ACCORDING to Pavlos Loizou, a board member of RICS Cyprus, the price of rent and properties have continued to drop in Cyprus during the first quarter of this year, following similar tendencies to those of the last quarter of 2011.
He said this was mainly down to the unfavourable economic climate, negative economic forecasts, lack of funding and low performance.
According to the RICS Global Commercial Property Survey, renters’ and investors’ expectations of the properties’ sector have improved in many parts of the world for the first quarter of 2012. However, most markets are continuing to note a negative tendency.
Russia, Canada, Brazil and China are stating that demand by far exceeds supply, when it comes to property sales and rentals. Hong Kong and Thailand have noted an improvement, as have the US, Malaysia and India. The three latter countries had some negative results in the previous quarter.
Apart from Germany and Poland, which have also noted an improvement in their economies and increase in rentals’ demand, the rest of the EU remains weak, said the RICS report.
“In Cyprus, property and rental prices continue to drop, mainly due to the unfavourable economic climate, the negative forecasts for the broader economy, the lack of sponsorship and the low performances,” Loizou explained. “With the simultaneous reduction in rent prices, the result is for commercial properties’ yield to range between 5.0 per cent and 6.0 per cent, which means they aren’t attractive to investors.”
Unless rents start to stabilise and performance levels exceed 7.0 to 8.0 per cent yield, Loizou said the market would continue to be in a slump. “We are going through a long period of trying to balance the rentals with the prices, which will be followed by an extended period of inaction, until the economy stabilises and starts to recover,” said Loizou.