Cyprus-Forum.com

[Johnson&Johnson]

Crisis in property market expands
First Published: 29/09/2008 07:38:32
stockwatch.com.cy

A new StockWatch survey among twenty developers and real estate agents carried out last week shows that crisis in the property market has expanded. It started to affect not only the plot prices but also the value of shops and offices.

The crisis is exceptionally intense on housing properties, where prices have declined up to 25%. Although in the previous survey crisis focused on tourist areas only, the new survey shows that it affects all housing properties in the market.

Sixteen of the total twenty developers support that prices fall. Only one sees that prices will go up and three expect that they will stabilize. Two developers stressed that conditions in Limassol differ due to the interest on behalf of the Russian businessmen.

All twenty developers and estate agents are actively involved in all cities of free Cyprus. The list includes businesses of all sizes, including the big.

Most of the respondents said that shop and office prices fall too, while others see a decline in plots and farms. At the previous StockWatch survey, none of the respondents expected a drop in this type of properties. Almost all anticipated that plot prices would stabilize.

According to a developer, he undertook the construction of a 23-flat complex in Larnaca in early 2008, but none of them has been sold yet. Two more developers said that they have not sold any property in 2008.

One of the developers that participated in the survey said: “The Company has a new flat of 90m2 in Protaras of £100 thousand. We tried to sell it for £90 thousand but it was not sold. We pushed the price down to £85 thousand, but still nothing. We will be forced to push price further down to sell it”.

A real estate agent from Larnaca said that the crisis does not concern housing properties only, but plots too. “About 5 months ago we were selling a plot in Alethriko for £120 thousand. Now we are forced to sell it for £90 thousand”, he noted.

“We are in the middle of a crisis and there’s no room for sentiment. Each one of us will have to push prices down to save his business”, another developer said.

“The market is moving in such a way so as to correct the fictitious property prices, which jumped 40-80% in 2005-2007”, a developer said.

According to latest central Bank data, housing property prices grew 15% in 2007 against 10% in 2006, 12% in 2005, 20% in 2004 and 8% in 2003. There are no official data for 2008 yet. These figures, however, concern all properties, while the developers referred to properties for sale.

“Two years ago we sold a property against £50 thousand. Now we ask for £200 – 250 thousand. With such prices, how we can avoid a crisis?”, he wondered.

Some of the respondents talked about a depression in the property market with a disproportionate increase in offer, unemployment and loss. Due to the prevailing conditions, certain developers became more restrained. “We are more restrained now. We build fewer flats and houses to avoid stock and bank pressures”, they said.

“We expect things will get worse in 2009. That’s why many businessmen have already reduced their staff. Also, a number of businessmen are not professionals and their activities are not based on strong foundations. Therefore, they are now forced to sell cheaper so at to pay their debts”, they said.

The cooperation between the developers and the real estate agents has been affected too. Some developers say that sell without the agents’ intervention. On the other hand, the real estate agents support that developers offer a 10-15% additional commission to them if they manage to sell.

[Tim Drayton]

I have asked this kind of question before, I know, but how come I see building work continuing at a frenetic pace in the area in which I live, including brand new sites being prepared?

[Johnson&Johnson]

because people are greedy (and stupid)

[DT.]

because people are greedy (and stupid)

and you're the smart one?

[zan]

I have asked this kind of question before, I know, but how come I see building work continuing at a frenetic pace in the area in which I live, including brand new sites being prepared?

These may be buildings that have either been payed for or have large deposits on them......Sure customers. I doubt that new developments are going to start for a while...

[Tim Drayton]

I have asked this kind of question before, I know, but how come I see building work continuing at a frenetic pace in the area in which I live, including brand new sites being prepared?

These may be buildings that have either been payed for or have large deposits on them......Sure customers. I doubt that new developments are going to start for a while...

Come out to Agios Athanasios, Limassol any time you like and I can take you on a guided tour. New developments are starting left, right and centre. There is a site of a few weeks standing just opposite where I live, and since there is a sign up advertising flats for sale in the block they are building, this means they have not been paid for yet.

[zan]

I have asked this kind of question before, I know, but how come I see building work continuing at a frenetic pace in the area in which I live, including brand new sites being prepared?

These may be buildings that have either been payed for or have large deposits on them......Sure customers. I doubt that new developments are going to start for a while...

Come out to Agios Athanasios, Limassol any time you like and I can take you on a guided tour. New developments are starting left, right and centre. There is a site of a few weeks standing just opposite where I live, and since there is a sign up advertising flats for sale in the block they are building, this means they have not been paid for yet.

I wonder if they will stop soon though...Looks like its going to get a lot worse

[Tim Drayton]

I have asked this kind of question before, I know, but how come I see building work continuing at a frenetic pace in the area in which I live, including brand new sites being prepared?

These may be buildings that have either been payed for or have large deposits on them......Sure customers. I doubt that new developments are going to start for a while...

Come out to Agios Athanasios, Limassol any time you like and I can take you on a guided tour. New developments are starting left, right and centre. There is a site of a few weeks standing just opposite where I live, and since there is a sign up advertising flats for sale in the block they are building, this means they have not been paid for yet.

I wonder if they will stop soon though...Looks like its going to get a lot worse

According to Antonis Loizidou in his regualr property column in the Cyprus Weekly, Russian money is bouying up the property market in Limassol. It is places where the main buyers are British that are feeling the pinch.

[Bananiot]

That is absolutely true. Paphos has a problem, consequently.

[Tim Drayton]

That is absolutely true. Paphos has a problem, consequently.

Paphos? Never heard of it.