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[Wingnut]

Property market at risk from unsold houses
First Published: 21/07/2009 08:58:54
Stockwatch

The drop in property demand pushed the number of unsold flats and houses sharply up and developers decided to make discounts that reach 30% for fear that worse days will follow. Big developers such Aristo determined a new phase in the market, where discounts are direct and not indirect.

“In the first half of the year, developers tried to attract buyers with gifts such as free air-conditioning etc. In the second half, they couldn’t bear the pressure of the economic crisis and decided to cut property prices”, Chairman of Real Estate Agents’ Association, Solomon Kourouklides told StockWatch.

Certain market circles support that the timing of the big discounts is attributable to the conviction that worse days are to follow after September, when the size of the problem in the tourist sector is reflected. “The property market will sink to the bottom after September. Areas such as free Famagusta, Avgorou, Dasaki Achnas, Xylofagou, Tersefanou and the seaside areas of Paphos might be under strong pressures’, evaluator, Antonis Loizou said.

According to Mr. Loizou, the main reason for the drop in prices is the low demand and the developers’ attempt to pay the cancellation debts of many buyers – mostly British – who cannot pay off their debts and return their purchases.

Sales Representative of Cybarco, Alexandros Sinka explained that the large number of unsold flats and houses are a burden for a developer due to the maintenance cost. “As time goes by and there is a large number of unsold flats and houses, the possibilities for their sale are minimized due to wear and tear”, he said.

Mr. Sinka also linked the discounts to the strategy that a developer adopts in order to increase the Company’s capital adequacy during the tough period of the economic crisis.

Property valuator, Haris Timotheou from “Danos Consultants and Valuators, stressed that this period is a knife that cuts both ways for the developers.

“On the one hand, the land developers try to minimize the loss from the market freezing and push prices down, while on the other they have a significant number of indisposed properties that if they remain unsold, they will be loss-making for themselves”, he said.

Mr. Timotheou agreed that the problem affects the seaside areas such as Protaras, Pissouri and Paphos, however, the cities might run the risk too if the market does not recover soon.

Chairman of Land Developers’ Association, Lakis Tofarides wondered how can one offer discounts of 30% without giving the impression that the prices formerly were unjustifiably high.

“The base cost of the developers’ material does not allow such discounts. Only in specialized cases such as tourist areas like Paphos, Protaras and Tersefanou, where houses of 100 sq. meters were built for non-Cypriots exclusively, justify such discounts.

A general acknowledgement is that those discounts indicate significant declines in the offer prices and might signal further discounts. Chairman of the Valuators’ Association, Charalambos Petrides agreed that prices in non-competitive properties suffer a decline of up to 30%. He clarified that even though prices remain stable in Nicosia and Limassol, the prices in properties of secondary importance fall 5%.

Mr. Kourouklides anticipates that property prices will continue to be under pressure in the second half of the year, while this decline might expand to cities but mildly.

[purdey]

I am not sure how the figures do not affect Limassol ? Prices on residential property has fallen and estate agents are certainly feeling the pinch. Commercial property and land is still in high demand but only on a lease basis, with discounting involved for outright purchase.

[cankertoo]

I have noticed may apartments that have been put up for sale for a long time by the developers.
Now they have realised that they are not going to sell it atleast in the near future and so they have put up signs to rent those apartments.
There are some instances where the construction has been completed halted.
All this in Limassol.

[purdey]

There are some real horror stories there at the moment. The smaller guys are really struggling, sad thing is the banks are now calling in the loans.

[Z4]

The Banks need to step in and protect the consumer. With the fiasco surrounding the deeds the purchaser needs to be protected against the developer going belly up.

[purdey]

I think alot of the smaller one's have gone belly up, the bigger one's have the ear of the Government and will probably just survive. Tough times ahead, but as this is Cyprus bad news does not travel fast !

[cyprusgeoff]

Now the fun starts!

Watch and wait.

[Nikitas]

This is what happens to people that have no imagination and the only way they can think of making money out of a beautiful place is to cover it in concrete.

When showing fellow Cypriots tourist businesses in France, things like luxury camping sites, shooting preserves, riding holiday camps etc, they are incredulous. "People make money out of letting someone sit on a horse!!!" they exclaim. Well, they do, and they do not need to buy thousands of tons of cement inorder to make money.

My cousin's eyes bulged out when he saw pics from a A' class camping site in Chamonix. "Re koumbare, it is OK to sit in the tent during the daytime, but at night do they take you to a hotel?" he asked.

This kind of conservative, very much in the box, thinking hits both communities, which explains the so called development boom and all the crap that goes with it.

The other thing that has not been resolved, and the same applies for Greece, is the way to compensate people who do not develop their land and therefore inject value in neighboring land that has been developed. If my neighbor builds apartments and I maintain my orchard, then his apartments increase in value precisely because I continue to keep my land green, but I get zilch, and soon I too will build apartments and be a bigshot. You know how it goes....

These causes will continue to exist after the crisis is over and will influenece the market. The concrete jungle extending from Limassol past Yermasoyia offers a dimnishing quality of life and it will soon pay the price, as will the area from Kyrenia to Lapithos.

[purdey]

Not in my back yard springs to mind. But when you have never had and you see big £ signs it's not easy to let the golden egg roll away.

[Wingnut]

they never beleived it would happen over here. the warning signs were flashing red from 2006, but noone cared. the money was flowing like a river.

first they said no no cyprus is immune ! we are a small island with limited land, prices cant go down. what they forgot what that per kilometre both the UK and Japan have more people crowded into them, so are in fact even 'smaller' islands than cyprus, but they have seen brutal real estate collapses that have wiped up to 70% (in the case of Japan) off the price of real estate

then when prices stopped rising they said: 'its not a collapse ! it will level off and stabilize' ! they forgot the basic rules of physics - you cannot throw a ball in the air and expect it to stay up there indefinetly ! sooner or later it will come down to earth.

then when prices started coming down last year due to the collapse in sterling and the lack of UK buyers they said 'screw the brits, they are tightfisted and miserable, we will focus on the russians' - they forgot that the russians are not a mass market, and that the wealth of the russians is very dependant on oil and gas revenues, both of which have seen a massive collapse recently

idiots