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Cyprus Property News
Cyprus | Posted:

Property Trends 2012

While the expectations of both tenants and investors in the real estate industry have shown improvement in many parts of the world during the first quarter of 2012, most European markets continue to show a negative trend, according to the latest Global Commercial Property Survey of RICS (RICS Global Commercial Property).

Furthermore, Cyprus property prices and rents continue to fall, mainly as a result of adverse economic conditions, negative forecasts for the broader economy, the lack of funding and low returns, while if the returns on commercial property does not become attractive, the market will continue to remain at a standstill.

According to the survey, the expectations of both tenants and investors in the real estate industry have shown improvement in many parts of the world during the first quarter of 2012. However, most European markets continue to show a negative trend.

After a few positive signs recorded by the global economy, but after the partial easing of tensions in the Eurozone during the first months of this year, expectations for tenants remain very positive in Russia, with respondents saying that the demand greatly exceeds the offer, as well as in Canada, Brazil and China. Marked improvement prevails in Hong Kong and Thailand. In parallel, the same positive climate has shifted in the U.S., Malaysia and India. All three countries had previously shown negative signs on the prospects for rental, but this has been replaced with a more upbeat set of results.

In contrast, the outlook for tenants is still quite weak in many parts of the European Union, with the notable exception of Germany and Poland. In Germany, a healthy economic recovery is fueling increased demand for workplace, putting further upward pressure on rents. With positive demand, Poland is experiencing two consecutive years of increased demand, stable supply and increasing rents.

In the rest of the Eurozone continue to dominate weak growth prospects, if not outright recession fears. It is worth noting that the negative effects extend beyond the economies most exposed to the debt crisis (Greece, Portugal, Spain and Ireland), and the Netherlands and France.

In terms of investment, demand for these European markets as well as in Italy, Hungary, the Czech Republic and Belgium are negative. In Germany, investment and expectations for growth in capital value of properties increase, while in Poland, after two years of growth in investment trends, the market seems to have stabilized.

Expectations for real estate prices are more favorable in Brazil, Canada, and China. Provisions for investment demand are also very positive in Brazil and Canada, followed by USA, India and Russia. There is also some evidence of improved climate in the UAE with investments to increase during the first quarter of 2012, after a long recession.

Moreover Cyprus real estate prices and rents continue to fall, mainly as a result of adverse economic conditions, negative forecasts for the broader economy, lack of funding and low yields.

Commercial real estate continues to range from 5% to 6% which means that it is attractive to investors. Until rents begin to stabilize and capital values to fall further consistently yields reach to more attractive levels (probably more than 7% to 8%), the market however will continue to remain at a standstill. We are going through a long period of equalization of rents and prices, to be followed by a prolonged period of inactivity until the economy stabilizes and begins to recover.