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Company Profile Antonis Loizou & Associates is a professional firm of Chartered Surveyors offering valuation, agency and project management services. The firm was set up in 1980 and is now the largest and most comprehensive professional firm of Chartered Surveyors in Cyprus and the Eastern Mediterranean. The firm employs 75 members of staff across 8 offices in Cyprus, Romania, and Russia and is one of the leading real estate advisors for corporations, finance houses, as well as the local government and individual members of the public. More about us |
Issue 7, October 2009 |
Cyprus Economy● The on-going economic turmoil has now began to affect the real economy. The unemployment rate increased to 5.6% in August, an increase of 0.2% compared to July and of 2.1% on the year. Whilst unemployment in Cyprus remains at comparatively low levels to the EU, where unemployment stands at 9.6% or 15.2 million people, it is now increasing at a faster rate than the rest of Europe. ● Over the first eight months of 2009, income from tourism fell to €234.8m from €278m in 2008. The reasons for this decrease are a reduction in tourist arrivals over the period by 11.1%, a drop in spending per head from €847 to €805, and a shortening of the period of stay from 11.4 to 11.2 days. ● The Inland Revenue announced that compared to last year there is a decrease in the government’s revenue of €190m from direct taxation and of €166m from indirect taxes. The reduction is mainly attributed to the lack of real estate transactions, as capital gains tax from real estate decreased from €246.9m by 80.4% to €48m (i.e. by €198.6m). ● The International Monetary Fund (IMF) announced a downward review of key indicators for the Cypriot economy, in contrast to its upwards review of the global economy. The IMF expects the economy to shrink by 0.5% in 2009, and to grow by 0.8% in 2010. The current account deficit is expected to reach 10% this year and 9.8% in 2010, and the unemployment rate 5.6% this year and 5.9% in 2010. Cyprus Property Market● Over the past three months we have seen increased activity in the property market, with a number of acquisitions from mainly Cypriots and some overseas buyers. The majority of purchasers are attracted by reduced prices for holiday homes and a sense of “easing” of the doom and gloom. The transaction volume for 2009 is expected to be 50% lower than for any of the years during 2000-2008. Whilst things are not positive in terms of transaction volume, the three month average is showing an upward trend probably indicating that the worse is behind us. ● During the first month of autumn banks were busy promoting retail loans, but bankers say that the market is still far from healthy. Mainly driven by the state of the economy and of the job market, clients are still reluctant to take out loans and banks are much more careful in scrutinising applicants and have increased their due diligence. ● Along with the marketing of their new mortgage packages, the average lending interest rate has decreased to 5.53% compared to 5.81% in July and 6.4% in last August. Since February when interest rates reached their peak, at 7.06%, interest rates have fallen by 1.53%. This reduction shows that Cyprus is following the fluctuations in rates taking place across Europe with a marked delay of 6-9 months. ● Dolphin Capital Investors, the largest AIM-listed property company, suffered a 34% drop in net asset value in the first half of the year. In Cyprus, Dolphin has two large-scale, leisure-integrated residential resorts and more than 60 smaller holiday home projects through Aristo Developers. ● Moving forward we expect the property market to deteriorate further as developers are pushed harder by banks and defaulting buyers (for whom the developer acted as guarantor of their loan). In the medium term, we expect prices to slowly recover as the lack of stock (there are few projects starting and stock is being reduced) and a balancing of the economy begins to drive prices upwards |
Elusive land values in CyprusIt seems obvious to some, but confusing to others, when a valuer says that “the value of land is derived from the price of the end product”. What this means is that the value of land is the difference between how much a developer can sell the end product for, e.g. house, apartment, office, etc and the cost of construction and their profit. With prices falling across all sectors, land values remain stubbornly high especially compared to those in other countries. The reason for this resilience lays in that Cypriots tend to have inherited the land and hence are not pushed to sell it, and that few are willing to “cement” any losses they have made on a past investment, i.e. in accounting terms to realise their loss. Whilst this may appear innocuous, the effect is that there are no, or few, transactions taking place as the market is not allowed to “find their market clearance price”, i.e. for transactions to take place at a price where demand equals supply. Whilst this persists, there will be few transactions taking place in the short term and this may persist in the medium term until the pricing of the end product rises again so that it becomes profitable to buy land at this “high” pricing level. Global Property Market● UK house prices rose by 1.6% in August according to the Nationwide Building Society or by 0.8% according to Halifax. The difference, as well as the ongoing murky picture in the UK housing market, is a direct result of the small sample size of data (there are very few transactions) and by the presence of forced sales and cash buyers that confuse the picture even further. ● The number of mortgages approved for house purchase in the UK fell in August for the first time in 10 months, in a sign of the continued fragility of the property market. The figure had been climbing since November last year. ● In Greece, loan approvals fell by 17.1% and housing prices by 5%-25% depending on the particular location of each property. Units most affected are those over 100sqm and those that are up for rental, as the reduction in sale activity has led developers to rent their unsold properties, resulting in an increase in supply. ● The economies of Eastern Europe continue to struggle after the collapse of inward foreign investment. Fitch, the credit rating company, warned that Poland, Hungary and the Czech Republic risk being downgraded due to the increase in their government deficit. In the Czech Republic the government deficit is expected to increase from 1.4% in 2008, to 6% in 2009 and 2010. ● In Romania, the slowdown in market activity continued to affect the construction sector. Over the past year, as a result of the steep decline in sales of homes, projects totalling more than 10,000 units in Bucharest have been frozen, while developers that had not begun construction works postponed them. ● Trouble may lay ahead for European banks as the World bank warned that in contrast to their US and UK counterparts, European banks have another 50% of their loses to write down. Also the OECD stated that European governments are likely to carry out strict “stress tests” in the banking sector to identify weak companies.
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Antonis
Loizou & Associates is participating in two of the largest property
exhibitions in Russia. 2-3 October in
Antonis Loizou & Associates launched the rental
section on its corporate website. Visitors can
search the for rental houses and apartments in all towns and resorts. In
addition since 
The
Royal Institution of Chartered Surveyors (RICS) took a strong stand at the
5th Real Estate conference that took place on 24 September 2009 in Nicosia.
The pre-eminent organisation of property professionals across the world was
represented at the conference by the Chairman of RICS Cyprus Mr. Petros
Stylianou MRICS, the RICS’ Senior Economist Mr Oliver Gilmartin MRICS, and
executive board member Mr Pavlos Loizou MRICS. The Chairman of RICS Cyprus
made the inaugural speech of the co-organised conference, highlighting
recent market trends and outlining the need for increased professionalism,
rigid standards, and better ... |
In the News Ο κ. Αντώνης Λοΐζου ήταν φιλοξενούμενος του κ. Μαυρίδη στην εκπομπή του ΡΙΚ-1 "Τηλεοικονομία" στις 17 Σεπτεμβίου 2009 σε μια συζήτηση για την παρούσα κατάσταση στην Κυπριακή αγορά ακινήτων
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Ο κ. Αντώνης Λοΐζου ήταν φιλοξενούμενος του κ. Μαυρίδη στην εκπομπή του ΡΙΚ-1 "Τηλεοικονομία". |
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Property for Sale in Cyprus |
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