The rising cost of construction in Cyprus, the restriction on the supply of suitable units in residential and central areas, VAT, the lack of titles, etc., have all turned the interest of part of the market to the acquisition of units of a certain age.
In most cases, these units need upgrading or repair, while units that in the pre-crisis era would have been considered depreciated, are also upgraded and repaired, highlighting their potential and the possibilities of upgrading or increasing their value.
In all this calculation of the comparative cost of new or second-hand units, VAT (5% or 19%) has its own role, as does the existence of separate title deeds (for older units) which offer easier financing.
Therefore, it is not unreasonable to adopt that for a used apartment of 100 sq.m. the average sale price should be about €1,300/sq.m. and for the equivalent new c. €2,500-3,000/sq.m.
This shift towards older units has increased the demand for services from small contractors, who can offer the entire range of restoration for a building, carpentry, painting, electrical and mechanical work, etc.
The cost difference in the above example exceeds €140,000-150,000, which compared to the upgrade cost is much higher. In the purchase of older units, the quality of the common expenses, the existence of any hidden defects, the quality of the neighbouring units, etc. should be taken into account.
Therefore, directly comparing the older unit and upgrade cost with a new unit is not absolute. However, based on our experience and similar parameters, buying an older unit and upgrading it is economically more advantageous than buying a new one.
A similar increase in demand for older units is also observed in Greece.
Based on a report by real estate agents in 2022, about 70% of buyers preferred to buy older units, while it is also indicative that the market trend is now around 70 sq. m. for small units of, say, 2 bedrooms.
Due to this situation, small contractors mainly from Greece have begun to appear in Cyprus and we expect this trend to continue. Of course, more attention is needed here, but looking at some of them, the Greek contractors, the craftsmen they provide are of better quality than the locals, while their performance is much better.
Disputes
Make sure of course that these contractors are registered with the Cyprus Contractors Council, to avoid any legal problems in case of disputes.
Returning to the older units, if we compare them they are larger in size than the new ones and with spaces that today are not particularly liked, such as a separate kitchen and dining room. Of course, there are issues related to the new housing requirements, such as private bathrooms or en-suite w.c., large verandas, storage rooms and parking spaces, etc. and therefore each interested party should weigh the pros and cons, as well as, of course, the financial cost.
There is a noticeable increase in demand for older units within the city centre that partly comes from the increase in demand for rentals, either to students, third parties or short-term rents such as Airbnb, and buying, upgrading, modifying such units for rent is particularly attractive.
In all this comparison of a study that you will have to conduct, the administration of the building in terms of common expenses also plays a major role.
New units have fewer problems than the older ones in this regard and it is good to consider the cost of common expenses and any pending work, while new units that offer high quality services will face a serious problem in the future, due to non-payment of common expenses.
The same topic of small contractors includes the various craftsmen for similar work and in our personal examples (raising the sofa by 5 cm with the addition of a wooden base that took 8 months), changing upholstery on chairs (4 months waiting), while for small repair painting a further 2 months of waiting. And all this waiting without there being a dispute about the cost.
On the one hand, the government is trying to reduce the cost of buying/renting housing and, on the other hand, it is unable to propose an amendment to the legislation on common expenses, the eviction of bad payers for immediate application, which cause, especially for older units, difficulties in their disposal, even though it is financially in the interest of its citizens.
