Across Cyprus, residential prices for both houses and flats increased on a quarterly basis by 1.3% and 2.9% respectively, with the biggest increase being in Nicosia, 4.7% for flats and Famagusta 3.6% for houses. Notably Paphos remained stable for residential prices, while Limassol showed a slight decrease of 0.8% in house prices. Values for holiday homes on a quarterly basis across Cyprus increased by 3.4% for flats and 1.1% for houses. Famagusta showed the highest quarterly increases for holiday flats and houses with an increase of 3.2% for holiday flats and 1.8% for holiday homes. Across Cyprus, on an annual basis flats increased by 7.8%, houses by 4.2%, offices by 10.7%, warehouses by 3.5% and retail by 3.7%.
Introduction & Commentary
During the first quarter of 2018 the Cyprus economy showed further signs of recovery, with a seasonally adjusted quarterly GDP growth of 1% and an annual seasonally adjusted GDP growth of 4%. Unemployment dropped significantly to 9.3% from 12.3% a year ago and from the record high of 17,6% in 2015Q1. The improved confidence in the Cyprus banking system and the improved availability of finance have consequently assisted in a relatively higher transaction volume during the quarter, which further enhanced market sentiment. However, the issue of NPLs and DFAS by most banks continue to be present in the market.
Market Capital Values
The Property Price Index has recorded increases on an annual basis in all cities and asset classes, with significant increases being recorded in Limassol, Nicosia and Larnaca, whilst Paphos and Paralimni have shown smaller annual increases.
Market Rental Values
Across Cyprus, on a quarterly basis rental values increased by 6.5% for apartments, 5.1% for houses, 0.6% for retail, 4.4% for offices and 0.4% for warehouses. On an annual basis, rents increased by 18.1% for flats, 10.9% for houses, 4.8% for retail, 18.1% for offices and for warehouses 2.2%. All asset classes have shown a consecutive quarterly growth.
Appraisal based initial yields
At the Q1 of 2018 average gross yields stood at 4.4% for apartments, 2.2% for houses, 5.5% for retail, 4.3% for warehouses, and 5.2% for offices. The proportionately higher quarterly rental increases compared to quarterly price increases have marginally improved yields for apartments and offices.