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The imminent increase in old-age poverty and the need for longer-term reforms in social insurance has raised another issue that many have not yet contemplated –demand for cheap housing for pensioners and opportunities that could arise in the stagnant property market.
As the average Cypriot household gradually refrains from spending on large mansions, due to future maintenance costs and mobility concerns, the call for small, affordable apartments is bound to grow. Especially so in the market of 1- and 2-bedroom apartments with 25 to 30 sq.m. in living space for singles and 50 sq.m. of floor area for adult couples.
The recent German phenomenon of “minimal pensions” is expected to reach Cyprus very soon due to the disparity in pensions between highly-rewarded civil servants and private sector employees, many of whom have been working for nearly 50 years in order to secure a nest-egg or a decent pension. This will seriously impact demand on the housing markets because elderly people with subsistence-level retirement pay will not be able to afford more than 250 euros a month for rent, plus heating and cooling. The subsidy from the Welfare Dept. only kicks in if the pensioner is living in a home for elders and/or requires house help, i.e. a maid or nurse, as many seniors are shunned out of their own homes, making way for their children’s families.
So far, developers and investors have focused on large high-end apartments in urban areas or seaside holiday homes, some of which are unsuitable for an octogenarian couple. On the other hand, the state-owned Land Development Company only caters to young couples or low-income first-time buyers, thus depriving pensioners of buying an affordable home or at least renting one from another home-owner.
There is obviously a need for a new category of suitable apartments, while investors should take advantage of the demand in the market that will produce a steady rental yield above inflation, and closer to the two-year mandatory ceiling for rent hikes.
With the slump in the construction sector not going away for quite a while, despite the occasional short-lived explosion of public contracts, and in the absence of western-type senior citizen residential estates, the need for more small apartments should give the necessary impetus the property industry needs.
The ageing population is growing, and healthily so in Cyprus, and will soon become the biggest segment of our society. A property developer with vision ought to capitalise on this opportunity as more and more services are developed to cater to pensioners and the elderly. Pensioners have rights too, and they should enjoy the same right to a decent home as younger owners.
