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Size does make a difference

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The former minister of the Environment of Ireland (Alan Kelly) announced that developers should build affordable accommodation for Ireland’s citizens – “Get Real”, he added and “build accommodation which is affordable to the citizens”.

The minister realised that the minimum size of apartments set by the regulations was larger than what the people could afford.  He suggested the following:

Existing Regulations New Regulations Cyprus*
One bedroom 55 sqm 45 sqm 55 sqm
Two bedroom 90 sqm 73 sqm 90 sqm
Three bedroom 100 sqm 90 sqm 100 sqm
Studio (new concept) 40 sqm 45 sqm

*  Depending on the location

In addition to the reduced sizes, Kelly added relaxation measures regarding parking requirements, especially for the town centres, to encourage people can also be close to their work in addition to affordable living/rentals in the city centres.

The setting of minimum sizes for apartments/residential units is a “red flag” for our firm, and we have been fighting this nonsense for over 20 years with no success.

At each time, the Planning Department’s Director argued that Cypriots should live in a “decent” space and not in “small boxes”.

And instead of examining what people can afford and whether, by projection, what measures are required to help solve the housing problem in terms of affordability, they provide the “high and mighty” locals with ample minimum living space as if all Cypriots earn the same salary as they do.

This excess of space has been recorded by EU statistics recently, which shows that Cypriots live in residential units, which are approximately 15-20% bigger than the average size in the EU.

Very few countries with planning zones, building density, height, and regulations have this measure of minimum living space.

Considering that for residential units, the average price for resales is now around €2,200/sqm, and for those near the beach, €6,000/sqm, you can assess that 5 sqm could make a difference of €10,000-30,000.

By adding the VAT, and transfer fees cost, the difference can reach €10,000-40,000 (for just 5 sqm).

Housing accommodation goes in cycles.

We start living in small apartments, and as the family and the income get bigger, we move on to larger accommodations.

This means initially reduced-size units reflecting not only the affordability of the now “poorer” Cypriots but making the sale of such units more attractive.

We have managed the development of several projects, and the older ones with a 2- bedroom apartment at 60 sqm are nowadays the most marketable, and this is especially for holiday homes.

At Ayios Elias (Protaras area), with the project having 60 sqm units/2 bedroom, not only are they the most marketable with a waiting list to buy (average sales price €125,000) as opposed to “better” and more spacious accommodation of 80 sqm with a €30,000 difference with limited demand.

In a project at Larnaca near the beach, the sales price ends up at €300,000 (100m away from the beach), whereas the 60 sqm would have had a sales price of approximately €180,000 (and the other added costs to go with it).

To those against these smaller units, I say, if you can buy a Mercedes, why buy a Mini?  It is, of course, a matter of price.

However, there are no “standard” restrictions set for cars and other products for the “blue blood” Cypriots to have a “proper” size accommodation.

I blame the Planning Director at the time, the Cyprus Technical Chamber, and the Association of Architects, for not grasping the country’s basic human/economic circumstances.

Let alone the Developers’ Association, who seem to have no stand on this matter (be it that they are the prime group of people who will benefit).

We seem to be the only “free” voice in the wilderness of nonsense, and I feel that narrow-mindedness and stupidity should have a penalty.

Those who cannot understand the basics of the building industry should either be sent home (if civil servants) and/or pay compensation for the cost and damage that they cause (financial and human) to the coffers of this country.

When one considers that almost 25% of the buyers are foreign, the local market and the affordability of the foreign market should not be ignored, bearing in mind the sizable percentage that it comprises in terms of demand.

Could we “borrow” Mr Kelly to examine the nonsensical state of our planning requirements?

After all, it took another Irishman (Mr Hourican) to fix the Bank of Cyprus!

By Antonis Loizou FRICS – Antonis Loizou & Associates EPE – Real Estate Valuers, Estate Agents & Property Consultants