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How Do We Compare?
By Antonis Loizou, FRICS 30 December 2007 We are aware of the cost of housing in Cyprus and the constant upward movement of values. The year 2007 has shown a phenomenal increase in agricultural and central building plots especially for office uses. The first category showed increases in excess of 30% (in some occasions 50%) and this is the result of high building plot prices for residential uses. If one takes an average building plot in a town/town’s periphery of around £150.000 (€256.000) with half the price a home seeker can secure an agricultural field be it without some public services (e.g. potable water) and having an extent of approximately 2 donums (2676 sq.mts.) on which in most cases is allowed to build 1-2 houses, thus solving his housing and perhaps his children’s housing problem. Not a good solution, since it encourages urban sprawl, it creates numerous problems for the local authorities (refuge collection) and for his children (schooling), as well as increasing travelling cost to and from work, especially bearing in mind the ever increasing petrol cost. But, it appears that local home seekers are prepared to put up with these difficulties since they feel that the need to own a house with a garden is more important. This trend of agricultural land buying has been encouraged by foreign buyers (for the same reason) since, now E.U. members can buy agricultural land and to any extent (as opposed to non E.U. member). At the same time the slum of office space which existed during the years 2001-2006, has been followed by a shortage of office space, whereas the ever increasing technological needs of high tech buildings have again experienced the abandonment of out of date, mixed use office buildings, in favor of the new ones with the modern electromechanical facilities. For this reason central plots within towns, suitable for office development, have also shown a high increase (encouraged in part by offshore Cos who are being attracted to Cyprus due to the lowest tax system in the E.U. countries – the Russian tax situation apart). We provide for your consideration indicative statistical information deduced from the Global Property Guide. PRICE OF APARTMENTS IN EUROPE RETURNS
The table shows that despite Cyprus having a relatively low cost, its returns/ rental yields are one of the lowest. In addition international statistical information show the growth potential indicators.
This international statistical information which is published by the Global Property Guide may be misleading to an extent, since what is a “value” differs from country to country. In Greece for example the value is based more on a historic cost, i.e approximately 30%-40% of the actual sales price, as opposed to Cyprus, which it is based on the actual sales price. As such in some cases the difference between Cyprus and other countries may be much higher. Independently of the %, it is evident that Cyprus has a high % of cost, which, if we take on that some foreign agents charge a 15% commission the cost may become even prohibitive.
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2006 Antonis Loizou &
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