As the purchase cost/sale prices of new units (apartments) increase, so does the difference between older and new units.
If we compare the selling prices of new residential units, which are now around €2,500/sq.m. + VAT and older ones with selling prices of €1,200-€1,500/sqm. (depending on the level of construction and repair requirements), the difference is large.
The consideration should be whether it is advantageous to buy an older unit or apartment and upgrade it, especially for units within cities where there is bigger demand.
Buying older units, apart from what one “sees” when buying, one needs to check the plumbing/electrical installation.
And the existence of any problems, both in the unit and in the common areas, the existence of a title (which makes it easier to obtain finance/resale) and depending on what the whole project will cost (purchase and upgrade), you can compare which one is advantageous (older vs newer).
Older units have more spacious areas, but they may lack private parking or storage, of great importance by today’s standards, in addition to the state of the common areas.
If you are targeting older apartments, focus on units up to 15-18 years old since there were private parking/storage and quality lifts and any problems will be obvious.
For any apartment buildings you are interested in, consider the existence of a good management committee, consider the payment or not of common charges, anticipated new costs and any arrear the building itself has from the common charges issue.
In a recent sale of a 3-bedroom unit, 15 years old, in a central residential location in Nicosia, it was sold for €190,000 and in good condition, but it needed some upgrading to the bathrooms and kitchen, costing around €25,000, raising the total to €215,000 and including transport-removals it came to around €225,000.
This apartment, after the upgrade, was rented for €1,000/month (±5% yield), and there is a proposal for sale at €290,000, a resale “profit” of around 30% over six months.
In another case, a one-bedroom unit in Neapolis Quarter (Limassol) with a rent of €400/month, after upgrading the unit at the cost of €10,000, was immediately rented for €600/month, a return of 24% on the additional investment. There is an offer to buy from a third party immediately.
Looking at older residential properties (houses) on the periphery of the towns, especially in areas that remain purely residential without dense apartment housing, particularly in areas like Ayios Andreas/Ayios Dometios (Nicosia) and Ayia Zoni (Limassol).
The data shows that their prices are mainly considered vacant plots, while an upgrade of €100,000-150,000 can be converted into attractive residential units in prime-demand areas.
The same situation prevails for older offices that have the potential to be modernised with amenities (again, special attention should be paid to the entrances, parking spaces and external appearance).
Parameters that need to be considered are:
- Consider the immediate area keeping in mind the existing condition and type of development. For example, if there are vacant plots, they will eventually be developed, increasing the density of your ‘neighbourhood’.
- Consider whether there are nearby public green spaces that are particularly attractive to young families/children.
- Are there schools in the area and easy transport?
- Outside the town centres, units are sold at lower prices but consider the distance to schools, tutorials, friends’ visits, sports activities, and watch out for children who may have a problem due to isolation.
- Grandparents are very helpful in raising the children. For the couple’s convenience, they should be nearby, although too frequent contact with the couple creates problems in many cases.
Regardless of the above and the expected downturn for units in towers, it is expected that the Pieris Estates era will be repeated when foreign buyers resold their expensive apartments to locals at almost half price.
The same is not expected to happen now with the €1 mln tower units.
Even with a 50% discount on such units, they remain expensive for Cypriots, while the expected problems will be additional issues due to both purchase and maintenance costs (and, most importantly, management).
Therefore, staying on the subject of older units and the expected new wave of supply (the three marinas now under construction), great caution is needed, just as caution is needed for the sellers and developers. Some of them may face serious survival problems shortly.
By Antonis Loizou FRICS – Real Estate Appraiser & Development Project Manager