We wish we had the talent to predict “spot on” the trends in the Cyprus real estate market for the coming year of 2007. Unfortunately we can only submit our predictions based on our experience and regards to the year 2006.

2007 is expected to have the following general trends regarding property prices:

• Generally an upward movement of property prices by around 10%.

• New apartments are expected to increase by 10%.

• Holiday homes by 15% on average.

• High cost houses within residential areas an increase of 5% and medium cost by 10%.

• Offices of an average cost/size by approximately 15%.

• Building plots and development land within the towns are expected to increase by 12% and for the suburbs by 15%.

• Seaside land to increase by 20%.

• Land outside the tourist areas 15%-20% increase.

We must also bear in mind that V.A.T. on land purchases after 1.1.08, will cause by themselves an upward movement of costs, as the price of the land dictates the overall price of the property and most of this additional cost will be passed on to the buyers. Of course, this constant upward movement of building costs/prices, reduces all the time, their financial attraction and the number of able/willing buyers, whereas the demand will then be directed more and more towards the lower priced areas/units. For this reason we note that for areas away from urban centers, the property values are expected to increase by a faster rate than urban properties.

Another most interesting report published last week by the Economist, provides a formula in order to check if prices are a bubble or not. Based on this formula, property prices in Cyprus are quite reasonable, based on a yield of 4%-6%, plus the expected general appreciation of 4%-8%. Regrettably Cyprus does not invest in research to support this and so all information included above is based purely on our own experience and opinion.