Invest in a solid economy

Primestar Estates in coordination with the leading Real Estate Agency and Consulting Company Muller Merkle Immobilien presents and analyses profitable investments.

Cyprus Current State

On March 25, 2013, Cyprus became the fifth European Union country to be bailed out by the European Union and the International Monetary Fund. Under the terms of this controversial agreement, the Cypriot Government requires strict measures that will result in severe financial losses for depositors with holdings of more than €100,000 in each of the country's two largest banks, as well as the imposition of capital restrictions. The implications of these decisions were unfolding throughout the last months, with no bank finance being available, deposits being blocked and a big reduction in property transactions. In particular, local buyers were the most discerning as the increase in unemployment and the worsening prospects of the local economy led to a sharp reduction in interest, whilst, those interested were unable to access bank-finance or their deposits.

Market Capital Values and Market Rental Values

The Property Price Index for the second quarter of 2013 (RICS, 2013) has recorded significant falls across Cyprus' major urban areas, with prices and rents falling across all districts. Overall, Nicosia and Limassol performed the worst as they were the least affected markets up until the second half of 2012. Residential prices for both houses and flats fell by 4.2% and 5.0% respectively, with the biggest drop being in Famagusta (6.7% for flats) and Larnaca (9.2% for houses). Values of retail properties fell by an average of 7.8%, whilst those of offices and warehouses fell by 4.4% and 5.9% respectively. Compared to Q2 2012, prices dropped by 12.6% for apartments, 11.2% for houses, 23.3% for retail, 13.0% for office, and 14.8% for warehouses.

Cyprus' rental values decreased by 5.2% for apartments, 5.4% for houses, 12.0% for retail units, 7.1% for warehouses, and 8.8% for offices. Compared to Q2 2012, rents dropped by 12.0% for apartments, 11.9% for houses, 28.3% for retail, 19.4% for warehouses, and 15.9% for offices. Appraisal based initial yields at the end of Q2 2013 average gross yields stood at 3.8% for apartments, 2.0% for houses, 5.6% for retail, 4.5% for warehouses, and 4.3% for offices. The parallel reduction in capital values and rents is keeping investment yields relatively stable and at very low levels.

Alternative Investment Market – Introduction to the German Property Market

Unlike other European property markets which have dropped heavily during the financial crisis, the German real estate market continues an upward movement in prices. In fact, the German property prices have risen by an average of 20 % over the past five years, namely 5% in the last 12 months. However, property prices are undervalued relative to rents and disposable income. In addition, an increase is anticipated in capital and rental values. Low interest rates in the German real estate market along with the high demand are two of the many reasons that make the German property as a good investment.

 Why Invest in the German Property Market

Germany as Europe's engine room:

  • Europe's leading economy with a continuing positive business climate
  • Economy has sustainably grown over the past 6 decades
  • Attractive domestic market and one of the strongest exporting nations in the world
  • Largest European labour market with one of the lowest unemployment rates
  • Country with a high degree of legal and political stability as well as a transparent and independent judiciary
  • Strongest possible credit rating of AAA

 German property is a safe haven:

  • Housing prices increased by 5.1% over the past year and by 20.5% over the past 5 years
  • Property prices are still considerably undervalued compared to rents & disposable income
  • Rental levels leave room for future upside
  • Diverse investment landscape with promising residential property markets across the country
  • Average housing prices per square meter in Germany's top cities are less than half the London prices
  • Increasing demand for housing space until 2020
  • Particularly big cities as well as university cities will benefit from increasing future demand
  • Low volatility offers a high degree of stability
  • Ideal financing situation with interest rates around 3%p.a.
  • Smooth entry and exit due to high asset liquidity
  • Everyone can invest in the German property market: equal legal status given to non-citizens

Primestar Estates in coordination with the leading Real Estate Agency and Consulting Company 'Müller Merkle Immobilien', presents and analyses profitable investments in real estate and provides ongoing assistance to international investors throughout the purchase process. Our combined academic qualifications in the field of real estate and our experience with complex transactions across Germany, allow us to provide valuable services covering all sectors for a profitable investment.