Property valuation in Cyprus

In Cyprus, the property valuation report is prepared by a professional property valuer registered with the Cyprus Scientific and Technical Chamber (ETEK), the government body responsible for registering, licensing, and monitoring the engineering, architectural, and valuation professions, among other things.

Property valuers in Cyprus must also be members of the Cyprus Property Valuers Association (ΣΕΕΑΚ or CVA).

According to the CVA website, a professional property valuer in Cyprus “operates under the RICS appraisal and valuation manual (Red Book) which is now incorporated with the International Valuation Standards”. Professional property valuers in Cyprus hold degrees in the real estate sector and often postgraduate degrees.

CVA represents Cyprus as a member of TEGOVA, the European Group of Valuers’ Associations. TEGOVA emerged in 1997 from the former EUROVAL to create and spread harmonised valuation practice, education, and ethics standards. TEGOVA has a code of conduct to which all members must adhere. It also publishes reports where central terms, like market value, fair value, and special value, are defined.

The report states the market value of the property.

TEGOVA defines market value as “the estimated amount for which the property should be exchanged on the date of valuation between a willing buyer and a willing seller acting independently after proper marketing wherein the parties had each acted knowledgeably, prudently and without being under compulsion”.

The property valuation report must be clear and have sufficient details to cover key areas.

Therefore, the report usually contains information about the location, physical details of the construction, description, address, land and size, the condition of the building or dwelling, zoning characteristics, and insurable value. Information about the title deeds might also be mentioned. It is also a good idea to mention anything that adds value to the property.

It will additionally include relevant documents, such as the cadastral plan.

DevelopersCyprus can help you with property valuation; just contact us.

The valuer will visit the property and do significant market research.

The CVA website explains the procedure and methodology followed by the Department of Lands and Surveys (DLS) of the Ministry of the Interior when evaluating a property. This involves considering the property's physical and legal characteristics (type, area, planning zone, location) and the land and building value per square metre (comparative sales, DLS internal valuations, market survey).

A professional valuer prepares a real estate valuation model, which consists of the methods, systems, techniques, and qualitative judgments that the valuer will use to estimate and document value (International Valuation Standards 2022).

When using or creating a valuation model, the valuer must record the model’s assumptions, limitations and risks associated with the assumptions. The assumptions, limitations and risks must be consistent with the scope of the valuation. The valuation model must comply with IVS standards regardless of type and other particulars.

J.P. Morgan Chase & Co. explains that cost, sales comparison and income are the three main property valuation methods. They can be used for residential and commercial properties, though some methods are better for one type of property, some for the other.

Therefore, the proper method is determined case by case, sometimes depending on the valuer’s gut feeling. J.P. Morgan Chase & Co. notes that “commercial property valuation is an art. … Even the best data is still an estimate”.

A property appraisal is an informal estimate given by the real estate agent and used as a guide to pricing. In contrast, property valuation is a formal, written report prepared by a licensed valuer and recognised by banks, insurance companies and other stakeholders.

Typically, real estate agents offer property appraisals as a free service and use them as a guide. On the other hand, the valuer charges a fee to do an in-depth and objective evaluation using comprehensive criteria. The valuer is legally responsible for the content of the report.

Factors that negatively affect a home’s value include traffic (living near busy roads), noise and pollution, high area crime rates, poor maintenance, damage, the home being built on a flood plain, illegal extensions and/or improvements without permission, and over-decorating that reduces the house’s aesthetic appeal.

Online property valuation in Cyprus can provide a general estimate but lacks the accuracy and credibility of a professional valuer's report. It is useful for preliminary assessments but not accepted by banks or insurers for official purposes.

Any tool used for automatic valuation produces unofficial reports similar to property appraisals, which Cyprus real estate agents offer as a free service.

In Cyprus, the CVA has an indicative rates list based on the property's value. For example, the report for property worth up to 250,000 euros costs 300 euros.

For property worth 250,001 euros to 1 million, it is 300 euros plus 0,1% of the extra amount (1 million euros minus 250,000) and so on.

You can see the complete list of indicative prices on the Association of Real Estate Appraisers of Cyprus website.