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Notwithstanding the situation of the real estate market and the difficulty in securing finance for the acquisition of a home, the market is moving in a positive direction.
For the local market demand, we find that residential units which are reasonably priced and in “reasonable” condition, have a successful sales price and within a reasonable sale time.
Save the exception of high end/cost units, the wider local market is picking up at a rate of increase of 5% for apartments and 7%-8% for individual houses. Industrial units are slow-moving, and demand is directed more towards rentals than acquisitions, whereas shops are at a stable level of demand and much of their sales success is the location and existence of tenants (lettings to good-paying tenants).
Holiday homes, especially those which are of appeal to locals (e.g. Ayia Napa-Protaras region) are in high demand and we could add that there is some shortage.
The demand cycle in new methods of letting direct, some investors base their demand on income as well (Airbnb etc).
This rather high income for Airbnb is also pushing prices on the up and this covers all sorts of residential units (including town centres for apartments, as well as holiday destinations).
All this is the result of a shortage of supply that was caused by the stale market conditions during the period of 2013-2017, which has just now started to recover, whereas it is notable that the market for the older units is on the up.
Older houses/flats are of increased demand since their price is well below the new units (which may also have title deed problems, VAT, latent defects etc).
As time passes and the market improves, we note that provided a unit has a reasonable sales price (i.e. market value), it will go within a period of 5-6 months.
We refer to units and not for agricultural land for which the market is extremely low and industrial plots demand for which is unpredictable.
It is worth noting the high demand for the older buildings within the original development areas of the towns, which could be of interest mainly for rentals to students/Airbnb and others.
We will also have to wait and see what new incentives the Government will introduce regarding development for hire – suggestions of increased building density by 20%-40% if development is buy-to-let for a period of 10-12 years.
Times are indeed changing, and we already see a new attitude of demand for the older buildings, which so far, we have ignored in favour of the new ones.
Buy to let for apartments has everything going for it, but the “criminal” law regarding the common expenses is an issue to watch, since if a new lift is needed/common areas upgrading etc, it is a problem since you may end up with your unit being renovated, but the rest of the common areas, appearance etc to remain at the original non-maintenance state.
For the high-scale investors who buy a number of units, we say that if we had a better legal system in terms of speedy court decisions (say in 30-60 days) from submission, we could recommend the acquisition of apartments to let with basic, but good quality furniture and equipment, but then they must be in good numbers 10-15 units, so that the rents can support the available handyman on call who is to go around and cater for any tenants needs/repairs/rent collection etc (there are some good deals of apartment blocks offered by the financiers).
Now that with the low returns on deposits in Cyprus a rental income which brings up a return of 5%-6% (short lets more troublesome, but the returns are around 8%-10%) is an option especially as we “hear” from time to time that some of our local banks may have problems themselves (see the scare we got from the Co-op deposits).
As we have said, “times are a changing” (Bob Dillan) and it is the time to look towards the various alternatives offered in Cyprus, but administration is not a job for amateurs and increase returns are coupled with more problems than that of the deposits in banks.
On the commercial side, Limassol is the most attractive place to buy/let (offices and shops), whereas Nicosia is also in demand for similar units, be it at lower prices and lower rental yields.
In terms of shops, one should look also in the tourist areas that have something going for them. Check the immediate area of Ayia Napa marina, as well as that of Protaras and any location that new hotels are under development, a factor which will improve their commerciality.
The upcoming Airbnb for offices (similar to Regus mode of let) is also an option, but yet to be tried in Cyprus.
Food for thought dear readers.
