Selling, Renting, Property Prices stats...

[andrey]

Hello,

Second post from me straight after the first one!

So I have this house in Aphrodite Hills and obviously because of Cyprus' economic turmoil and Swiss Francs loan etc it has proved to be more work owning that house than I thought it would be back when I bought it in 2006.

Now I am looking for various options to reduce the financial weight of paying off this mortgage.

1. I was thinking of Short Term Holiday Letting. Has anyone done that?
a) Never done or even considered this before so would be awesome to hear from those who have the know-how.
b) What are the legal caveats to know about?
c) Is there a good agency in Cyprus that would find tenants and maybe even maintain the house for you? UK for example is full of these companies which are really good actually!
b) How to value your house in terms of weekly rental rate? I know it is a very vague question but maybe there is some kind of a magic formula that can help?

2. Selling the house. Obviously this is always on the cards.
a) Again, how do you value your house in Cyprus? Where do you get the data/info about the current property prices and what 'your neighbour' sold/bought for? In the UK there is the Land Registry and more recently Zoopla which allows you to find out.
b) Does anyone know the property growth/decline rate for the last 10 years? Year-on-Year. Is there an article of some kind, or a study - anything? That would certainly help me value that house. At least something to start with.
c) Any good estate agent you could recommend for selling a house in Cyprus? Of course I assume that estate agent must have an exposure to all the other clientele around the world (British, Russian, Gulf state even?), but must also understand Cyprus property market.

Thank you guys! Really looking forward to learn more about all that mentioned above.

Cheers,

Andrey

[Nigel Howarth]

Hello again Andrey

As for finding out the market value of your house, there is no local equivalent of Zoopla and, unfortunately, the law in Cyprus is quite different to the UK.

In England and Wales

• The Land Registry operates an open register which means that copies of all documents referred to on the registered title can be obtained by anyone, subject to payment of the necessary fee.

In Cyprus

• Information or documents in the public register of Titles connected with the ownership of immovable properties and charges or encumbrances lodged against them are treated as confidential and unavailable for public inspection.

If you place your property with a reputable agent, they should be able to assess its market value. Alternatively you can engage the services of a professional valuers - and you can look on the Internet to see what price is being asked for similar properties in the same area.

RICS (Cyprus) publishes a quarterly property price index, detail of which I publish at Property Prices. My guess is that properties in your area have fallen 35% - 40% from their peak in 2007.

Also, because of the economic situation and problems with nefarious developers, the property market has collapsed (down >80% from peak) - so don't expect to find a queue of people waiting to buy.

The property is in a decent (if remote) area - suggest you look at one of the up-market London firms that specialises in overseas property. Some of them have links to agents operating in other countries.

As for renting the property, you'll probably be better renting it long-term rather than short-term holiday lets. Although the income you receive may be lower on a weekly basis, you'll have 100% occupancy rather than relying on the vagaries of the tourist market. Suggest you search the Internet, you may find a company that can assist for both long and short-term lets.

But you have to be very careful who you rent to - a company will be best. It took a friend of mine two years to get tenants out of his house in 'millionaire's row' in Limassol and the couple trashed the place before they left.

Regards,

[andrey]

Hi Nigel,

Wow... That was probably the most brutal truth right there. Thank you, I guess

I was looking at other houses in the same area listed for sale on the web and the price for the same size just varies so much, I have no idea what it depends on, and how to even think about the property price these days. It's kind of a like a Wild West of property market.

In all honesty for some reason I thought that as of this year the prices started to go up again. But obviously not! What happened to Cyprus in the first place back in 07/08? Why did the property prices plummet so much down?

I am also very curios as to when do you think the housing market in Cyprus will finally start to recover, and why - what are the underlying factors affecting it now?

As a property Guru, Cyprus in the last 10-15 years must have been either a massive pain or a holly land for you? So much happening, it's insane.

Cheers Nigel.

[Nigel Howarth]

It's kind of a like a Wild West of property market.

That's a very good description, I wish I thought of it.

Basically property fever gripped the island when it was announced that Cyprus was to join the EU. Prices rose sharply as every man and his dog with a bit of land soon realised that they could build a property on that land and then sell it to johnny foreigner at a vast profit. Prices spiralled out of control until the market peaked in 2007.

In 2007 two things happened - the UK economy fell on hard times so Brits became more careful about buying property overseas - and stories of problems started appearing in the local and UK media. In October 2007 Channel 4 broadcast a programme about Title Deeds and how developers were abusing property law to make huge profits for themselves - see https://www.youtube.com/watch?v=eLUDlI6CSCM - the property market has yet to recover from this double whammy and more and more bad stories have emerged since.

In 2007 21,245 properties were sold
In 2008 this number dropped to 14,667
In 2009 - 8,170
In 2010 - 8,598
In 2011 - 7,018
In 2012 - 6,269
in 2013 - 3,767
And so far in 2014 sales are down 17% compared to last year.

And in Cyprus applied for a bailout from the EU, which resulted in hair-cuts on bank deposits over €100,000 with the Bank of Cyprus and the Laiki Bank. The Laiki bank folded and has now been incorporated into the Bank of Cyprus.

Although Cyprus seems to be managing its way out of the financial crisis very well, I cannot see things improving in the short term.

Meanwhile property developers are focussing their attentions on the Russian and Chinese markets, with a modicum of success.

Regards,

[andrey]

Hi Nigel,

Property is not a short term investment (or at least it shouldn't be) so what glimpse of hope do we have ahead of us? What underlying factors should I, and many other property owners in Cyprus, look out for? To find out whether we are maybe climbing back to where we were 6 years ago? Cypriots keep telling me something along the lines that 'we have a gas field discovered in the Mediterranean near us, things must get better now', or something like 'well, it has been too long now that we had this poopy economy going, it must go up, right?'. But of course for me it is all hot air. I am sure that the bailout was the bottom of where Cyprus could fall to economically. So what is next on the cards?

Where do you get the info on how many houses were sold? I must follow these numbers month on month to see whether there is an improvement soon.

And about Russians and the Chinese - wouldn't they pull the luxury Cyprus property market above the declining property sales rates you are mentioning? Would that mean that luxury houses did not lose as much of their value as an 'ordinary' (I mean not a luxury villa) house did? I know for sure that at Aphrodite Hills in 2006 probably 80% owners were British but now more than 50% are for sure Russians. Does it mean that the economics there is slightly different? Just like London and the rest of the UK.

Cheers,

Andrey

[Nigel Howarth]

Hi Andrey

Yes - gas deposits have been discovered in the Med in Cyprus economic zone - but they have yet to be accurately quantified.

As for property - as you say it should be looked on as a long-term investment - a minimum of 10 years. Many people were told they could sell at a profit before their property had been completed (buy and flip) - unfortunately many believed what they were being told and it also helped to fuel the property bubble.

The Department of Lands and surveys publishes statistics each month on the number of property sale agreements lodged at Land Registry offices across Cyprus. You can find the information (in Greek) at http://www.moi.gov.cy/moi/DLS/dls.nsf/d ... enDocument - alternatively I publish the figures each month in English in the property sales section of my Cyprus Property News at http://www.news.cyprus-property-buyers. ... rty-sales/

There will always be a market for top-quality luxury property, but buyers are few. Prices of these have held up well compared to the rest of the market according to Leaf Research - see http://cdn.cyprus-property-buyers.com/w ... 2-2012.pdf

As for properties in the Aphrodite Hills area, Dolphin Capital Investors (DCI) recently published their preliminary results for 2013 - see http://www.investegate.co.uk/dolphin-ca ... 00342133D/

Aristo Developers (a 49.8% subsidiary of DCI) reported the following:

"The reduction in real estate market activity triggered by the March 2013 banking crisis in Cyprus persisted over the whole of 2013 and significantly affected the appetite of both international (primarily Chinese and Russian) and local buyers. During 2013, Aristo generated €20 million in sales, 61% lower than the corresponding €52 million of sales realised during 2012, with Chinese buyers representing over 74%, Russian buyers 16% and others 10%.

The 2013 sales performance - which was also severely impacted by the fact that Aristo stopped making sales in its best-selling Venus Rock project in view of its sale agreement with CGIG - has been the lowest since 2007 when Dolphin initially acquired a shareholding interest in the company and has significantly impacted Aristo's operating cashflow. However, this is expected to be counterbalanced by the expected collection of payments due under the Venus Rock transaction, as reported under B.4 above."

Regards,

[andrey]

Hi Nigel,

20m in sales for Aristo? That is 5-10 villas and that's all. It seems like very bad news for them.

Property is long term - so one would expect it to grow during the 10 years period, at least. Then more and more as the time goes by. But if I bought in 2006, then what should I expect it to be worth by 2016? This date is only two years away but with the last year's economic hell Cyprus seems to be in the worst position, even if compared to 2009, 10, 11, 12. So what are you looking for as the signs of improvement?

Cheers,

Andrey

[Nigel Howarth]

Hi Andrey

The past few years have been disastrous for many developers, particularly those specialising in holiday homes.

I published a press release yesterday by Leaf Research with its predictions for the next two years - Cyprus economy & real estate forecast 2014-2015.

Regards,