Property Channel

Is the Cyprus boom fading?

Is the Cyprus property boom over?

3 Oct 2005

The property investment boom in Cyprus is experiencing a sharp slowdown as jet to let prices on the island achieve parity with equivalent property in Spain.

The sudden change has been revealed by a property survey in the Financial Mirror, Cyprus's leading business and finance newspaper.

Rather than exploring new and less stable markets however, the majority of property development seems to be returning to the traditional Costas.

Property investors have been 'driven away' by record high prices throughout the past 12 months, the Financial Mirror found. Jet to let sales have declined 29 per cent year on year through the first half of 2005, with the total amount of property investment falling from 626m Cypriot pounds to 442m Cypriot pounds.

"Industry experts blame most of the real estate decline on the sharp increase in property prices, with Paphos now matching prices quoted in Spain and driving itself out of the market," said the Mirror.

Estate agents and property investment experts consulted by the Mirror said that a range of factors were influencing the property markets, blaming the recent introduction of VAT, higher government transfer fees, the increasing costs of construction materials, a general slowdown in the Cypriot economy and increasing competition from the north of the island.

Construction costs are up by 11.8 per cent in the first half of 2005, and the number of building permits has declined, with developers concentrating on apartment blocks rather than individual houses or villas. The paper points out that the figures remain well above the pre-2004 high of 411 million Cypriot pounds (£489 million) in the first half of 2003.

Property investment activity is also closely related to that of investors' home markets and the slowdown in UK housing and the German economy, the two countries who have provided the most inward property investment, plays a part.

Interestingly, property investment is primarily leaking back towards Spain, suggesting that the strength of the economy and infrastructure is the most important factor in jet to let investment decisions rather than seeking out, low prices at any cost in less stable east European markets.

"Cyprus losing its price advantage is good news for our developers who are already adding value, as seen in the first 3,000 apartments and villas we are launching next month especially for SIPPs buyers," Alberto Linares, spokesman for property investment group Sipps in Spain told Property in Spain.

"They have upped the quality of finishes and are introducing extra comfort and security with smart homes technology," he added.

Story source: Assetz
found by HOMES & FINCAS, Ayamonte, Costa de la Luz, Spain

The new Pension Scheme SIPP is already causing a huge demand in the overseas property market, since our previous Newsletter which introduced the changes in the regime regarding private pensions, we have had a overwhelming number of clients that since then have purchased properties through their pensions.

From April 2006 clients will be able to pay into their pensions the equivalent of their years gross salary where as before they were only allowed to pay in a small percentage, this will allow people to build up a good amount of money much quicker and this money can now be invested in properties abroad. By purchasing a property through your SIPP pension you will not be liable for capital gains when you sell the property, you will not pay any tax on rental income paid into the pension company. The clients who have already purchased in Spain taking a vantage of the new regime bought properties with completion after April 2006. Clients can open a SIPP pension or transfer any private pensions to a SIPP scheme, even clients with frozen pensions will be able to transfer to the new scheme.
Details HOMES & FINCAS, Ayamonte, Costa de la Luz, Spain

Spain.
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Spanish and Galician: Reino de España or España; Catalan: Regne d'Espanya; Basque: Espainiako Erresuma) is a country located in the southwest of Europe. It shares the Iberian Peninsula with Portugal, Gibraltar and Andorra. To the northeast, along the Pyrenees mountain range, it borders France and the tiny principality of Andorra. It includes the Balearic Islands in the Mediterranean Sea, the Canary Islands in the Atlantic Ocean, the cities of Ceuta and Melilla in the north of Africa, and a number of minor uninhabited islands on the Mediterranean side of the strait of Gibraltar, such as the Chafarine islands, the "rocks" (es: peñones) of Vélez and Alhucemas, and the tiny Parsley Island. Strong economic growth and an expansion in trade following membership of the European Union in 1986 made the country's economy the tenth largest in the world in 2002. Life expectancy, public transportation, sanitation, infrastructure, and health care are first-rate, although the GDP per capita remains at 87% of that of the four leading European economies.
Property Investment in Spain - what's is the deal?
More and more people are seeing traditional investments in Pension Plans, PEPs, stock investments, saving accounts etc, which continue to fall in value almost day-by-day. The search for opportunities that can give a satisfying return on investment has become THE number one priority.
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