Cyprus' first property price index has been launched. It will monitor property prices and monthly rents across 46 locations including apartments, houses, high street retail, warehouses and offices in Cyprus. It's been developed through a partnership between the Royal Institution of Chartered Surveyors and its Cypriot counterpart SEEOKK.
The first results for Cyprus offices found the highest prices in the bigger urban centres of Nicosia and Limassol, but there is a major price gap between the two. Rents for office space are 68% higher in Limassol compared with Nicosia. The trend is more quietly followed by house rents which have a 13% difference between the two locations. RICS says the likely explanation is the presence of overseas companies in Limassol pushing prices high. The index also found Limassol warehouse rents are 78% higher due to the presence of the port. Nicosia has the lowest warehouse rental costs across Cyprus.
Investment yield (rental income/price) is a term rarely used in Cyprus as most companies own their real estate instead of leasing it. Initial yields on commercial property stand at 6,1% for retail, 4,7% for offices, and 4,8% for warehouses. These low yields may show that rents are being kept artificially low by the tendency of companies to occupy properties with alternative uses (mainly residential) in order to minimise their costs. An alternative explanation is that property prices are too high due to the lack of land supply and the price boom of the past few years.
President of RICS Cyprus, Petros Stylianou, says the significance of the index in bringing an identifiable measure of property prices and returns. Experts at the University of Reading in the UK were commissioned by RICS Cyprus to develop the methodology for the Index.
