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Cash-in on refitting older properties

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As new units are increasing in their sales price, so is the difference between old and new property values.

If one is to compare the values of new apartments directed primarily towards locals within town centres of around €2,500/sqm (+VAT) and the older ones of around €1,200-€1,500/sqm (depending on the state of repair) the difference is considerable.

The idea then is to acquire an older apartment, do it up in a modern style and let or sell it for a good return/profit.

Even if for an ordinary apartment, the upgrading cost is around €20,000-€30,000 the increased income is at least 50% more.

The older apartments/offices are primarily located within the town centres (a preferred location), they are more spacious than the new ones, the existence of title deeds facilitates easier financing and resale prospects.

Older units, on the other hand, should be checked regarding their plumbing workability (as well as electrical installations), the provision of two bathrooms/shower units (most of the older units have only one).

For offices, check the provision/possibility of open plan and cabling provision/raised floor, provision of a/c and heating should be considered and how this can be accommodated in the older units.

Older units do not necessarily have private parking and storage (most important), common expenses/installations should be checked, including the lift replacement, the external appearance/maintenance and so on.

For such upgrading, an ideal maximum age of the older units is around 15-18 years, since at that time units had parking/storage/better quality lifts/titles.

And these units of such an age, do not bring up immediate problems of maintenance.

Whatever you choose to buy, pay particular attention to the existence of an effective common expenses committee which manages well the accommodation and checks beforehand any long outstanding dues.

In a recent example, a central Nicosia apartment, approximately 15 years old with all mod cons, including security, double glazed, parking/storage/children playground, was sold for €190,000, the buyer spending another €25,000 basically for upgrading the kitchen, replacing the old bathroom with modern units and some other things. It was duly let for €1,000/p.m. (approximately +5% p.a. return) and subsequently sold for €290,000.

This is one example, but it is not isolated, where another one-bedroom unit at Neapolis Quarter, Limassol, let for €400/p.m. was duly renovated with a professional decorator and turned into a “living unit”.

It was let after the renovation for €600 pm, the expected value has an approximate increase in the selling price by 40%.

Coming to older houses, for which a good percentage of sellers do not appreciate their value as such, and they approach the sales price as a vacant plot.

There are many houses of the 50s which are in a good state, but out of date and which require higher cost for upgrading (an indication is around €100,000-€150,000), but do your maths since every unit has its peculiarities and check if it is worth it.

Older houses of the colonial era in the Ayios Dhometios/Ayios Andreas Nicosia area and others at Ayia Zoni (Limassol) could be locations to examine.

As a general observation:

  • Check the neighbourhood if it is developed and bear in mind the vacant plots will most likely be developed with apartment buildings (depending on the local building density).
  • Check if there is a nearby green area (most important for young families).
  • Are schools nearby and communications availability?
  • Out of town units are cheaper, but if you have children, the school/private lessons/friends are an issue, especially with children around the age of 7-8 plus.
  • Grandmothers and in-laws are most helpful with looking after children, so it is important to choose a location close to them (should you want them to be involved, since there could be disadvantages as well).

Beware the defunct passports for investment situation and the sharp drop in demand from this source.

Sales prices of these “tower” units will drop dramatically, so not an opportunity to take advantage of, since for these apartments their problems are many.

Now the luxury apartments of these high-rise towers costing €2 mln even at half the price we expect that there will be no takers from the local market even at the 50% levels.

So, we do not suggest that you aim to invest in such units until the matter of the defunct investment scheme becomes clearer.