for holiday homes and for permanent residence. Also, there seemed to be some renewed investor interest, particularly for city centre, prime, properties. Evidence of this however is anecdotal, as there have been no significant transactions to support it.

These signs need to be viewed within the wider context of a continuing curtailing of loans by financing institutions, reduced income as a result of inflation and salary reductions, and to a change in people’s expectations of future changes in capital values.”

Outline of properties used to calculate the index

Apartments: Residential, two bedroom, 85sqm, Medium quality.
Houses: Residential, three bedroom with garden, Semi-detached, 250sqm, Medium quality.
Retail: High-street retail, 100sqm ground floor area with 50sqm mezzanine.
Warehouse: Light industrial area, 2,000sqm, which includes 200sqm office space.
Office: Grade A, City centre location, 200sqm


The methodology underpinning the RICS Cyprus Property Price Index was developed by the University of Reading UK and may be viewed by  clicking here.

Readers' comments

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  • dimitri says:

    @Ken have to agree with Ken, but then again what is the realistic price of land in Cyprus? Supply and demand plays a role for sure with housing but land it not finite.. and as for materials that too but developers make a killing everywhere it has to be said (I am not justifying the high costs)…..problem is if you do complain or try to bargain re prices of a property you view they tell you to go buy the land and build and if you can do so cheaper then do it by all means…..

  • Ken of Kiti says:

    For whom is this a ‘disappointing’ fall in property prices across the Island? 

    Oh yes, “anyone” wishing to sell their property at a silly price. 

    It is about time that prices here fell to a more realistic price for the real value of the land and the real cost of the materials used to build it!

    Maybe this slump will help it to happen. 

    It really is ridiculous just how much money is being asked for a property that has been thrown up by an incompetent builder, on land that was not fit to keep a donkey on.  And then to boot the deeds are withheld!

  • @Alex – You’ll need to read through the methodology to see how the calculations have been performed. Plus you’ll find a list of the 46 locations used in the various Districts.

  • Alex says:

    Where did they find these outrageous prices for houses? Semi-detached 3 bedroom in Nicosia for 511K??
    Even 4 bedroom detached ones cost less than 400.

    Relative valuation is also abnormal – a 3-bed detached house is equivalent to THREE 2-bedroom apartments?
    Come on, who would bother buying a house then?

  • Andrew says:

    Issue people, who have paid in full for their homes, with Title Deeds and hey presto. More sales!

  • Robert Briggs says:


  • Mr Happy says:

    Disappointing, maybe
    Surprising, hardy

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.


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