Saturday, November 12, 2016

Normalcy returning to Cyprus real estate market


There are tentative signs that the property market in Cyprus is recovering with prices and sales rising and a return of interest from overseas buyers.

The latest quarterly index from the Royal Institution of Chartered Surveyors (RICS) shows price increases in almost all cities and particularly in Larnaca while the latest monthly data from the Land Department shows sales up 37% year on year.

The RICS data shows that prices for both houses and flats increase by 0.3% and 0.2% respectively in the second quarter of 2016 with the biggest increase for apartment in Larnaca with growth of 1.1% and houses in Paphos also up 1.1% for houses.

RICS has included prices for holiday homes for the first time and shows that values for apartments increased by 2.7% while prices for houses were up by 1.1%.

Year on year prices are also up. Compared to the second quarter of 2015 prices for apartments are up by 0.5% and for houses they have increased by 1.1%.

This news is an indication of why I like to look to markets that go through a period of turmoil. Several years ago during the banking crisis in Cyprus the news was all bad and asset prices crashed. The rational person understood that at some point the place was going to bottom and then turn around. 

Buying at the point of maximum pessimism is no being shown to be prudent as real estate prices are now once again rising. 

This will benefit my investment in Bank of Cyprus because higher prices and higher demand will allow the bank to work through the foreclosure process more quickly. 

The other key point to understand is that these countries never disappear just because there is crisis. Mostly what happens is that after the wheels fall off completely change happens in the politics and government of the country. The change is typically enough to cause market particpants to change their perceptions from fear to less afraid and that is when specualtors and distressed investors enter the market and create a bottom. 

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